3 Basic Inventory Points For New Merchants To Ponder Over

Starting your own online business is always exciting. However, there is one aspect that many new merchants overlook: Inventory. Not many home business opportunity online owners are aware of this but inventory issues can seriously affect a business. Inventory management is a balancing act which requires serious thought. To avoid inventory problems, many new merchants have opted to employ the services of drop shipping suppliers such as Doba. Such services may suit some merchants, especially those selling more contemporary products. It also solves any storage space issues new merchants might have.

However, many merchants prefer to have full control over every aspect of their business from the get-go. For these merchants, here are a few considerations for making decisions with regards to inventory…

If you are just starting your own online business, chances are you do not have that many products to sell, mainly due to the fact that you lack the space to store inventory.  Many home businesses utilize their basements, attics and even garages for inventory storage space. How much space you need depends on the types of products you sell, the product turnover rate and the size of the products.

Inventory Segregation

Even as a new merchant, you should have a rough idea what your top-selling products will be, which products will sell regularly, and which will probably only get the odd order or two. Once you have figured this out, you can segregate your inventory into different classes. Let’s say you run an online shoe store. You can overstock models that sell fast – light weight trainers, for instance. This type of shoe sells well near competition dates. In fact, many shoe stores target big runs like the New York, Chicago, Boston, London and Singapore marathons. However products that don’t have specific high- or low-demand periods, such as regular everyday trainers should be kept at normal stock levels and never overstocked. Just to complete your store, you should also stock (or at least make available on back order) certain niche items like shoes for severe over-pronators.

Economies Of Scale

When it comes to inventory, what is an online business opportunity to make more money? One method is to take advantage of economies of scale by purchasing in bulk. It’s fine to take advantage of economies of scale just as long as the turnover is assured. Otherwise, you’ll end up being stuck with idle inventory. Before purchasing in bulk, make sure that whatever discount you gain justifies the cost of holding on to your inventory until you can move it. Many factors affect the holding cost – some products may need refrigeration, taxes may need to be paid on inventory and some products need special equipment to move them around before being shipped.


There are cases when overstocking regular-selling products may bring long term benefits. For instance, stocking up on products that are bound for a price increase in the market. Once the general market price has increased, you can choose to increase your price as well and enjoy the improved margins or maintain the old price and enjoy the improved turnover. The latter could be the better option as it has a better sales angle and may result in you acquiring new customers.

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