When your eCommerce business’s marketing campaign goes viral, you can usually expect that a significant increase in order volumes will follow. And while you can’t always predict which campaigns or specific posts will explode in popularity, you should always be prepared for the moment one does, especially if you’re about to roll out a new digital marketing campaign.
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How to handle big changes in order volumes
Here’s how to prepare for and handle a sudden influx of orders when you’ve gone viral:
Analyze, analyze, analyze
Looking at sales data from previous marketing campaigns is a great starting point to understand what you can expect if you experience a massive increase in sales over a short period time.
Since a viral marketing campaign could result in an unprecedented surge in demand, analyzing similar previous periods can give you valuable insights into typical customer behaviors, your most popular products seasonally and during peak times, and any areas where you can improve your approach in the future.
Make your eCommerce business scalable
Any successful eCommerce business understands the need for scalability. Not only does it ensure that temporary spikes in demand can be managed smoothly, but it also allows for growth of the business over the long term.
Before launching any marketing campaign, you should ensure that you have a sophisticated eCommerce platform and inventory management system set up, so you’re well-equipped to handle an uptick in sales.. You’ll also need to make sure that the limit on store items and customer purchases is high enough to accommodate a major increase in orders.
Calculate your safety stock level
When you’re preparing to launch or ramp up a digital marketing campaign, you’ll need to reevaluate your safety stock level to make sure you have enough inventory to meet a spike in demand and reduce the risk of stockouts.
Your safety stock level should be high enough to cover your forecast increase in customers and take into account your supplier’s delivery times. Learn more about calculating a safety stock level for your business, and remember that with any new marketing activity, particularly viral marketing efforts, you should always anticipate the need for more safety stock.
Know your reorder point
Once you’ve considered factors such as your lead time (how long you need to wait for stock from your suppliers) and your safety stock level, you can determine the point at which you’ll usually need to reorder more stock, also known as your reorder point.
Along with your usual reorder point, you should also prepare your supply chain by calculating an alternate reorder point with the assumption that you’ll need to replenish your inventory faster should your digital marketing efforts succeed.
Digital marketing and inventory management done well… and not so well
ModCloth’s Be the Buyer initiative
In 2009, women’s online retailer Modcloth launched its Be the Buyer initiative, where it allowed customers to look at clothing samples online and vote for their favorite. The business immediately saw positive results from the program, with items receiving more than 100,000 votes in a month and traffic to the website increasing by 25%. This was effective for a number of reasons:
- It provided assurance that there was demand for certain products – lowering the risk of dead stock
- It empowered customers and made them feel valued
- It effectively utilized digital technologies and marketing initiatives to leverage smart inventory management
Target’s Barbie SUV traffic jam
In 2015, Target was forced to abandon its planned 133 store openings in Canada after multiple inventory management and logistics failures – one of which was that barcodes on Barbie toy cars didn’t match the numbers in Target’s system, causing a massive pile-up at their distribution centers and empty store shelves. The business collapse revealed a number of inventory management errors:
- They were trying to grow too fast, too quickly
- Their supply chain management was inadequately prepared and inefficient
- Their pricing strategy was misguided
The stark difference in outcomes for Modcloth and Target highlights how planning, strategy and implementation are crucial for both digital marketing and inventory management, to ensure that when customer demand changes, you’re ready to handle it.
About the eCommerce Digital Marketing Model creator:
Taylor Davidson is the founder of Foresight, which helps entrepreneurs use financial models for business decisions.
Through his template financial models and strategic advisory services, he has helped over 18,200 entrepreneurs on financial planning, projections, fundraising, and business strategy.