One item in our inventory sells only a few times each month, but the margin per sale is excellent. The shelves it occupies could hold faster-moving products, yet discontinuing it might disappoint a small group of regular customers. I'm thinking of keeping a minimal quantity and ordering more on demand. How would you compare gross profit per shelf space with customer expectations when the product is slow but profitable?
Dealing with inventory that sells slowly but has strong margins
- small-business
- inventory
- sells
- slowly
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3 replies
I'd look at it in two lanes: profit per unit and profit per shelf meter. If the item is slow but carries a strong margin, a tiny stock level...
I'd look at it in two lanes: profit per unit and profit per shelf meter. If the item is slow but carries a strong margin, a tiny stock level plus a clear reorder process can make sense without letting it sit there forever.
I would not tie up a whole shelf for it if the fast movers are constantly out of stock. In my shop the compromise is a sample-facing spot and the rest kept in back, so regulars still know we have it.
That back-stock idea helps if customers ask for it often. If it's a quiet seller, I'd be careful not to let nostalgia for a few loyal buyers...
On-demand ordering only works if customers can wait without getting annoyed. If the item is something they expect to grab immediately, the shelf value is more than just the margin.