If you’re a B2B company and you’ve recently set up an online store to sell direct to consumers — or are even thinking about it — then good on you.
There’s no denying there are still big challenges ahead though. As you’ve no doubt already realised you don’t just need to set up an online store — you also need to make significant changes to the way you manage and move your inventory.
So today we’re going to share our views on how to get your inventory management organised for B2C sales, offering practical tips that you can use to make the transition from B2B to the B2C model a success.
Disclaimer: We’re Unleashed, so we’re going to use some examples and features from our own software to illustrate some points. But the principles remain the same regardless of what you use to manage your inventory.
5 steps: How to get your inventory management organised for B2C sales
- Re-organise your shipping for B2C sales
- Get a tighter grip on margin and stock turn
- Work out the cost of breaking wholesale stock into retail units
- Change the way you manage allocation of stock
- Make sure physical warehouse processes match your software processes
Step 1: Re-organise your shipping for B2C sales
We’ve spoken to B2B businesses recently who have seen 90-95% of their business disappear. They’re bouncing back though and have started selling to people at home online — and in some cases have seen those online sales increase by anything between 400% and 650%.
If you’re in this situation it’s pretty obvious you’re going to completely change the way you manage shipping; (a) to make sure you actually get the products out in good time, and (b) to make sure you keep a tight control on things like delivery costs to make this part of your business viable.
One of the first things to look at it is the cost of basic shipping processes. As this Traders Warehouse story shows, even the seemingly simple task of importing data from your inventory system into labels can take up to a minute to do per label — simply because you need to copy and paste each field of the address into DPD or DHL or whichever courier firm you’re using. This time can quickly add up. If you have 70 shipments in a day, that’s over an hour of someone’s time and a cost you don’t want to incur.
Solving this issue is relatively easy though — for example, you can use the new Unleashed Advanced Shipping module (available in the UK only for now, and initially for DPD customers with other carriers coming soon), which is free until the end of July, and will handle this process for you automatically.
Alternatively, you can use a service like Shiptheory, which is a fully automated shipping integration platform. Shiptheory is a very cool solution — it integrates easily with Unleashed, and will automatically look for the best delivery rate from providers like DPD and DHL for each shipment for you. Using a tool like Shiptheory will help you to schedule all your deliveries automatically — saving you more time and money.
Step 2: Get a tight grip on margin and stock turn
With your new online shop set up you’ll notice that the eCommerce platform you’ve chosen — whether it’s Shopify, Magento or whatever — allows you to feature star products and offer multi-buy discounts.
This is perfect if you want to drive sales faster or make sure you’re making money on products that are about to expire. But before you do that, you need to be able to figure out what your margins and stock turns are per product line to decide what makes the most sense to push.
For this you need to make the most of three things within your inventory management system:
Features that keep cost of goods accurate
So you can keep costs fully up to date at all times — for example, by using features like purchase order recosting.
Margin enquiry reporting
So you can accurately calculate and report on your margin based on different variables.
Batch expiry reporting
So you can keep a handle on stock turn and promote products online that are about to expire.
Step 3: Work out the cost of breaking down wholesale into retail
As part of your margin control, we recommend that you also keep a close eye on the cost of breaking down the large quantities of wholesale stock into B2C-sized retail packs.
This shouldn’t be too daunting though. If you know the cost of your wholesale packages already, then it should be a simple fraction of that cost, plus the cost of the labour for breaking down the package.
Tip: You can perform a neat trick here by using the Auto-Disassemble feature within your inventory management software to make this happen for you automatically.
It’s also a good idea to add a layer of cost analysis reporting at this stage. This will show you every single transaction in a list — or more importantly what the cost was before you broke down the wholesale pack and what the cost was after you turned it into retail units. By doing so you can keep an audit of those disassemblies, then go back at any time and see whether you’re over or underestimating the cost of breaking down those packages. In a period of readjustment — and even experimentation — it’s always going to be good to have this kind of insight to hand.
Step 4: Change the way you manage allocation of stock for B2C sales
Another thing to bear in mind is immediate stock allocation. If you’ve got 10 items left, and 12 people looking to buy them, do you have the ability to allocate the stock to that customer immediately and update product availability on your store straightway?
Don’t worry if you haven’t done this before — as a B2B business you probably haven’t had to. It’s easy enough to solve the problem by integrating your eCommerce platform with your inventory management by using one of several providers that specialise in this area.
The best place to start is by asking the eCommerce platform provider you’ve chosen who they recommend.
Step 5: Make sure physical warehouse processes match your software processes
Finally, if you’re successful and you’re suddenly receiving a lot more orders for smaller units than you’re used to, then you will probably need to change the way you manage physical processes in your warehouse.
This may sound obvious, but we’re seeing B2B businesses right now that have moved from taking 4 orders a day to over 200 and are working many more hours as result.
Over the years we’ve been to many warehouses and noted that the most effective ones have a process for mirroring what’s happening within the system as it happens — for example, by physically moving allocated stock to a separate area and having a clear process for handling fast-moving orders.
As your business moves from a B2B to a B2C model — whether that’s just going to be temporary or could even last long term — then it’s thinking like this around physical processes as well as your technology that will give the best possible chance of long term success.
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Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.