Many wholesalers will agree that timing is critical in their line of work – if you’re able to ride on the wave of certain high demand products and capitalize on the trendiness or virality of these items, you’ll be laughing your way to the bank. In this article, we take a closer look at products that are currently in high demand right now, as well as explore how you can optimize your supply chain and operations to maximize profits from these high demand products.What are high demand products?
Simply put, high demand products are products which a large (and increasing!) number of consumers find desirable and wish to purchase. Demand can be generated and fuelled by media coverage and social sharing; sometimes, producers may put an artificial “cap” on production quantity to make the product seem even more exclusive. Because of the supposed scarcity of these products in high demand but low supply, they become even more coveted in the eyes of the consumers.
Top trending products 2017: Fidget spinner
Practically everyone has heard of the fidget spinner, which first appeared on Kickstarter, and then went viral after being covered by online news sites as well as mainstream media.
According to 1010data.com, this unassuming-looking gadget has grown over 2000% in just 3 months to achieve over $25,000,000 in online sales – making it the fastest growing product online ever. (Well, at least since they’ve been measuring eCommerce, which dates back to early 2014.).
The fidget spinner isn’t a fancy gizmo – it’s essentially just a ball-bearing spinner (somewhat similar to a top) that you can spin and do tricks with. Whilst it was originally designed for those with Attention Deficit Hyperactivity Disorder (ADHD) way back in the early 1980’s by Catherine Hettinger, the way it is built (simple to understand, cheap, small and easily consumable in any location) has led to it having an arguably universal appeal.
Zing, a toy manufacturing company based in Oregon, was one of the “early adopters” which started producing their own line of fidget spinners back in March 2017. Within just 3 months, they shipped 2 million units – and that figure is likely to increase to 4 million units per month. Josh Loerzel, Zing’s Vice President of sales and marketing says that the fidget spinner is a great product for smaller companies which are able to “react quickly, get the orders, and ship fast.”
Small and medium sized wholesalers often find themselves ill-equipped to handle unexpected spikes in orders of high demand products. When this happens, some may dramatically ramp up production efforts, incurring exorbitant labor costs. Others who are flat-out unable to cope, or do not wish to significantly scale up their costs will have to experience stock outs, lost sales, and churned customers.
For those who are able to restructure their resources to produce more of these high demand products, it’s also important to take a closer look at inventory placement in your warehouse.
Since these high demand products are likely to be the fastest moving products in your inventory, it is only logical to locate them nearest to the shipping, staging and receiving area. This ensures that the majority of your picking activity is contained to a specific area, and that pickers and handlers will not be wasting their time running from one corner of the warehouse to another looking for products.
In addition to a spike in orders being placed for high demand products, wholesalers should also expect to receive plenty of enquiries for these products. This is especially the case if these products are a new innovation in the market, are technical in nature, and/or require a learning curve.
In this scenario, wholesalers should make it easy for their retailers and distributors to market these high demand products to their own customers by providing collaterals such as demo videos and printable how-to leaflets or brochures that can be made available in-store. Whilst this isn’t something that is by any means necessary, providing marketing collaterals for innovative and high-tech in-demand products will help wholesalers reduce friction in the buying process, and increase the volume of sales.
How do you adapt your supply chain to better serve customers who are purchasing high demand products? By making sure that your systems and processes are suitably agile, and implementing a demand-driven supply chain (DDSC). On the demand side, you’re looking at identifying demand signals which are closer to the source (and hence more accurate), and also shaping demand by using promotional and pricing strategies. On the supply side, you’re looking at lessening reliance on your forecasts, and also increasing the company’s agility and reducing the response time involved in production.
Inventory optimization is another key factor when it comes to adapting your supply chain for high demand products. The simplest and most effective way to go about doing this is to use an inventory management system such as QuickBooks Commerce. You’ll be able to easily generate metrics for reorder point, order quantity, lead demand, stock cover, and other optimization data – and because the system is equipped with fully-automated demand forecasting, you’ll be one step ahead, and won’t be caught off guard with the orders that are surging in for your high demand products.
Other than looking into your manufacturing supply chain and operations, wholesalers also need to ensure that customers have a proper ordering system that allows them to place orders efficiently and effectively. In a case study of a global manufacturer of consumer packaged goods, it was identified that the manufacturer’s customers did not have the resources to manage their order levels properly – and that this led them to sporadically place unnecessarily large orders.
The manufacturer realised that it was crucial to have their sales and supply chain personnel work together more closely in order to achieve a better ordering process for customers. Once both the sales team and supply chain team was aligned and on the same page, they were able to come up with a better system that could smooth the flow of orders – hence leading to less order fluctuations.
Wholesalers selling high demand products can learn from this example, and similarly, ensure that their own ordering processes are up to date and easy to use. By doing so, they’ll be able to maximize revenue, whilst minimizing volatility from orders for high demand products. If you’re not sure how to get started with this, QuickBooks Commerce’s B2B platform will allow your retailers and distributors to place orders with you easily and efficiently.
Last but not least, wholesalers might also want to consider implementing a backordering system for high demand products. In the unfortunate event that you’re unable to have products ready on hand, it’s better to offer your customer an alternative (to pay first, and receive their items after a certain period of time) rather than to simply close yourself off to sales completely.
This can be easily done with QuickBooks Commerce's backordering features. Using QuickBooks Commerce, all sales orders for an unavailable item will be consolidated and converted to one purchase order per supplier. You’ll also be able to see items that are unfulfilled at one glance – across both sales and purchase orders.
In this day and age, social media and social sharing are forces to be reckoned with – and wholesalers who can capitalize on products made trendy or viral by this will definitely stand to increase their revenues significantly. If you want to take advantage of these opportunities and optimize your business for high demand products, use QuickBooks Commerce to take your forecasting, operations and processes to the next level.
Use QuickBooks Commerce to take your forecasting, operations and processes to the next level!
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