It all begins with the buy!

It all Begins with the buy! by Randy Snyder


The genesis of the process for a retail venture to succeed is the product that has been bought and offered for consumer consumption! In this piece we will address the various elements of the buy as placed and how to deal with it and control the product once it has become part of the business inventory!



First and foremost, after the buy is delivered is inventory control!



A. Buy once delivered, is Inventory!

From that point it must be monitored and controlled! If bought in excess, it may require further action to stimulate sales. Also it must be monitored to make certain that it is not realizing "internal shrink" which is caused by stealing by shoppers, employees or recording errors! Only periodic audits can effectively monitor this!



B. Availability
The end result of a good buying plan is to be able to offer your customers the products they want, when they want them and at a price they will be willing to pay!


C,Bulk discounts

The theory is the more you buys, the more money you will be able to save on the cost! Buying in bulk requires a consideration of the amount of money beings saved versus the money you will earn from the sale of the product and how long it will take to transform the product into revenue! If buying in bulk jeopardizes your current cash position severely, it is not a good idea. The consideration is money paid, revenue potential, time required and the “shelf life” of the product being purchased!


D. Cash Flow

This term is an important consideration when making inventory purchases. The size of your store, ability to accommodate the sales floor and stock space required for the purchase all affect cash flow. Also to be considered are the other operational expenses which may be affected due to short fall when making bulk or excess, unplanned purchases of inventory.


E. Time

The time factor in ordering, receiving processing, stocking, handling, displaying the inventory must always be taken into consideration.


F. Shipping

Shipping costs can add considerably to the cost of goods. Shipping large quantities and using consolidators can reduce the cost of shipping. The cost of shipping will be affected by the mode of shipping that is being used. Always take the cost of shipping into consideration when calculating the retail price of the product that will be needed to produce an acceptable markup!


G. Shelf Life

Remember to consider how long inventory will take to liquidate satisfactorily and the “trends” that could affect saleability of the product being purchased.


H. Mark down risks

The higher the fashion, the trendier the merchandise, the greater the risk of mark downs needed to sell the product within a reasonable amount of time. Take this into consideration when determining retail price or possibly when negotiating the purchase price! Oft times the lower price can be negotiatedin terms of a “mark down” allowance factored into the purchase price from the vendor!

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The author, has 40 years experience in specialty retail encompassing general management of 3 national chains, two international companies and 10 years of consulting. He can be reached at rsnyder921@att.net or 828 625 4932.