Retailers: You Can't Sell What You Don't Have
Take the Fear out of Buying Inventory
Plant for Profits Column, Leslie F. Halleck
Fear of buying and committing to inventory is one of the biggest struggles I see in the garden center and plant shop industry. This is a perennial problem for these types of business - certainly not a new phenomenon - but the intense focus on running “lean” and only keeping JIT (Just in Time) inventory messaging that’s been heavily pushed over the last few years hasn’t helped. Add high freight costs and availability issues to the mix and most green industry retailers end up looking downright anemic when it comes to their inventory.
The bottom line is, you can’t sell what you don’t have. Unless you are doing drop shipping of course, which I’ll get to here in a minute. Most garden centers and plant shops are tangible, tactile experiences for customers. Unless you’re an online only grower-retailer, in-person shopping still makes up the vast majority of your sales. Driving foot traffic and meeting customers expectations when they arrive at your store is still paramount.
As a gardening and plant shopper, there is nothing more disappointing than getting into the car, driving to your local garden center or plant shop, only to find a limited inventory and not finding what you need, or what you didn’t know you need. It’s wasted time and a major let down. If the customer does decide to shop anyway, you may be forcing them to choose from what appears to be “leftovers.” Consciously or sub-consciously, they will still be dissatisfied. No one wants that. As a business, it hurts your brand credibility (reputation) and the trust you promised your customers could have in you. When customers lose confidence you’ll have what they want, they won’t bother getting in the car to visit you anymore.
As gardening and houseplant customers we want to feel like we have a choice of what we consider to be the best plant, from a depth of inventory. We also want a healthy variety of inventory. As such, restocking quickly enough is also paramount to profits. As soon as your inventory on a particular item gets down to about 60% of the stock level, you'll see your turns slow down. That's the point at which customers start to feel like they've been offered leftovers.
I get it, making big buys or committing to bigger quantities of inventory than you have in the past can be scary. But you need to take the fear out of the buying equation. If you aren’t managing your inventory buying using hard data and projections, which you correlate with your marketing activities, you’ll likely never have enough inventory when your customers actually want it. Or, you’ll end up with too much of what they don’t want. Either way, not a good recipe for net profits.
"The problem isn’t that you bought too much inventory. The problem is that you had no plan in place to sell it when you bought it."
As gardening and houseplant customers we want to feel like we have a choice of what we consider to be the best plant, from a depth of inventory. We also want a healthy variety of inventory. As such, restocking quickly enough is also paramount to profits. As soon as your inventory on a particular item gets down to about 60% of the stock level, you'll see your turns slow down. That's the point at which customers start to feel like they've been offered leftovers.
I get it, making big buys or committing to bigger quantities of inventory than you have in the past can be scary. But you need to take the fear out of the buying equation. If you aren’t managing your inventory buying using hard data and projections, which you correlate with your marketing activities, you’ll likely never have enough inventory when your customers actually want it. Or, you’ll end up with too much of what they don’t want. Either way, not a good recipe for net profits.
The problem isn’t that you bought too much inventory. The problem is that you had no plan in place to sell it when you bought it. Or, you didn’t pivot fast enough to adjust your marketing to deal with inclement weather or other unforeseen issues. In this industry we must always pre-sell the season. Pre-selling the season requires advance marketing planning, and then deploying that marketing in a timely fashion using the tactics you’ve decided to put in place. Thinking you can just order it and “they will come” is a fantasy.
Drop-shipping: OK, yes, you can supplement your revenue with drop-shipping plants and products. So technically speaking, you are selling what you don’t have. But you must “have” it, as soon as they order it. So that is still an inventory source and availability you have to ensure to manage your customer expectations up front. Just don’t get sucked into the idea that drop-shipping is somehow going to save your business or your profits if you don’t have a handle on your real inventory, sales, and marketing.
The message I’ll leave you with here on inventory is that intuition and feelings-based-buying is not going to get you where you want to be. Running continuously lean on on-hand inventory isn't the solution for garden centers and plant shops. When you start managing your buying using an open-to-buy, based on sales history, set mark-in-margin targets, and hard inventory counts, you can open up a world of possibilities for growth and profit. Not to mention, make your customers much happier. There’s power in hard data.
Having enough on-hand inventory, at the right time, tells your customers you respect them and you’re here to do real business.
