Inventory control is something that most companies struggle with at one point or another. Actually, it’s something that some major companies struggle with on a daily basis. Inventory control is an ever changing beast that must be tamed to maximize profits. Without efficient inventory control, your online store will fail.
When I first opened Leotard Crazy, I was prepared to succeed. I had plenty of everything, but I had no idea what our sales would be. If I had purchased the inventory correctly, I would have had enough for the entire first year of business. As it worked out, I didn’t purchase correctly. I hadn’t thought about hot products.
I had one very hot product. I sold out of that product within two weeks, other products I still had after a year. Four years later, that product is still accounts for over half of our sales. The point is that only $500 worth of my $10K inventory was turning on a monthly basis. I had a lot of inventory sitting around not selling. My inventory was way too big, but I couldn’t make it any smaller as I didn’t know our selling trends. I had to be ready for anything.
Fine tuning that $10K inventory was a great thing for us. We started off with a $10K inventory doing $500 a month in sales. Four years later we are still running a $10K inventory, but we are doing $5K a month in sales. We are now looking to increase our inventory to $20K.
By having enough working capital to learn through the “school of hard knocks”, Leotard Crazy has been able to take risks and new products and expand at an outstanding rate. The business has grown from under $10K in annual sales to $50K in annual sales in four years. Showing no signs of stopping, Leotard Crazy is working proof that inventory control in crutial.
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