Managing and saving inventory costs in your business

As any online shop owner you purchase and manage inventory. The prices you pay for the inventory, the quantities you carry and the inventory commitments you make can drastically affect your profits.

As any online shop owner you purchase and manage inventory. The prices you pay for the inventory, the quantities you carry and the inventory commitments you make can drastically affect your profits.

10 Ideas to save money on inventory:

  1. Negotiate, negotiate, negotiate
    Many distributors’ price lists are simply a starting point. Always ask for a lower price regardless of the volume you're purchasing. Also, if there are gift shows occurring when you go to place the order, ask for the show special (even if you're not there). This is especially important during the summer when you're stocking up for the holidays. Good vendors offer 10 to 15 percent discounts during this time of the year.
  2. Seek 'Quantity Discounts'
    If you're making a larger-than-normal purchase, ask for a discount, extended terms or free shipping.
  3. Request a 'Free Sample'
    Make sure you get at least one free sample of any new product. Not only do you need this for testing, prior to making a purchasing decision, but also for photography purposes. Yes, it's only one unit, but if you're adding several hundred new products a year, it can really add up.
  4. Remember to returned goods.
    Returns and defectives must always be charged back to the manufacturer. Get this ironed out before starting a relationship with a new vendor. If you have to foot the bill for shipping a replacement to a customer, you shouldn't also be paying for the unit itself.
  5. Negotiate 'Terms'
    Negotiate net 30, net 60, or even net 90 terms with your vendors. This will help your cash flow immensely. If you can swing it, get the terms and pay with a credit card that gives you rewards or points.
  6. Order on slow days
    Place your orders Tuesday through Thursday if possible. Mondays and Fridays are the busiest days for most distributors, leading to a higher probability of errors. Orders are more accurate and you are more likely to receive better customer service with orders placed mid-week.
  7. Collaborate with Suppliers
    If you want to make a large purchase or invest in a new line of products with a supplier, be sure to talk to them about your plans, how it may benefit them, and any special challenges you may have. This may lead to a discussion about extended terms, consignment, cooperative advertising or other programs that would be mutually beneficial.
  8. Seek Early-Pay Discounts
    Pay off your merchandise invoices early. Oftentimes, suppliers will offer significant discounts to dealers if they are willing to clear their outstanding balances within a set time period. These reductions can add up over the long haul to noticeable savings.
  9. Partner with Carriers
    Major freight carriers like UPS and FedEx offer equipment allowances to their customers. If you are doing any kind of decent volume you can get thousands of dollars' worth of PCs, printers and other warehouse hardware for free. So long as you meet a minimum volume requirement you incur zero cost. If you're going to do that kind of volume regardless, why not take advantage of these programs ?
  10. Invest in multiple box sizes
    When it comes to box sizes, one size does not fit all. Billable weight is calculated using either dimensional weight or actual weight. Either way, the more tightly your box fits around the merchandise that you ship, the lower your freight bills will be. The cost you incur to purchase more box sizes will pale in comparison to your shipping saving.