As recession looms, demand wavers and supply chain struggles continue, merchants must do everything possible to keep their cash flow steady and maximize their profit – even during the downturn.
As experts in this area, we were asked to share our advice with e-Commerce Fastlane, a top-rated e-commerce growth and marketing podcast, hosted by Steve Hutt, exclusively for Shopify merchants.
In the episode, our own Jill Liliedahl revealed why cash flow is so critical right now, how to ensure every dollar you spend brings in results and why now is the perfect time to work on your business (and not just in it) – plus lots more.
In case you missed it, here are 9 top takeaways…
1. Inventory planning is essential for every merchant
Jill says: “Inventory Planner forecasts sales demand. It predicts revenue right down to a variant level and shows merchants exactly what they need to order. You can slice and dice the insights and data to suit your business, including looking at your performance and analyzing trends to easily see where you should direct your resources.”
2. Cash is king
Jill says: “It’s all about cash flow! When I was a retail merchant, that’s certainly what kept me up at night. Sales forecasting boosts cash flow because it tells us where we have demand and what inventory we need to meet it. On the flipside, it also shows you where you don’t have demand – so you can see what you need to clear out to free up cash. It’s a way to ensure your cash is always in the right place.”
3. The challenge of new products
Jill says: “Forecasting demand for new products is a challenge, but not if you use Inventory Planner. It’s often useful to forecast for new products based on category – this works especially well for fast-moving fashion brands. For seasonal products, it’s about looking at what happened at the same time last year. Inventory Planner makes it easy to account for seasonal products.”
4. Not all demand forecasts are created equal
Jill says: “A good forecast takes into consideration any days when items are out of stock. If you aren’t taking into account your out of stock days, you could be seriously underestimating how much you could be selling.”
5. Supporting multi-channel, multi-location merchants
Jill says: “As merchants will know, each sales channel has a different personality – what sells well on one wont on another. With Inventory Planner, you can forecast by channel and location separately, as well across your business. This is useful if you need to put in a big PO from an overseas supplier. You can see what you need altogether and then see the detail for what needs to be allocated where.”
6. Working on your business, not just in it
Jill says: “Sales forecasting can be a good opportunity to work on your business, and not just get caught up in the day-to-day. Inventory Planner helps you work out what’s working and contributing to profit – and get serious about clearing out what’s not. It’s a way to ensure every dollar you have in inventory is performing.”
7. Handling multiple suppliers
Jill says: “In Inventory Planner, you can customize lead times, days of stock, contact info, minimum order amount and case size. Operationally, it’s great to have all the info for multiple suppliers in a system and not just in someone’s head. It makes ordering a lot easier! The system is intuitive too so that if a supplier officially says the lead time is 90 days but actually send items in 60, it will reflect that.”
8. Making seasonality simple
Jill says: “Forecasting for seasonal items is very different to forecasting for items that sell all year round. You need to be able to change settings at variant level to accurately predict a spike the following year (not just for BFCM but for other peaks like Spring).”
9. Getting set for Chinese new year
Jill says: “During Chinese new year, Chinese manufacturers completely shut down for 2-4 weeks. As a merchant, you have to be prepared for it and that means factoring an extended lead time into your forecasting (which you can do in Inventory Planner).”
Want more advice? Check out these 6 Simple Steps to Boost Cash Flow
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