Inventory refers to any product ready to be sold in your boutique. At least thirteen inventories exist, including raw materials, components, work in progress, and finished goods. There is also excess inventory, packaging materials, maintenance, repair, and operating supplies.
As a business owner, you must know how to buy the inventory your customers will buy in the right quantities to avoid overstocking and missing out on sales. It’s not as simple as people may think. However, there is a formula you can use to help, such as inventory turnover.
What Is Inventory Turnover?
Inventory turnover is the number of times inventory has sold in a year, quarter, or month. Also called the stock turn, you can calculate it by taking the cost of goods sold (gross sales) and dividing it by the average inventory for the year (how much you paid for the stock). You want to figure out how many times you had to replace inventory throughout the year and whether you made a profit on the merchandise.
For example, if you sold $50,000 in jewelry in your boutique and paid $25,000 for the products, your inventory turnover is 2, meaning you had to replace inventory twice during the year. Since your profit is double what you spent, this is a good inventory turnover.
This is not always the case, unfortunately. There may be times when you spend $50,000 on inventory but only sell $25,000 of the products, giving you an inventory turnover of .5, a loss in profits.
Benefits of Inventory Turnover
Fashion clothing, jewelry, and accessory trends change quickly. Knowing your inventory turnover numbers can help you make the right buying decisions for your boutique. Other benefits include the following:
- It helps you evaluate whether you need to increase, decrease, or eliminate inventory.
- It helps you estimate how much inventory to store.
- It reduces the number of markdowns on the inventory.
- It helps you evaluate the effectiveness of your inventory management system.
Once you reach a point where you are seeing high inventory turnover, your benefits increase and include maximized profit margins and better cash flow. It also helps you keep inventory fresh and on-trend so customers don’t see the same products every time they enter your boutique.
Improve Inventory Turnover with Wholesale
Buying wholesale inventory gives boutique owners an edge over competitors. You can purchase various products in bulk; the more you buy, the bigger the discounts. Wholesale suppliers purchase products directly from manufacturers and designers, in bulk and at deep discounts. Doing so allows them to pass their savings on to the retailer.
For fashion boutique owners, wholesale suppliers reduce the time and money you spend purchasing clothing, jewelry, and accessories. Instead of spending days and weeks shopping at different outlets, you can get most of your inventory from one place. Below are examples of fashion pieces you can get from a wholesaler:
Denim is always in fashion but can vary in style, texture, and color. Wholesalers know the trends before most people in the industry, and you get to preview what’s coming down the denim line. Jeans are a great addition to any fashion boutique. Consider your target customer when deciding between dark or light denim, distressed, Capri, flared, boot cut, bedazzled, etc.
Other popular denim items to include in your inventory are skirts and rompers. Depending on the season, you may want denim shorts and jackets.
Wholesale suppliers offer dresses of all kinds and for all occasions. What is your customer looking for in a dress? Do they want a versatile, classic, little black dress, prom dress, ruffle-tiered smock dress, or a spaghetti strap sundress?
A benefit of buying dresses from wholesalers is that they have all the outerwear and accessories to turn one dress into multiple outfits.
You are too busy to try and keep up with all the seasonal and holiday fashion changes. Wholesale companies make it easy for you by offering seasonal options long before they hit your boutique’s racks. Examples include swimwear, patriotic graphic tees, jewelry, football season activewear, cold weather beanies, or beach Bahama hats.
Additional fashion products you can purchase from a wholesale supplier include the following:
- Beauty products
- Graphic tees
Finding a Quality Wholesale Supplier
Searching for a quality wholesaler can be done in several steps, including checking them out online. Read customer reviews and feedback. Evaluate how easy it is to navigate their website. Read their fine print. You can also make an online appointment to ask specific questions, giving you insight into their customer service processes.
Wholesalers should be eager to build a relationship with you that lasts well beyond one order. They want you to win just as much as you want to win. If you are successful, they are successful. Think of yourselves as partners but without being legal partners. There are things you can do to help build the retailer-wholesaler relationship.
Building a Relationship with a Wholesaler
Communication is the key to any great relationship. Be open, honest, and ask for what you need. Many wholesalers are willing to negotiate parts of an order if it means keeping a good customer. Other actions you can do to build a relationship include paying your bills on time, giving them plenty of lead time, getting to know them, and sharing your goals.
Final Tips on Inventory and Purchasing Wholesale
You’re probably ready to start searching for a wholesaler and buying products for your boutique. Before you do, reflect on these final tips:
- Don’t hesitate to ask for discounts such as free shipping or returns.
- Make sure the wholesaler is an expert in the industry.
- Create and stick to a budget.
- Shop with your target customer in mind.
- Keep storage space in mind and ask for small-batch ordering.
- Ask for product samples to evaluate quality.
Finally, find ways to reach your target customer. Create a marketing plan that makes inventory turnover skyrocket and see the success you deserve.