Less really can mean more. It might sound daft, but the figures don’t lie; sometimes the key to selling more is actually by trying to sell less, to take the bold step of reducing your stockholding in some areas, to make way for the things that make you higher profits and reduce waste.
Ticking long nicely, thank you
So, you’re part of a merchant business. Your sales are holding up, year on year, but you’re not experiencing a great deal of growth; things are ticking over nicely, but nothing is really changing. Not a bad position to be in – but there’s always room for improvement.
This is where great analysis and reporting really comes into its own. Firstly, you can easily run a report which shows what you’re selling most of, what’s not really selling well, what has a good margin, and what you’re making very little on. Sounds obvious, but actually not everyone thinks to check off the basics regularly.
To take things a step further, you could look at your quote conversion ratios – are you always quoting to a certain customer but they never buy? Or on a certain product, but the sales don’t match up? These reports are readily available and can even be automated so that changes are flagged. (And if you need a hand, remember that we’re always here to help you set up, automate and interpret your reports.)
Of course, the basic data is all well and good – but it’s what you do with it that counts. Turning the information into business insight and, importantly, actions; that’s where the value really lies. So when you get these reports, and the statistics, you need to start asking yourself….
It’s time to start asking questions. Why is one particular format of a product selling so much better than another? Why have you got so much of one particular type of wood still in the yard? Why is over-the-counter trade slowing down month on month? And why are you still ordering stock from that same supplier who has put their prices up exponentially?
It’s not all just about cost either. If your sales team is regularly re-quoting materials that simply don’t sell, or they’re tied up in complex deals for stock with low profitability, your business is taking a double hit, in time as well as money.
There are many factors which can have an impact on the profitability of your business when it comes to stock management. Here are just a few:
Sometimes, the way products are selling through is a simple matter of availability. Do you have enough in stock to satisfy demand? Are your suppliers letting you down consistently? Could you sell more if more were available?
Keep an eye on prices in the market, as well as your own. Are your prices in line with other suppliers? Shortages or surfeits in the wider market can have a big impact on both the cost of the raw materials for you, and on what you can, or should, be charging your customers. It’s not about profiteering, but it’s important to know the real cost of certain products, and make sure your prices keep up with the costs.
If a certain product is simply not selling, and there is no apparent demand even after you’ve checked off availability and price, then perhaps it’s time to take a stand and stop selling it, or at least reduce your stockholding. Storing product that doesn’t sell through is an expensive business, and your analysis reports can tell you what you’re likely to need in the short, mid and long term.
Obviously no-one wants to buy – or sell – poor quality products or materials. Sometimes a sharp drop-off in sales can signal an issue with quality control. Was the last consignment from a particular supplier not up to the usual standard? Your customers will always want to buy the best product for their budget, so read between the lines of the reports and make sure you’re not missing a trick.
Simply put, storing products that don’t sell through is a complete waste of money. Your reporting software is there to help you. Ordering on-demand may be an option to reduce stockholding, or perhaps there are some bold decisions called for on the range that you stock. No business can afford to waste space, time, money or products, so make sure you’re running your stock as efficiently as possible.
Business guidance you can count on
There are so many different ways to interpret information from data analysis, it can be quite bewildering. But we’re here to help, and can guide you in how to apply the findings yours reports turn up, as well as asking the right questions and suggesting ways to implement changes. We want to get you to the point where you’re selling more of the things that are profitable, and less of the things that are a drain on your resources. So yes, less really can mean more with the right statistics to help your decision-making, so be bold, and see where the numbers lead.
Information is power – so let’s work together to build better business by making that information work harder for you. Give us a call to get business guidance you can count on to make a real difference to your profitability.