Your supply and inventory for your eCommerce business seem to be running on autopilot.
What happens if one of the links in your logistics chain gives out? Your productivity and success heavily rely on your supplier’s manufacturing capabilities, as well as your shipping services functioning optimally around the clock.
If one of these elements falls out of place, it’s not long before your attention shifts from marketing and optimizing, to drinking from the hose in attempts to get all parts of your eCommerce machine back on track.
Supply chain disruptions are not the same as inventory planning.
Inventory involves predicting the stock you will need for a specific time, funds, and shipping times. We have a great article on inventory planning that you can check out right here.
Here, we’re discussing factors that cause supply chain disruptions, and the precautions that can be taken to recover quickly when these issues arise.
In most cases, the disruption of your supply chain means your inventory will not be coming in on time, if at all.
Your currently available inventory needs to last longer. If you are selling on a platform such as Amazon, running out of stock can severely damage your organic rankings.
Explore these approaches to slowing sales when retaining inventory is a priority:
Increasing product prices may cause sales volume to drop, but closed sales will generate more profit per unit.
Here are the downfalls to increased pricing:
HIGHER CUSTOMER EXPECTATIONS
If you are selling your product at a price that is noticeably priced higher than your competitors’ with a similar product, customers expect the product to meet standards of quality that come with increased pricing.
If your product fails to meet the expectations that come with the higher price, you run the risk of deterring customers from your brand in the long run.
HIGHER RETURN RATE
Higher return rates correlate with customer expectations. When a customer pays more for a product, they expect the quality and value of the item to follow suit.
If you have a highly-rated product, customers believe those ratings correlate with the listed item price. A price increase with reviews from the lower-priced product may lead customers to expect a higher quality product than what they receive, leading to item returns or negative reviews.
UNRELIABLE ADVERTISING DATA
Price is a vital determinant of customer purchasing processes.
Increase product pricing directly correlates with advertising data.
A page visit without a completed purchase could be a result of the increased product price.
The advantages of online marketing are in the data it produces, whether we get conversions and sales or not. This data tells us what is working and what isn’t.
An increased price temporarily skews the previous data set of the lower-priced product. You’ve added a new, inconsistent factor, resulting in less cost efficiency from your advertising efforts.
Reducing advertising efforts
Most successful storefronts have found a groove with their advertising. Of course, some marketing campaigns work better than others, but have you thought about how your advertising interacts with supply chain disruptions?
A cost-efficient way to reduce your product exposure is to reduce paid advertising.
Depending on how much you advertise, you have options.
FOR EXAMPLE: If you have multiple campaigns running and leave your best performing campaign active, deactivating all others, your sales volume will likely decrease to some degree. The sales you do receive will be coming to you at a lower acquisition cost.
This plan isn’t full proof. Your most efficient marketing campaign accounts for a large chunk of your (advertising) sales. Continuing these ads likely won’t be enough to slow down sales and retain enough inventory.
This strategy depends on the amount of inventory you have remaining and how long you need it to last. If you are already close to going out of stock, it likely won’t help at all.
Completely halting all advertising
Try this course of action if your inventory is already running low when disaster strikes.
Pausing advertising leads to organic-only views/sales. You don’t lose organic rankings when you pause advertising. It’s a great option if you have a decent organic ranking, as most of your sales will depend on this during the lauded advertising period.
Additionally, you save on advertising spend and have more profit per sold unit. This tactic could have the least damaging effect when reducing sales volume and retaining inventory.
In conclusion, 90% of effectively navigating supply chain disruptions involves having a solid contingency plan.
From time to time, evaluate each aspect of your supply chain operation. Consider areas of efficiency and cost-effectiveness. If an area of operations fails, what is the plan for getting back on track?
We’ll be dropping a Part 2 discussing in further depth the tricks every successful entrepreneur should have up their sleeve for conducting business as usual when it comes to supply chain disruptions.