Why are some toy importers regularly out of stock of best selling items? How long does it really take to manufacture and ship toy and gift products from the Far East? What can you do if best selling products become unavailable?
We realise stock outs are frustrating for retailers. The purpose of this article is to explain the challenges that toy importers face, to give you an understanding as to why stock outs happen (particularly with new products), and what you can do as a retailer to minimise the negative impact on your profits of best selling items being unavailable when you need more of them.
New Product Launch Challenges
At Ashwood, stock outs sometimes occur with new products. When launching a new product/product range, it is often difficult to gauge how well it will sell. A positive reaction and forward orders from retailers is a good sign, but the real acid test is when the product is out on the shelves of numerous different retail outlets, and all kinds of consumers are given the opportunity of actually purchasing it. The fact that we have huge preorders for a product, is no guarantee that it will sell quickly when it reaches retail stores. So, at Ashwood we tend to be cautious on reordering too much of a new product before the first batch of stock of it actually arrives. As a general rule, once we have pre-sold half of our stock of a new product before it arrives, we will then reorder it.
Production & Shipping Lead Times
Obviously lead times do vary product to product and supplier to supplier, but as a rough guide, in our experience Far East manufacture normally takes around 5-6 weeks for production on average, and then a further 5-6 weeks to ship (via sea freight into a UK port, and then by road to our warehouse) on average. So around 3 months from the date of order.
Cash is King
Toy importers tend to have significant amounts of cash tied up in stock, and so stock management is a critically important area of this business model. We must ensure that we have enough stock of the bestselling products, but also that slow selling products are being cleared through quickly to make space and cash available for new products. The result of us having too much stock has a negative impact on our customers, because it means that we cannot launch the next range of new products so quickly.
Limit the Risks to Your Business
So what can you do to limit the risk of being unable to reorder a popular new product/bestseller? Here are some tips:
• If you see a new product which you feel very confident will be a winner for you, order several packs rather than just one pack. Alternatively, if you're not that confident, you could order just a single pack, but then keep in touch with that supplier/rep to check how much of their batch of this product has been pre-sold. If the majority of their stock has been pre-sold, you can ask if they have more on order, and you may well want to increase your own order quantity.
• Consider giving new products prime positions in your store, and then monitor sales very closely in the first few days/weeks. If a new product is selling strongly for you, and you reorder it, find out how much stock the supplier has left available and if/when they have more coming, because depending on the answers to these questions, you may well want to increase your reorder quantity. In fact, if they only have a reasonably small amount of stock left, consider taking all remaining stock!
• If your supplier doesn't have any more stock when you want to reorder, ask them if they know of any other supplier that might stock a similar product.
• Check to see if the product is on Amazon and either purchase some if you can make a margin, or approach the seller directly and ask them about placing a bulk order.
• If you are unable to source more of a bestselling item, consider increasing your retail price on your remaining stock. This will at least mean you earn more profit on the remaining stock.
It is impossible for a toy importer to keep all products in stock all of the time, but some are significantly better than others at it. The importers that tend to have better stock availability are the ones who are conscientiously checking sales on all of their products very frequently; carefully analysing recent trends and having regular discussions with their sales teams. At Ashwood we check detailed stock reports weekly, and once we identify that a product needs to be ordered, the purchase order is placed and the earliest possible shipping date agreed with the supplier rapidly - often within 3 days! We then line up a shipper to transport the goods well before the goods are actually finished, to ensure that there is no delay whatsoever.
Stock outs are frustrating, but they will inevitably happen from time to time, so just do your best to limit their impact on your business by following the above tips!
Does your business often suffer from stock outs? How do you deal with it? Please let us know in the comments below!
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