When it comes to purchasing inventory, knowledge is power. The more you know about your consumers' demographics and preferences, the better off you'll be when it comes to choosing just what to sell. Here are 10 helpful questions to ask yourself before you decide to buy a brand new batch of items.
- Is it something I'm passionate about?
No one is more immersed in your business or the products that you sell than you, the business owner. If you choose items that fit within your brand or your current theme, you'll be able to keep your focus on what will work in your space, with your audience, and with the rest of your product mix. Likewise, you may also want to concentrate on long-term selling items; they definitely have a longer shelf life than seasonal or trendy items that may only be hot commodities for a few months.
- Does this item match my customer profile?
Your customer profile is all of the intel into who your customers are, what they love and hate, what they need and want, their views on what's trendy, and so much more. There are a lot of items out there that are cute, cheap, and might appeal to your customers, but you're taking a risk if you aren't confident that these items are exactly what your target customers want.
If you frequently question whether buying an item is the right move, try this trick. Paint a picture in your mind of exactly who your ideal customer is - extra points if you name your vision. Then, every time you're considering purchasing a new item, ask yourself if it's something he or she would buy. If your gut instinct says no, it's probably best to pass.
- Have I done enough research?
Keep an eye on the best prices, quality, service, and inventory of any items you're considering. Mass appeal and high markup potential are two big indicators that a product would likely sell well in your store. It'll also help to know how much of the item you'll need to sell to cover your expenses.
- Are there any accessories or add-ons I can also offer?
If there are any other items associated with the potential purchase you're considering, count this as a major advantage. For example, if you're thinking about selling jewelry, you might also look into offering jewelry cleaner, decorative storage boxes or stands, repair kits, and more.
- Does this item fit into my overall brand?
Your store should be a reflection of an overall lifestyle. Items should make sense next to each other and reflect the vibe you've worked so hard to create. This can be challenging when you're working with several vendors and seeing various items at different times. Keep your focus and visualize how the item would look among your current inventory with a mood board. Pinterest is great for letting you see things side-by-side and picturing how an item would reflect your store's brand. If it looks and feels like it would fit seamlessly into your collection, move on to the next question in your checklist.
- What kind of selling tactics will this item need to be profitable?
Some items need much more selling help than others, especially complex and specialty items since they typically need a demonstration. If your sales team isn't outgoing and comfortable enough with what you're offering, potential buyers might not get to see the product's full potential.
- How will this item need to be showcased?
When display space is at a premium, consider how much room the item will need to catch your customers' attention. Is there more than one variation you'll need to purchase? Will customers have enough variety to choose from if you only purchase a few models of the item? Will the item need any special shelving or display hardware? These are great spatial questions to consider when mulling over a new purchase.
- What's the expected profit for this product?
It's time to make a few mathematical guesses on whether or not the item will be financially worth it. "It's probably the toughest thing there is to do," says Charles Toftoy, Associate Professor of Management Science at George Washington University. "It's part art and part science." While there's no magic formula that will guarantee this item will turn a profit, you can make a pretty smart guess if you know your customer profile, costs, market, and target revenue. It'll also pay off to know what customers would expect to pay for something like this, the estimated volume of the item you could sell, and how this product fits into today's market.
- Is it really the right time to purchase this?
Current inventory levels, the average amount of sales you make in a specific time period, and seasonal peaks can all influence whether or not it's really the right time to purchase this item. Analyze each of these as you decide whether or not to take the purchasing plunge.
- Who else is selling this?
If the item is popular enough that several other retailers are carrying it, you might want to pass. Even if you can offer the item at a slightly lower price than a competitor, chances are many customers will just purchase the item at the most convenient location.