Today’s conversation was inspired by fascinating analysis by Jay Vasantharajah (@jayvasdigital): Gymshark, a bootstrapped ecommerce brand selling athletic clothing, as £53m in cash. The company is relatively young, founded in 2012. and even though it is a globally popular brand, that is a HUGE amount of cash, especially as ecommerce can be so capital intensive business. how do they do it? with smart financial management. They are able to turn inventory into cash incredibly fast. In fact, they have a *negative* cash conversion cycle, which means that their vendors are crediting Gymshark their inventory, so there is no cash outlay. Jay has broken this down in a fascinating analysis here: https://jayvas.com/the-power-of-having-a-negative-cash-conversion-cycle/ In the episode, we dig in to Jeremy’s expertise with inventory management, and his experience helping other ecommerce entrepreneurs manage inventory during his time at Forecast.ly. In an economic climate where cash-on-hand is so crucial, this is an episode that you will not want to miss!
3:33 - what is a Cash Conversion Cycle & Why It’s Important
6:39 - what is a Negative Cash Conversion Cycle
12:14 - How Accounts Receivable can impact your cash on hand
16:33 - How to accurately calculate your inventory needed
19:40 - How Inventory Management impacts Marketing
22:47 - How to increase AOV with “Kitting” (ie bundling)
27:46 - How to avoid stockouts
Jeremy Biron: [00:00:00] Hello and welcome to episode five of the Cart Overflow podcast! Gen, how are you today?
Gen Furukawa: [00:00:06] I'm great. Jeremy, how are you doing?
Jeremy Biron: [00:00:08] Good. Today we're going to be talking about inventory management as it relates to e-commerce it mainly as it relates directly to marketing
Gen, do you want to give everyone an idea of what sparked this discussion?
Gen Furukawa: [00:00:20] Yeah. So I saw this really interesting tweet. It was sent out by @Jayvasdigital, and it was based on a screenshot from Sam Parr who runs TheHustle.co. And he's always. Talking about these interesting business models, one of which was basically a screenshot of the financials of GymShark. So GymShark is a bootstraped eCommerce business.
I think they're based in England. And the interesting thing is that they have $53 million in cash and it's bootstrapped. And that's really difficult to achieve when e-commerce, which is so capital intensive requires so much cash.
How do they have so much money on their books? So of course they have great marketing and sales and a huge audience and influencers, but I think that there's something interesting here and that's in the inventory management.
He kind of laid it out in this tweetstorm I'll link to it in the show notes, but I thought that you have a really interesting perspective on inventory management with Forecast.ly And your own eCommerce business. So I thought that there would be some insightful lessons that you could share that we can talk about today?
Jeremy Biron: [00:01:27] Perfect. Yeah. So for anybody that doesn't know my background, I did mention this, I think in episode two briefly, my background is e-commerce. But specifically inventory management. So I was the founder of forecastly () Forecast.ly as the domain name for anyone that wants to check it out). I started at forecast.ly because I was having problems managing my inventory, using Fulfillment by Amazon.
At the time, there weren't any tools out there that did a decent job of this. I tried a bunch of software tools. I was having a lot of problems kept be running out of stock and decided, all right. I have no other choice, but to build the internal tools, we built an internal tool and then I had other sellers asking me, "Hey, I want to try this out. How do I do it?" And I didn't have an answer. So that's why I just had the launch, a offer as a service platform to help people sell on Amazon.
Gen Furukawa: [00:02:16] Right. And then just to add a little bit more detail running out of inventory sucks because you lose out on those sales and you can always say like capture email, we'll get back to you. But on Amazon specifically, we don't want to get into too much on Amazon, but then it really does impact your organic rankings, right?
And then so like you're, you're not only losing out on those sales. But then the future sales and I think the same can be said about eCommerce as well. Right?
Jeremy Biron: [00:02:40] Yes. So those are referred to as stockouts for anybody that's unfamiliar with, or there are a wide array of folks listening. So some people might be familiar with inventory management and other folks may have no idea what we're talking about. So hopefully we can, we can bring some insight to you and give you some actionable steps to out of this.
And "stockouts" mean you run out of inventory or stock is out and you have no inventory available for sale. This is a serious problem. We'll get into a little bit more detail later, but it essentially means, "Hey, you better get inventory in ASAP. Otherwise, no one's going to buy off your site or buy your product."
So we talk a lot about Amazon, but we definitely don't want to talk specifically about Amazon today, if at all, it should be kind of the last time that we mentioned it.
Gen Furukawa: [00:03:23] cool. Cool.
Jeremy Biron: [00:03:25] Talk a little bit more about that tweet that you had sent me it does get into the nitty gritty and we don't want to get into the nitty gritty, but it talks specifically about the Cash Conversion Cycle. And I even had to think about this for a second. Cause it isn't a term that we typically throw around too much and we won't get into detail as far as exactly what it means, but I'll give a quick overview.
So it's essentially how many days does it take for invested cash to be turned back into cash in the bank? So I am investing cash by buying inventory from a vendor. It could be a manufacturer or I could be a reseller, so I could be buying from another brand. And then how long does it take for me to sell that product and then get paid for that product as well?
Gen Furukawa: [00:04:06] Right. Okay. And so that's called a Cash Conversion Cycle.
Jeremy Biron: [00:04:09] Exactly. So you're converting that cash from cash right now, and then you're converting it back into cash in the future. So a couple of lines that I found interesting when I was doing a little bit of homework here, Walmart is at two days and then Amazon is at negative 21 days. Which is insane. So the the tweet that you sent me was talking specifically about negative Cash Conversion Cycle, right?
CCC. And somebody had pointed out how crazy it was to have cash in the bank for the eCommerce entrepreneurs or the business managers that are out there. You want to improve this. Because, especially right now when people are watching their cash, right? If you're listening to this in the future, it's July 2020, we're in the middle of a pandemic, lots and lots of businesses are hurting for cash.
You can have a negative Cash Conversion Cycle. It helps to build up cash on hand, easier said than done. but it can help you all around.
It gives you more money to be marketing. It gives you more money for payroll, giving more cash for everything. and so to turn back to the point about a negative Cash Conversion Cycle, this means essentially that your inventory is selling and you're getting paid for that inventory before you have to pay your vendors.
The let's just say what's a hypothetical scenario. I have 60 days to pay my vendors. So I placed an order today. If I get that inventory in a week and it sells in another week after that I have a lot of time to pay my vendor after I get paid.
That's where that negative cycle comes into play. A lot of times folks are used to, "Okay, I have to pay my inventory. I have to pay my vendor when that inventory is received or when I place the order. And then it doesn't sell for 30, 60, 90 days after that." And that's a real problem because you just have cash sitting on a shelf.
Gen Furukawa: [00:06:02] Right on that vendor shelf?
Jeremy Biron: [00:06:05] On your shelf. So considering it, if you think about inventory sitting in my warehouse or in a fulfillment center that I use.
Gen Furukawa: [00:06:14] So you're talking cash being the unsold inventory.
Jeremy Biron: [00:06:18] Exactly.
Gen Furukawa: [00:06:19] Got it. Yeah.
Jeremy Biron: [00:06:20] So if I have a thousand dollars and I've spent $500 of it on inventory, I have $500 of assets sitting on the shelf."Cash". It's not real cash, but it's cash that I could have if I didn't have to pay for inventory.
Gen Furukawa: [00:06:34] Right.
So one point that Jay said is a negative Cash Conversion Cycle. How does it happen? Basically is the vendors finance, your operations and no extra cash needs to be invested as you grow. So can you walk me through how exactly somebody can make that happen?
Is it like. You make some kind of deal or you have that much of a track record and a proven sales funnel or cycle that your vendors are that confident that you'll sell it. So they'll just front you the goods without cash upfront?
Jeremy Biron: [00:07:14] So if I understand your question correctly Gen, it's essentially, how do I get better terms from my vendors?
Gen Furukawa: [00:07:19] exactly. How do I, as an eCommerce brand, get my vendors to finance my operations like GymShark?
Jeremy Biron: [00:07:27] Sure. First of all, we don't want to call it finance operations. Cause that's going to make our negotiations very difficult. from my experience, you know, we have a wide array of folks listening. We have a lot of small businesses, but a lot of very large corporations as well, marketers and in those corporations listening as well. So it's, it could vary drastically. However, let's just kind of talk in general terms, a couple of different ways to negotiate.
These things are the longer you've been working with a vendor, the more willing that they're going to be to front you the inventory before you paid for it. Brand basically plays a lot into that. Apple, Amazon, Walmart, those type of retailers. They have, they have a lot of power and they use that power to get better terms with their vendors. And that also ties back to business credit. Do you have other vendors that are willing to go out there and say, and write you letters of recommendation? Do you pay your bills on time? If you don't pay your bills on time, businesses or vendors are thinking about, all right," now, I'm now I'm going to give Jeremy 30 day terms, but He's paying those invoices another 30 days after that. So I'm fronting him 60 days. Well, if you pay your bills, 30, 60, 90 days late. Vendors are not going to be bending over backwards to give you good terms. But if you have a fantastic credit report as a business, Hey, you have a lot right. More to go to the table with to say, I pay my bills all the time on time.
Look at these letters of recommendation. Look at my business credit report, just like buying a car. It's just like. Getting a new credit card, credit card companies, personal credit card credit card companies are more willing to give a larger line of credit. If you pay your bills on time and you have a fantastic credit report, same thing applies.
Gen Furukawa: [00:09:15] Yeah. And so that's what Jay also mentions in. Puts us succinctly is just increasing in accounts payable. So if most eCommerce brands have to pay for their inventory within 30 days, then whilst you negotiate for 60. And I think that's kind of what you're saying, except you're saying, why don't you show them how credible you are and that you are good for what you say you're going to pay.
So GymShark, for example, he says is. 163 days accounts payable, which is kind of mind boggling that you get almost half a year in order to pay the goods. so that I think also does come from a track record and proven marketing and sales, another thing, reducing accounts receivable. Yeah.
Jeremy Biron: [00:10:00] So, yes, you hit it. Exactly. I mean, that's, that's what he's getting toward is, and I wanted to make sure that people understand not necessarily just easy to go out there and say, all right, I want 106 was his cause most of the time a vendor's going to laugh at you have to be a decent size retailer to get those type of terms.
Those are insane. You will face a lot more friction. When you go to that negotiation table with I'm going to speak specifically about unit a U S retailers or North American retailers here. If I go to a vendor in China and ask for terms significant terms after they shipped that inventory, a lot of times as a small business, if you're buying from a vendor in China, they want full payment upfront.
Or at least a chunk of the purchase order. So whatever that let's say, we have a, let's pretend we have a $10,000 purchase order. I want $5,000 up front and I want $5,000 before I shipped this inventory. So that's essentially zero it's negative terms. Cause I'm paying before I even ship that inventory.
Nevermind received it init's a lot harder to get terms of the international vendor versus a us vendor. there's several different reasons for that. A lot of it is the business culture. So what are they used to in their country, but also the other piece of it is it's a lot harder for them to come.
That's why domestic vendors are gonna, I'd be more willing to work with you in terms of payment terms, but I wanted to give some folks, some actual tips to go to the negotiation table
Gen Furukawa: [00:11:33] then the, the second point that he made that I think is , a compelling point is like basically reduce accounts receivable, not super actionable necessarily if you're an eCommerce business, like. You're going to get paid. You're not trying to pay pass on the credit to a customer that you've never met before.
but the solution there is maybe taking preorders. If you're creating a new product that way, at least you validate demand, and you're not buying things that will sit on the shelf for six months or he mentioned drop shipping. I think that's a whole other topic.
but getting to the third point, and I think this is where your expertise and experience really comes in is to
Jeremy Biron: [00:12:10] Can we talk about accounts
Gen Furukawa: [00:12:11] Oh yeah, yeah, yeah. Please go for it.
Jeremy Biron: [00:12:13] So, as you mentioned Gen, we won't get into tons of detail as far as accounts receivable, because we we're in e-commerce. And a lot of folks in eCommerce don't even know what accounts receivable is, which is a funny thing. So I grew up in the office products industry. And my, my parents owned products dealership and 99% transactions operate on accounts receivables. You have terms on those invoices, we're going to deliver with a truck, some cases of paper to let's pretend a hospital, and they have 60 day terms on that. So they're getting their product, but they don't have to pay us for 60 days. So you're sitting on that and that's that ties directly back to that Cash Conversion Cycle. We hardly saw credit card, which is funny. Cause now it's a hundred percent credit cards or ecommerce. And as it ties to e-commerce a lot of folks don't realize that you can get more frequent payouts with credit cards. Sometimes folks are only getting companies are only getting. Either a daily payout, which is, which is really good or potentially a weekly payout, the large companies are getting immediate payouts, which is what exactly what you want.
But if you can increase your payouts, it's not cutting weeks off of your cash conversion cycle, but it is cutting some time off. We used to talk about this a lot with Amazon because frequently, at least right now the most common payout from Amazon is every two weeks. Some businesses and 90% of sellers on Amazon, don't realize this.
Some sellers get weekly payouts, other sellers get daily payouts, and there are some other unique circumstances where you can just press a button whenever you want to get paid out. It's come about the more frequently you can get that. Basically deposit from the credit card vendor or marketplace. If you're selling on different marketplaces, the more frequently you can get paid from those marketplaces or from your credit card processor, the faster your cash conversion cycle is going to come around.
Gen Furukawa: [00:14:08] And the reason why that's important is because you're basically accelerating your feedback loop, right. Or at least you have that to invest in marketing to accelerate your growth. Shall we move on to the third point of. inventory management. you did it for Amazon, but it is something that all e-commerce brands have to consider is the balance between inventory and managing for future sales, which are in some ways unknown, especially now, now being in the pandemic.
so what are some of the things to consider when, Balancing an inventory on hand and considering that they need cash on hand, because you know, like you said earlier, cash is King, especially now in uncertain times, how would you recommend approaching inventory management?
Jeremy Biron: [00:14:52] what this tweet was specifically talking about was reducing inventory.
So reducing, as you mentioned, how to correctly balance cash. With the proper amount of inventory for you, you carry too much inventory. You don't have any stockouts. Oh, good. Wait a second. Now I have tons of inventory. That's tying up cash and sitting on the shelves and getting stale. And that's what we don't want that.
And then the opposite end of that spectrum is. Hey, I'm running out of inventory. I don't have any stock to sell, but if you don't have any stock to sell, people are going to go elsewhere
the way to get to that magic level is essentially using software to help you again, like in it for some eCommerce companies, it could just be an Excel spreadsheet, or you just use your Shopify reports to essentially export out here's the inventory I have. Here's the sales we've been having in the past.
How does it work out? How long does it take to get from my vendor to my warehouse? And then out, out to my customers, these are, these are things to think about.
Gen Furukawa: [00:15:55] Yeah,
Jeremy Biron: [00:15:56] are choosing a software you want, does it have seasonality almost everything has some type of a seasonality cycle. And I say almost.
It's 90% of items. Now I'm not talking about, Hey, I'm selling Halloween costumes. Like I have this huge October spike. It doesn't have to be like that. But there is some type of a seasonality profile to every single, every single product or, Oh yeah, I think about that. That isn't important if you're selling a few thousand dollars a week, but as your business starts to scale, you need inventory management software that ties in seasonality.
then, if you want to go back to the basics, even if you're using the Excel spreadsheet, how long really does it take for me to place an order with my vendor to get that inventory in my hand, to ship out, back to ship out to a customer that's re. Some folks say, Oh, my vendor told me it was two weeks.
So I'm just going to put in 14 days equation. And then that will give me the numbers I need. And then it turns out, well, no, you have to send your vendor a PO. Then you go back and forth for two days about exact numbers and get maybe questions that they have. So now you're adding on another two days. Then the inventory might be ready, but they're sending you photos or it needs to go through QA before it actually gets shipped out.
So I had a couple more days on and then, Oh, wait, it sits at a dock or it gets held in customs for another five days. so it's all these little teeny things add up to additional days. Next thing, you know, you went from 14 days that you were planning on to 30 days, or let's just say 28 days.
And you're out of stock for two weeks. So if you're not careful, then it's really easy to run out of stock.
So I just go worst case scenario or somewhat worst case scenario, go somewhat a realistic worst case scenario. so I think that's something that's important regardless of what size you're at as an eCommerce company.
Gen Furukawa: [00:18:00] it sounds like the devil's in the details. missing even just one step in that or miscalculating underestimating can have ramifications down the line. Ultimately it just means cash on hand. And that's a big problem to deal with
So now let's talk about marketing. I think where this all ties back to is inventory management and its impact on marketing, marketing dollars and growing the brand. So what are some things to consider in making this happen? So that. we understand like the whole picture
Jeremy Biron: [00:18:36] Sure. That's a really good point. I think the first thing to point out is that. Tying inventory management to marketing or the other way around either one gets harder as you scale. If you have one person or five people, or even 20 people in a company that's somewhat easy, like you're working together all the time.
As you scale and you get up to 200, 300 people, then it gets a lot harder. Or it's what I found is, is the interim. So if you're at two or 300 people, you have a lot of policies and procedures. You have processes in place. Okay. We work together. This is how we work together. We have for sharing data all the time have meetings, but it's that interim as you grow in, that's something to think about sooner rather than later.
So I want to point that out before we get into any other details. But the first thing that comes to mind about tying inventory management to marketing is think about the items or work with whoever's handling inventory to find out what you can purchase in bulk and then market that properly. Now, a lot of companies don't think don't think about this in advance.
Okay. What can we get a deal on? What items can we purchase in bulk, larger quantities than we would normally purchase? Our Excel spreadsheet says to purchase, or our software says this purchase a thousand, but we can get a 25 or 40% discount if you order 5,000 and then work through the numbers. So work through the numbers.
All right. From an inventory perspective. So the inventory side of things, how long is it going to take us to sell these off it? Does it make sense to tie up all that cash? So it's a financial side of things too. And then from the marketing side of things, what promotions can we write run to sell these at a lower cost?
Or not necessarily sell them at a lower cost Psalm at the same cost, but increased our cost of acquisition. So we have more profitability in each item that we sell. I'm willing to increase my cost of acquisition,to churn through these items faster. So they go hand in hand.
Gen Furukawa: [00:20:40] right. That's really interesting. So basically it's like, all right. Increase , the stockpile that we have 40%, our profit margins might increase by that savings, right. That savings just gets passed on as profit, but we can also therefore increase our ad spend by say 30%. And so that difference of 10% just becomes like the increased profit.
Is that right?
Jeremy Biron: [00:21:04] Yes. Exactly. So it's costing us. Why are these customers. But we have a lot more profitability to play with in each and every need that we sell, because we got such a good deal on this product.
Gen Furukawa: [00:21:15] Yeah. That's a super interesting arbitrage. I never really thought about inventory and ad spend like that. But then when you talk about how long does it take? at that point, you're just looking at historical, right. And ideally probably year over year. As opposed to monthly, just to account for seasonality.
Jeremy Biron: [00:21:34] Ours, how long that inventory is going to last. Is that what you mean?
Gen Furukawa: [00:21:38] Yeah. When you're talking about like your sell through rate.
Jeremy Biron: [00:21:41] Yeah. And this, this is where things get a little bit tricky because you can look at historical, but now we're going to change. A lot of the assumptions are we're going to pay. We're going to increase our cost of acquiring a customer. But in hopes that we're also going to be able to sell a lot more. So we were selling five a day.
We think we're going to be able to increase that to an average of seven and a half a day. If we increase our cost of acquisition, 30% may or may not happen. And so it is the move, but this is, this is why you have to work closely, both on the marketing end.
Gen Furukawa: [00:22:20] Cool.
Jeremy Biron: [00:22:21] historical info does help.
Gen Furukawa: [00:22:23] Yeah. So let's talk about other ways to consider the merchandising and you're home goods, for example, like how would you sell through a bunch of. Stuff. But like, what are the other ways that we can think about, using what we have as an eCommerce brand to sell more.
Jeremy Biron: [00:22:47] She'd done very successfully across both large brands. Very small brands is "Kitting". kitting is essentially grouping or bundling. This is great with e-commerce because, all right. I know on average, if I sell cutting boards, 10% of folks will also buy a knife to go with it.
If we are home, home goods was your example. Well, what if you group those items together? So normally the cutting boards, $40 and the knife is $40. It's typically $80, but we're going to offer this at $70, cause it's easy for us to do, we can in the warehouse. We can increase efficiency. We put those items close together temporarily, and you can pack the box a lot, lot faster. So we're going to cut down on the inventory management or fulfillment costs that we have by doing that. And also it's going to be a lot less expensive versus shipping a cutting board by itself and a knife by itself.
We put in money. So the inventory management side of things. So you can think about your costs there, but also. It works out really well for customers because, Oh wait, now I can save on a bulk deal. Yeah. You know what I'm, as I was thinking about purchasing a knife as well, I can save a lot of money if I purchase these together.
A good example of this from my real life is one of our frying pans are nonstick fine working one dayI went on bed bath and beyond and found I was going to purchase this one pan and it costs X dollars, but I can purchase a whole set of three or slightly more.
And I immediately wanted the set. Like there was, I didn't even want to look at that single pan. He won't longer because I no longer viewed that as a good deal. I've wanted the full set and that's a perfect example of grouping.
Gen Furukawa: [00:24:38] And what's also interesting is that the pricing psychology there, it's basically anchoring you. You see one and it costs 40 bucks. You see three and it's 60. And so in your mind, that's like $120 value or there abouts, you know, three $40 pans, but it was just marginally more. You're like, Hey, you gotta snap it up.
what we don't often think about is. The inventory side of it, the logistics saving on the shipping costs and then ultimately the upside to the vendors, to the brand.
Jeremy Biron: [00:25:09] Increasing average order value, which is great for the business. It looks good on the books. Our average order value went from $40 to $60. This is fantastic.
Gen Furukawa: [00:25:21] Can you talk about how we should consider inventory management and like the shipping part of it?
Jeremy Biron: [00:25:25] Sure. So as a marketer, we always want to make customers happy, right? Like that's your, that's your overall goal? Happy custers equals repeat customers. Those more money in the bank. And, there are a couple of different ways to look at this from an inventory management or fulfillment perspective, and fulfillment is an inventory management precisely, but it all ties together. Faster shipping times is, is really what comes to mind. The faster I can get the product out the door, the happier customers are a lot of times as a consumer, I don't really know when they're going to ship it. I'm just kind of sitting here waiting, wandering.
Is it going to ship in today or is it going to ship in three days from now? So if you can give estimates. It's very helpful. If you can give it as checkout on your order page. This is where I brought up trackboost in the past tackboost.com, which is the tool I've been developing, or this is the software I've been developing.
Help folks give a better post order experience, preshipment, or actually post sometimes post shipment.
Gen Furukawa: [00:26:33] Sure.
Jeremy Biron: [00:26:34] A brand has shipped your product. The customer's waiting for it. They want to know exactly when it's going to be received or estimate when it's going to ship. That's all available on your branded trackboost page, which is really nice.
It makes folks happy. Information is very helpful here. If customers proactively have the information that they're looking for and they don't have to email, they're happier. .
Gen Furukawa: [00:26:59] So let's talk about another challenge that brands are experiencing during coronavirus, which is mainly on their end, the supply chain coming in inventory, isn't being restocked as often. What's a good way to address that, where you have a product for whatever reason, no longer in stock, what can, what can eCommerce brands do with that?
Jeremy Biron: [00:27:24] more frequent stockouts are definitely a problem. Especially during the pandemic. we've been seeing this a lot during the holidays, but now. Things are going crazy in the world, both on the demand side, but also on the supply side.
So you're right. It is a very big problem during the pandemic. One obvious thought that comes to mind as it ties to marketing that I've seen a lot lately is that you shouldn't run ads on out of stock items. If your ad platform is not somehow tied. To your inventory platform, you have a serious, serious problem.
I've actually been amazed. I brought up that example of the pan previously. When I was searching for this fry pan, there were a lot of really big retailers out there that were running ads for pans. I would click on the Google ad and then it was a page where it's out of stock and I'm thinking in my mind, Hey.
I just cost you 75 cents. You're getting zero out of this because you don't even have this product available.
Part of that could be things are changing so rapidly during the pandemic. Like this thing could have been in stock an hour ago, and it's just a delay in systems. that's definitely a cause of some of these problems.
However, more frequently than not. It's just that. The two tools aren't tied together and you really need to take these things consideration marketer.
Gen Furukawa: [00:28:54] All right. So we're kind of running out of time here, but if you were to summarize what marketers really should consider. what are a few key takeaways that we can all learn from based on your experience with forecastly and as a marketer?
Jeremy Biron: [00:29:13] We'll hit on the first point, which is work directly with the inventory managers or inventory manager, whoever purchasing for your business to see if you can get products on sale. see if you can get products that you can purchase in bulk. That you can get a better deal on them and then put a plan together on all right, how can we run ads to increase our conversion on these?
How can we turn this inventory over faster and make more money as a whole? We're going to have to invest more up front because we're purchasing a couple pallets of this item versus a few cases, but in the law long run, it's gonna pay off for us.
Look at your credit card terms. That's a rather easy one, right? There isn't a whole lot of flexibility there sometimes . specifically increasing credit card payouts there from those processors
ordering more frequently.working with inventory or working with the inventory manager or the person that handles inventory and saying, all right, here's the demand that I've seen on the marketing side over the past six months for this product, do you think we can play smaller orders, get them in more frequently because that, that decreases going back to the cash conversion cycle that brought all this this up, that will help to decrease that.
Kitting was another one. Think about what type of products can you put together to give a better deal to customers, help customers save money at, but also increase your average order value.
One thing I didn't bring up previously with Kitting is that if you have inventory that isn't turning over that well, so stale inventory considerably, this is a nice way to boost your average order value, but also get rid of some still inventory at thesame time.
the demand may be there. Just all right. The price that we offered that product at isn't there, or we can't sell it profitably any lower, but we could bundle it with the more expensive people as a cutting board. I think we bundle it with that cutting board and all of a sudden, now we can sell this thing for $10 instead of $20, we can still make money because we're shipping it all as one.
Gen Furukawa: [00:31:23] Okay.
Jeremy Biron: [00:31:23] So kitting is a great one.
Faster shipping times, thinking about those faster shipping times. One that we didn't talk about was easy returns,
but how can we work with the team or the inventory team to make our return processes easy as possible?
And then speaking of faster shipping times, keeping customers informed of those shipping times, when are they going to actually receive it?
Are there any problems with the fulfillment process? Are there any problems with shipping? Did something happen on the way to the customer. And we want to make sure that that customer knows about it. Hey, we noticed that ups damaged your goods and they're going to return it back to us.
We're going to send this out. We're going to send you a replacement before it's even back. It's already on its way. So to be proactive about that stuff, that makes a big difference. It goes back to the personal touch. I think we've mentioned that in every episode, communication, just be honest with that.
It's all I asked for.
And then tying, tying, advertising back to inventory, knowing, all right, what inventory are we out of? what inventory is overstocked? That stuff's really important. Okay. Now we're going to lose a little bit of money on this, cause it's going to be a high cost of acquisition.
But we're going to get rid of this stale inventory. We're gonna turn it over faster, and we're going to use that cash to buy inventory of products that actually sell
and then stock outs. So the, the closer you can get to that magic number that you discussed earlier, you don't want to be overstocked. You don't want to be understocked.
That's really important. You need to tie marketing and inventory together. Here's what we do. Estimate of the demand. Here's the market trends.
What competitive products are coming into the market that we've seen, maybe there was a Kickstarter and we think it's going to come. A new product is going to be coming actually out or available for sale in the next three months. We'll think about that stuff in advance. That's really important.
And then the last piece isjust collecting their email address is really important. Okay. Let them know when it comes back in stock and I believe there are apps out there that will let you take an order, even when the product is out of stock, that one's a, because could, and it's going to increase your refund rate.
Gen Furukawa: [00:33:35] one of three ways that @Jayvas lays out that I think are really insightful is. Capturing that preorder, which essentially is the same as reducing your accounts receivable. You're getting money up front that way.
You're not on the hook for stale inventory. Once it comes in, you're sending it out to the customer which accelerates your cash conversion cycle. Right. So, yeah, I think that there was a ton of stuff there. I think we also just kind of scratch the surface. I can see you talking about this for three hours on end, while continuing to drop nuggets of wisdom.
Jeremy, thanks so much for sharing your thoughts there.
Any final words?
Jeremy Biron: [00:34:14] Hopefully we didn't nerd out too much in folks got some tidbits that they can take away and add some growth to their business.
, I do want to mention again, if anyone wants to reach us, if they have any questions, feel free to reach out.
We will. We want to know people are listening. Feel free to email us hello@cartoverflow.com and, and feel free to drop us a line. We'll definitely read every email that comes through and hopefully respond to the majority of them.
I wanted to mention is thank you everyone so much that has left us a review or rating on Apple podcasts.
That helps us tremendously. If you haven't done that and you found this and you found this podcast helpful, please go over to Apple podcasts and leave us a review or rating there. We greatly appreciate it. Thanks everyone.
Gen Furukawa: [00:34:58] Alright, thanks so much, everyone. See you next week.
Outro: [00:35:00] And that's the episode for today. Thanks so much for listening to the end. We love you for it. If you've found anything valuable at all, or want to share your feedback, please leave us a review on iTunes or wherever you get your podcasts. You can also drop us a line at hello@cartoverflow.com. If you have any suggestions for how we can help you grow your e-commerce brand.
So until then keep that cart overflow. I had to sorry keep that cart overflowing thank you bye