Inventory Management

In the traditional catalog arena, 
profitability analysis is pretty straightforward: Merchandising contribution margin is composed of demand, returns, net sales, cost of goods sold and advertising expense. In e-commerce, merchants have a different kind of profit analysis and planning process, due to the dynamic nature of the web.

Selecting software for order management or warehouse management systems, e-commerce solutions, or other applications is a challenging task. The process begins by documenting a set of requirements, constructing a request for proposal (RFP), identifying vendors, viewing Web demos, and conducting site visits and reference checks. But a trend is emerging to select vendors based on word-of-mouth recommendations and two-hour Web demos. The question is, is that really the right approach?

For direct merchandisers, the Internet brings opportunities for additional sales and another touchpoint to build relationships with customers. As Internet-based sales have risen to 50 percent of total sales or more for many companies, they’ve also introduced new challenges to demand forecasting and inventory management. Many traditional catalog merchants feel less in control of their inventory planning than in the past.

Instead of anticipating the doom and gloom of market conditions no one can predict, stay focused on the fundamentals to get through these tough times, and position yourself for greater profitability when up markets return. Simply put, it’s a matter of what you know, when you know it and what you do about it.