As eCommerce Sales Trend To $73B In 2016, Data-Driven Decisions Key To Inventory Management (Infographic)

Statistics show that revenue from the apparel and accessories industry is growing at 44% annually in the US, and that eCommerce is expected to rack up $73B in sales by 2016 (accounting for more than 20% of all US online retail sales). Stitch Labs, a software tool to help manage inventory, orders, expenses, contacts, and statistics across various selling platforms, presents the Infographic at the end of this blog post: Online Sales Trends: Size Matters, with the point proper inventory management can be the difference between retail success and failure.

The premise is that as retailers look to increase profit, seemingly insignificant manufacturing and purchasing decisions are often overlooked; using product-level data lets retailers prevent lost sales and excess inventory by making data-driven decisions. 

The same principles apply to the use of pricing and assortment intelligence solutions. It is essential for retailers to have this information to know where you stand with regard to inventory, assortment, competition, and the market -- information that is accurate, timely, effective, and the most important tool in your Retail Intelligence toolbox.  

In the Infographic, Stitch is talking literally about sizes of apparel and accessories, as well as the size and management of the inventory itself.

The Infographic notes that inventory is costly, as 45-90% of all business expenses are a result of inventory costs. Stitch says, minimize costs, maximize revenue and increase turn by making informed decisions about how many of each size to produce or carry.

Based on analysis of more than 340K online transactions totaling more than $20 million in sales, the Infographic examines the average unit revenue for items sold online, using clothing sizing as an example.

What Sizes To Carry Is Important Reflection On Inventory: 

The Infographic says the size x-small is a moneymaker, for while it may not be your BEST-SELLING size, people actually pay more money for smaller sizes, so x-s and xxl -- representing more than 5% of sizes sold, should not be overlooked.

The Infographic talks about avoiding the 1 - 2 - 2 - 1 rule -- a common practice of determining a product mix's supply level for sizes -- stocking 1 size small, 2 size medium, 2 size large, and 1 xl). According to Stitch, for every 100 units set up this way, 6 mediums won't sell, 3 larges won't sell, and 2 smalls won't sell, which equals 11 lost sales. So why stock these sizes if you are not meeting the demand trend? You have both lost sales and excess inventory due to mismatched supply and demand. In order to optimize supply levels, Stitch found the following combination to be more effective and profitable: For every 100 units, stock 2 extra smalls, 22 smalls, 27 mediums, 30 larges, 15 extra larges, and 4 xxl's.

Size... And Labeling Matter

In addition to the size matters question, another interesting finding is that labeling matters, with abbreviated letters (like xs, s, m, l, xl) generating 38% more revenue than sales where the sizes are written out (e.g. large, x-large, etc.)

Bottom Line For Your Bottom Line:  

"You have to know your product and your data to maximize your profit," is the Infographic's basic premise. Carrying excess inventory results in an additional expense for your business, which reduces your bottom line. Not carrying enough of the right products causes lost sales and gives customers the impression that your business is poorly managed. Managing your inventory is the secret to maximizing revenue, avoiding lost sales, and reducing excess inventory and costs. (INFOGRAPHIC FOLLOWS):

Size Matters - When It Comes To Inventory, Assortment, And Competitive Intelligence Actions (Infographic) 

About the Upstream Commerce Blog: In this blog, we discuss ideas, techniques and strategies to compete more effectively in the extremely competitive world of online retail. We explore issues such as competitive price monitoring, competitive pricing, and competition in general, as well as how to drive sales and best practices for online retailers. (Mention of companies or individuals or illustrations used in our blog posts are purely informational and do not constitute an endorsement of any entity). Gilon 


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Gilon Miller, CMO

About Author

Gilon is a seasoned marketing, sales and business development executive with over 15 years of experience in the software and Internet business. He is the Founder and CEO of GuruShots. Previously, Gilon was the CMO of Upstream Commerce, VP of Marketing at iMDsoft and Director of Global Marketing at SAP. He earned an MBA at the MIT Sloan School of Management and a BS in Electrical Engineering from Tufts University.
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