There are several reasons for good inventory management. The first is that your profit margin is predictably thin and every dime you lose on moving a product is a dime you no longer have. As a product sit idle over a period of time the value may decrease simply by virtue of what it is. A calendar, for instance, is a dated item that must be moved or it will have to be written off.
Wholesale pricing is another way dropshippers lose money. If you can now stock an item for less than you invested a couple of months ago, your profit margin has decreased unless you raise the price. Your competitors will be buying at the new, lower price, and can easily outsell you.
Another reason for good inventory management is the massive task of keeping track of where everything is located. Having to search through inventory costs time and money. A closely related difficulty is in the need to pay for warehouse space. Don’t pay for more than you need.
A fourth reason to control your inventory is that by doing so, your marketing strategies will be much easier to devise and implement. If you know which of your products are selling you can stock to the projected sales levels. You will avoid a shortfall of product when the demand is high and you can likewise avoid the pitfall of ordering in too much stock.
Keep your website updated with new products and eliminate those that aren’t selling. Keep tabs on the price fluctuations by keeping as small an inventory as possible. Make certain that you aren’t offering items you no longer dropship as this will create customer dissatisfaction when they’re informed your advertised goods are no longer available. Inventory management is important for your eBusiness. Your bottom line depends on it.
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