The leaves are changing color outside, temperatures are slowly dropping, children are heading back to school, and—if you’re a business owner—it’s time to unpack holiday decorations. Business owners know all too well these next two months are crucial to success through the holiday season.
While your customers settle into their fall flannel and sip their pumpkin-flavored drinks you should use this time to get ahead of their holiday shopping season. To help boost your success, make sure you have plenty of your top sellers in inventory that are ready for customers to purchase before the rush.
What is a Top Seller?
Top sellers are typically considered to be your items with the highest sales volume, or how many units of inventory are sold during any given period. Calculating this is easy, you simply add up the items sold. Most inventory management systems keep track of each item you sell, if used correctly, and should be able to quickly inform you of what item you are consistently needing to reorder to meet your customer demands.
The report most helpful for calculating your top seller is referred to as inventory turnover in most systems. If your inventory management system doesn’t keep track of this for you don’t be worried, you can calculate this one on your own. Your inventory turnover is a ratio during any given length of time you determine.
Let’s say your store sells an assortment of furniture, including some gold lamps. To calculate your inventory turnover for last week add the beginning inventory level (200 lamps) to the inventory you purchased (50 lamps), then subtract your remaining inventory at the end of the week (80 lamps).
Inventory Turnover = Beginning Inventory + Inventory Purchased – Ending Inventory
Inventory Turnover = (200 gold lamps + 50 gold lamps) – 80 gold lamps
Your inventory turnover for last week was 170 gold lamps.
The more specific the details in your inventory management system are, the more quickly your inventory turnover data will show you your top sellers.
Holiday Consumer Trends to Help Your SMB
Shopping season is upon us.
Are Top Sellers Only the Fastest Moving Product?
There is another school of thought regarding your top sellers that focuses on your per-unit profit. Knowing the difference between profit, profit margin, and markup will be helpful as we dig in here. As a quick refresher, profit is the amount of money or earnings you have after paying for business expenses and profit margin is the comparison of your profit divided by your revenue. While markup is how much more your product costs you than what you sell it for.
When considering your top sellers, you may come to find there are items that have a higher margin and because of this, they bring in more profit than the items we found to be your top sellers by volume. Classifying top sellers by margin is equally as important as these items greatly increase your profits. Let’s return to the furniture store to explore this further.
Your furniture store’s top seller is gold lamps and they sell for $25 each while they cost you $21 (your margin then is $4). Your store also sells side tables for $10 each and they only cost you $2 to make (bringing your margin on this item to $8). Last week you sold 20 gold lamps and 12 side tables.
Gold Lamps: $4 x 20 = $80
Side Tables: $8 x 12 = $96
Upon consulting your inventory turnover report you discover your gold lamps are your top seller. However, when looking at profits you’re likely to discover your side tables brought in more money. Your side tables contributed more per-unit profit and were not far behind in terms of volume. You should prepare to increase the amount of each of these items through the holidays.
How Can I Increase My Sales Volume?
Most retail stores and restaurants have items they are known for in their communities–their staples. Are there one or two items you seem to have a hard time keeping on the shelves? Those items may also be your top sellers. There are a variety of creative ways to help increase your sales volume overall, as well as increase the amount of top sellers you have flying off your shelves.
Consider creating an incentive program and contests for your employees based on sales goals. For example, offering a pizza party lunch to your team if your flower shop hits targeted numbers and offering an extra $100 to whoever gets the highest sales number overall may increase their salesmanship out on your floor and overall service to your customers.
Make sure to advertise your products on your business social media accounts and especially in local groups. Get creative about what social media your customers may be using. People newer to your area may not be in their neighborhood Facebook groups, but may have updated their addresses in the Nextdoor app where they can see advertisements to local businesses. If you have specials or deals going on make sure to post so customers know about them and potential customers know where to find you.
If you are considering discounting or having sales through the holidays think about some creative ideas to increase customer purchasing. One example of this is to group items together for larger discounts. If you own an ice cream shop and you offer 20% off on your second scoop of ice cream your customer is much more likely to add it. You have successfully increased sales volume and your customers are happy with bellies full of ice cream.
Holiday Consumer Trends to Help Your SMB
Shopping season is upon us.
How to Introduce New or Seasonal Products
Season changes are an especially fun time to change up what you’re offering to your customers and practice putting on your Customer Cap to think like them. There are a few different ways you can ensure potentially new holiday products are a success.
You can experiment with what your customers are looking for in cheap ways. Find an image of an item you may want to sell in your store and put it on your social media to see how people react to it. Are people commenting and asking when it’ll be available? Are they tagging their friends mentioning that they need this product or it reminded them of someone? This experiment was cheap and a total success! It’s time to get this product in the store.
Another way to cheaply experiment is by running your own marketing campaign. Include images of your potential new item and track if people are clicking through to buy it. A timer letting them know when it’ll be available or a banner of “coming soon” where they land will let them know the item is coming and will help build anticipation for your new seasonal product. Later, when an email comes through letting them know it’s available they’ll be ready to purchase.
Ready to Find Your Top Sellers?
Being aware of your top sellers will help keep any hectic inventory shortages and hair-pulling at bay. Spend the next few months focusing on strategies to increase the sales of your top sellers and holiday prep your business and turn your finances on auto-pilot with ScaleFactor.
Learn more about other ways ScaleFactor can help throughout the year. Request a demo today.