Chapter 5

Purchasing, planning, and execution

In 2018, luxury brand Burberry came under media fire for destroying millions of dollars of unsold clothes, accessories and perfumes.

The British brand wanted to ensure that any unsold stock couldn’t be resold at heavily discounted prices and devalue the brand. As a result of the criticism Burberry announced they would reuse, repair, donate or recycle all unsold products.

A similar situation happened for H&M the same year, with $4.3 billion worth of unsold shirts, dresses, and accessories.

These situations — and countless others across the fashion landscape — were the result of poor planning and lack of efficient inventory management. We understand that the ‘made-to-order’ approach is not going to be feasible for every brand, nor is it necessary to invest in thousands of SKUs to be profitable.

Strategies to help you plan better and avoid deadstock

Tradeshows for insight

Use tradeshows as a source of information, but make sure you plan properly before you go. Ask questions face-to-face with potential customers and other retailers.

Wholesale website research

View wholesale suppliers websites to determine which items seem to be selling well, versus which are in the clearance section or are discounted. Some manufacturers will sell their products at wholesale prices directly to the retailer. If you have a particular product you want to sell, contact the manufacturer and ask if they sell directly to dealers.

Minimum Order Quantity (MOQ)

Order smaller quantities when offering new products until you know how well they sell. Retailers can sometimes buy in smaller quantities with or without a minimum order. Some even offer free freight on orders over a certain amount.

If you commit to a higher MOQ, you risk more capital in production and if they don’t sell out, you end up with deadstock.

Horizon scanning to forecast demand

The fashion industry trends can be as fickle as the weather forecast. Horizon scanning is one area in which an inventory management/supply chain management system can be quite useful.

It can help you figure out how to forecast demand in the apparel industry. This is especially the case in the fashion industry, where demand uncertainty, lack of historical data and seasonal trends usually coexist.

Market trends should not dictate your product decisions

Don’t let yourself get carried away with market trends and customer demands. If you’re too reactive, you will lose focus on building a strong and sustainable brand.

Having a huge inventory always comes at a cost; as you can see in the H&M and Burberry examples. You need more money and investment of time to manage, promote, design, and create.

You might be wondering… ‘How much inventory should I have?’

Your inventory size should not exceed your ability to maintain it. What we mean by this is that you should be able to write quality product descriptions, take professional photos, upload and present on your store with unstrained resources.

As soon as you don’t have resources at your disposal, then you know it’s time to hire more people. When it comes to hiring, try to hire employees who embody the persona of your ideal customers. This will make it easier to keep your team on the same page regarding your brand vision.

Thanks to eCommerce platforms like Shopify, Magento, and WooCommerce it’s never been easier to start building your online business. However the investment of time and money is still significant, especially when you’re still a start-up brand. This is why it’s important to have a clear picture of where you’re going to sell your products.

The next chapter helps you navigate the range of different sales channels and the pros and cons to selling on each.

Read next

Chapter 6: Selling in different retail environments