How to Improve Margins by Taking Control of Your Operations
Improving your operations through full visibility has four major business impacts. Let’s explore the third: Improved margins.
Influencers, wholesale & more
Inventory effective & expiration datesNo more spreadsheets required
Multi-status, multi-location inventoryWarehouses, stores, and channels
Fulfillment holds & order editsAuto-hold on new CX ticket
Automate fulfillment rulesBundles, marketing SKUs, and more
Influencers, wholesale & more
Inventory effective & expiration datesNo more spreadsheets required
Multi-status, multi-location inventoryWarehouses, stores, and channels
Fulfillment holds & order editsAuto-hold on new CX ticket
Automate fulfillment rulesBundles, marketing SKUs, and more
Improving your operations through full visibility has four major business impacts. The final benefit? Better cash flow.
Having better control of your inventory and more flexible operational processes helps brands achieve the following:
Maintaining accurate and up-to-date inventory records provides a fourth benefit: Optimizing your stock and cash flow.
Profit margins (expressed as a percentage) are what is left after subtracting your brand’s expenses from your brand’s income, so the higher the better—unfortunately, profit margins have always been low for ecommerce brands. Meanwhile, cash flow is simply the net amount of cash moving in and out of a business; this is typically measured month-to-month.
Considering that cash flow is the money you have available to cover current expenses to keep the business running, improving cash flow is just as important as improving profit margins. In fact, 32% of ecommerce businesses reported “running out of cash” as the reason they failed.
Implementing these strategies will help improve your bottom line and ensure that your business is running smoothly. Spoiler alert: It all relies on having visibility and control into your inventory and order data.
The inventory counts in your records and the actual amount of inventory sitting on your warehouse’s shelves don’t always add up. Inventory adjustments bring stock records into agreement with the physical inventory, with adjustments being made to account for exceptions like theft, damaged goods, or errors in the amount of items received. Unfortunately, reconciling inventory is time-consuming when 1) inventory tracking is done manually and 2) your brand doesn’t have access to the data in your fulfillment partner’s warehouse management system (WMS).
Let’s say you’re a homegoods brand that has 50 red serving platters left at the warehouse. Unbeknownst to your ecommerce team, 10 red serving platters were broken in-transit during yesterday’s delivery. Only 40 should be made available to purchase on your website, but since your brand is unaware of this accident—the inventory has yet to be adjusted from 50 to 40—you are now at the risk of overselling 10 red serving platters. That’s 10 canceled orders to 10 disgruntled customers… which your finance team may not even know about until after all 50 are sold, with the ledger erroneously accounting for 10 orders that were “filled” despite actually being unfilled. Not having an accurate understanding of your cash flow could result in poor decision-making.
Speaking of poor decision-making…
Why do some brands overstock on slow-moving items? They don’t know those items haven’t been selling. Why do other brands seemingly always have their most popular items go out of stock? They don’t know which items have been selling the most frequently.
They don’t know their sell-through rates (STR).
An STR percentage is the amount of inventory sold within a time period relative to the amount of inventory received from your manufacturer(s). If you know your STR across all your product variations, you could manage your cash flow in the following ways:
Speaking of sitting idly…
When returned merchandise is sitting idly at your warehouse, you lose revenue and a potential new customer. Wait too long, and that item is out-of-season or needs to be heavily discounted because it’s been wasting shelf space needed for more-important items. The sooner your brand knows that a returned item is back on your warehouse’s shelf, the sooner you can put that item back up for sale on your website.
It’s not just the inventory turnover of returned items that can be sped up. You can increase the sales velocity of featured products (e.g., a fan-favorite item debuting in a new color) as well. When you know exactly when something is stocked and how much you have left to sell—especially since your inventory adjustments are all accounted for—your marketing team can confidently push products or even pre-sell highly anticipated items.
Improving your operations through full visibility has four major business impacts. Let’s explore the third: Improved margins.
Improving your operations through full visibility has four major business impacts. Let’s dive into the second benefit: Increase in sales volume.
Improving your operations through full visibility has four major business impacts. Here’s the first: Increase NPS while lowering CAC.