When it comes to runningyour online store you need to decide where you are going to keep yourinventory. Are you going to look after your own stock, or use amethod such as dropshipping?
To help you decide, we'velisted the pros and cons of stocking your inventory, business, so youcan choose the right option for you.
Pros:
1. You can provide bettercustomer service
If you have full access toyour inventory then it allows you to provide better customer servicebecause you're cutting out the middle man. If your customers come toyou with a rush order then you can reduce the time they have to waitby sending it out straight away.
You don't need to worryabout the quality of your products as you will be able to check thembefore you send them out. And if there is a problem with yourproducts, you can deal with it instantly, without having to putthe problem on hold while you contact your supplier.
2. You can take advantageof bulk savings
Suppliers will offer plentyof savings if you buy in bulk and this can definitely be worthwhileto your business if you map out the inventory you will need. You'llnever fully know how much stock you will need, but if you do end upwith too much, then you can always run a promotional sale on the leftover inventory and attract new customers.
3. You can manage how muchstock you'll need
When you get an influx oforders and you don't house your own stock, there isn't really muchyou can do about it, other than hope that you can find a supplier todeal with a huge order. But if the control is in your hands then youcan prepare for any occasion. If you're running low on stock then youcan order more, just in case. Plus you'll come to learn when stockwill be in high demand, especially if you are running a promotion.
4. You can entice morecustomers back
Did you know that boostingretention rates by just 5 percent can actuallyraise your profits by 95 percent? Looking after the customers thatyou've already got is an important factor to the success of yourstore...
The great thing aboutsending out your own products is that you get to package them howeveryou like. This means that you can personalize each order and includetasty offers that will entice your customer to shop with youagain.
5. You can stay on top ofdeliveries
If you are personallysending out your products direct from your business then it allowsyou to stay on top of deliveries. If a customer has not receivedtheir order then you can find out why and resolve the issueimmediately. You will also get the choice of which delivery methodwill suit your business, so you can choose a company that you trust,and that offers a great deal.
Cons:
1. Youneed to invest in your inventory
Althoughbuying in bulk is great for saving you money, if you have only justset up your store then you may not have the money to buy stock untila customer makes an order. If you can'tafford to buy products in bulk then it is worth using drop shippinguntil you have made enough money to keep the stock at your business.
2. Youneed space for your products
Oneof the biggest set backs is that you will need enough room to storeyour products. More often than not you will have to invest in storagespace which can be quite pricey. This can also incur costs tomaintain and run, which means you'll have to put your prices up onyour products and you could end up losing out in the long run.
3. Yourinventory could become outdated
Asyou will need to buy in bulk there's always the riskthat you won't shift all of your stock and it could become outdated.Say for example you are selling Christmas jumpers - clearly there isa limited time that you can sell them for - and if you don't manageto do this then you'll end up with a bunch of jumpers that you can'teven put on sale as they will be outdated.
4. Morework is involved
Takingcare of your own stock definitely requires more work on your part.Not only do you need the space for it, but you need to keep track ofhow much you'll need in future and keep full control of deliveries. The great thing about running an online store is that you can do itfrom anywhere – but this isn't really possible if you have tomanage the delivery side of your orders too.
5. You'llhave to pay insurance
Probablynot something that you may have thought of, but it's one of theunfortunate facts of life. If you have all of your stock at your headquarters then you are going tohaveto pay higher insurance premiums.You're risking the chance of loss, theft, or even fire/water damageto your stock and if this happens then you will lose out on sales,and quite possibly loyal customers.
Takeawaythoughts
Your inventory is clearly one of the most importantaspects of your business, so it's definitely worth thinking aboutwhere you are going to keep it. If you have the space to look afteryour own stock and the time to manage deliveries then it may bebeneficial for your business to do so.
If you have very little money and can only afford to buystock when a customer buys from you then it may be worth using dropshipping. There is no right or wrong answer, it really depends onmany factors for your business.
Letus know what you decide to do in the comments below and if you needhelp settingup your online store,then we are more than happy to help! Connect with us on Facebook,Twitterand Google+formore handy posts like this one.
