How ClicData Helps Retail Brands Manage Product Inventory and Pricing
Every successful business must provide value to its customers and ensure reliability. Being on top of your inventory can help you meet the market demand and generate more leads and sales. However, about 43% of business managers don’t track their inventory, and 21% of businesses do not have inventory.
Lack of proper inventory management can lead to under-stocking or overstocking, which often results in price-sensitive setbacks. A business might not maintain the prices of its current goods and services for optimal profits. In addition, it becomes difficult to match with competitors in meeting consumer demand.
In this article, we’ll discuss key benefits and offer real-life examples of how to use ClicData to manage your inventory more efficiently.
Inventory Management and Prices
Just like cash flow, inventory management can make or break your business. Understanding inventory costs can help optimize inventory levels without hurting your profits. Inventory cost includes the cost of purchasing the goods plus ordering, holding, carrying, shortage, and spoilage costs.
It’s important to evaluate your business regularly to ensure that your business is on the right track. This is because inventory management directly influences the pricing decisions about products.
How Inventory Management Influences Pricing Decisions
The key problem that arises from poor inventory management is overstocking or understocking of products. This often affects its value greatly.
Under-stocking occurs when a company has less inventory than demand. This often leads to an increase in pricing or losses as customers seek other suppliers to meet the demand. Under-stocking mostly happens for products that are in high demand or are popular among many customers.
Because of the popularity of the products, a business can take advantage and leverage high profits. Businesses should prevent understocking in order to avoid missing out on potential sales when the demand increases. Even if there is a competitive side to it, businesses should use digital tools to monitor inventory and forecast sales.
When businesses have excess inventory items, they may have to sell the products at lower prices than their competitors to remain in the competition and replenish their products. Overstocked products often lead to dead stock; items that remain in the warehouse without being sold.
The business may have to move obsolete items from the warehouse, thus incurring carrying costs. It may choose to bundle excess items or lower the prices to increase its product’s sale rate. Alternatively, it may give their customers overstocked items for free. These methods to eliminate overstock can lower profit margins for the company, but they get to remove items from their inventory and grasp customers’ interest.
Streamlining Inventory Management
A business can streamline the inventory management process by getting an inventory management software. Integrating such software with the company’s infrastructure offers access to real-time data on inventory, expenses, and wastage. It generates reports related to the company data and aids the company in important pricing decisions.
ClicData has a great user-friendly interface to help a business identify popular items and business owners to make informed decisions for a competitive edge.
Importance of Leveraging Data
Today, the logistics marketplace is data-driven, and analyzing data is helpful in uncovering insights that can lead to impactful solutions. Data-driven analytics provides an evidence-based strategy for validating business solutions. However, data on its own is not enough. You need to leverage the data you get.
Here are some key benefits of leveraging data:
Data gives you an in-depth insight into where your business stands in the marketplace. With inventory management, a business owner can see their inventory and the current performance. Data should also allow you to forecast future trends, and that is where data analytics comes in.
The data gathered is weighted to provide accurate forecasting, which relies on historical data to predict your stock levels. That way, you will always have the right amount of stock and easily avoid overstocking and shortage of products. Most data analysts use tools such as SWOT analysis, sensitivity analysis, multi-scenario bracketing, and prediction intervals.
Determining Product Mix using Algorithms
Data analytics help determine optimal product mixes. Comparing sales data reveals the items that move well when paired. The product mix also varies by location, where some stores may sell more than others. Integrating a system to perform data analytics will reveal the inventory to move, where to move, and the amount to move.
How to Manage Inventory and Pricing
Poor inventory management can lead to missed sales because of under-stocking, tied-up money resulting from overstocking, losing customers because of under-stocking, and excess warehouse costs that result from overstocking. Therefore, a lack of proper inventory management causes more damage than having little or less inventory.
There is great inefficiency from manual data entry and the lack of real-time information on inventory in a business. The risk of human mistakes in business operations is high and selling non-existent inventory and reordering inventory can happen with manual inventory management.
However, using ClicData, customers can address these issues easily:
Solving Sales and Stock Data Disparity
One significant barrier in inventory management is data disparity. Data disparity can be inconsistent data or differing data terminology. You can overcome data disparity through disparate systems and consistent data.
One of our customers was in this situation. They had products referred by their category and brand in their sales dataset and the same products listed by reference number on their inventory system. Without any automated data processing and management in place, they spent hours trying to reconciliate the data. In addition to the valuable time they were spending to manually reconciliate the data, they didn’t have a simple way to monitor their product inventory on a daily basis.
With ClicData, the client was able to quickly create a consolidated dataset with the product name, category, brand, and reference. With this master dataset, they could easily create joins between their stock and sales data and visualize it in real-time dashboards. That simple automated data management process helped them save up to $18,000 in the first year.
Creating Profit Scenarios Upon Pricing Changes
Another challenge that retail brands face is creating profits as the pricing changes because of seasonality, competition, and market demand. To counter this problem, you need a dashboard that enables you to forecast future sales results by changing the pricing of products on the system.
Just to give you an example, we created a dashboard example using an open dataset of the Mercedes C class sales results between 2006 and 2009 investigating the impact of MSRP price changes and seasonality.
The approach included understanding the need for the client, their own clients, industry practices, how to approach, and then coming up with a pricing template. Any change in any of the factors influenced the revenue that the client generated.
If you want to get into the technical details of how we built this dashboard and data modeling, you can read this post.
Anticipating Price Changes with Business Intelligence
Pricing strategies are complex, and changes vary depending on market demand, competition, and seasonality. A good pricing strategy is critical to hit monthly goals and generate the overall sales revenue. Business intelligence tools serve a great role in determining the pricing strategy.
A dashboard enables one to adjust pricing and view anticipated sales. That information is critical in making a pricing decision. We built another example of pricing and supply dashboard that tracks the performance of the supply chain and show the effect of pricing changes over time.
Feel free to browse our other dashboard examples for the retail industry – marketing ROI calculator, online customer acquisition, financial statements… Enjoy!