Inventory turnover is the amount of stock you sell in a given period of time. It’s important to monitor your inventory turnover to manage your business costs and improve sales.
A low inventory turnover usually comes down to slow restocking or overstocking of low selling products. Improving your turnover rate can lead to a healthier cash flow. Here are 4 ways to help you do just that.
Do you know what your best sellers are over summer? Do you know how the Christmas period affects your sales?
For many businesses, seasonality plays a big role in determining what sells and when. By looking closely at existing data and sales trends, you can predict how much stock you need throughout the different seasons of the year. The better you can forecast, the higher your inventory turnover rate will be.
To improve your forecasting try:
Gain more interest in your products and get your sales flowing again with better marketing strategies. Smart advertising campaigns can shape the way people think about your products and help new customers find you.
Of course not all marketing campaigns are effective and it’s important to monitor the results so you don’t lose out on poor performing ads. Keep a close eye on your campaign’s ROI (return on investment), let go of tactics that aren’t working and double down on what is.
It can be tricky to get pricing right. Price your products too high and you can discourage people from buying but lowering prices across the board may not be the right move either. Instead, create a more successful pricing strategy by drawing on psychological tactics.
These might include:
Invest in the products that are bringing in the most profit and get rid of products that are causing you losses. Examine your latest inventory reports to find the products that are selling the best and focus on optimising your re-ordering strategy for these.
Similarly, work out which products are selling poorly and causing you losses. Clear out any stagnant inventory that is taking up valuable space in your warehouse. This will make room for more profit-making inventory.
If you need advice about improving business performance – including how to cultivate a strong inventory turnover – get in touch with our team at Lawrence Group. We help businesses big and small grow in a sustainable and healthy way. We’d love to help you too.
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