How To Avoid Over-Selling
In E-Commerce overselling usually happens when your buyer buys a product that’s already sold. It is more common when stocks are listed on various marketplaces. If you do not track your inventory well, the probability of you selling the last item that has already been sold in another marketplace is higher. It happens when the stock is erroneously updated on the online marketplace, without keeping a tab on the physical inventory in real-time. This circumstance will unquestionably cause disappointment from your customers and could directly affect your business. When a customer leaves a negative review, it could adversely affect your brand’s reputation. This is why you would need to consider these few strategies to maintain a strategic distance from overselling.
1. Track Inventory
One reason for overselling could be that you sell on multiple channels. Maybe it’s because you did the stock incorrectly, and it doesn’t match the amount of stock available. You want to do stock takes and make sure you are taking stock of your inventory every now and then, but don’t need to do it every week. Instead, you need to make sure that all outgoing stock is tracked efficiently, and all new, incoming stock can be added seamlessly to your existing figures. You will want to automate this process, and reduce the potential for human error as much as possible.
2. Reserve/Safety Stock
One way to ensure that you never oversell is to always have a small reserve of safety, or back up stock on hand. This is inventory that you do not include in your stock levels, so you will never have to sell it accidentally. But if you oversell (or there’s a sudden surge in demand), you know you always have this reserve that you can use to fulfil the order and then top back up. However, the problem with this is that you need to have sufficient cash flow to purchase and keep this stock (essentially they’re unusable spares) and the space in your warehouse to store them. When you are deciding on the quantity of safety stock, bear in mind how quickly the product sells and how long it will take to replenish the inventory from your suppliers. Although it is tedious work to set all your safety stock levels, it will save a lot of time in the long run and prevent stock outs - and unhappy customers. Make it a habit to check your safety stock levels quarterly, as things are ever-changing within the world of ecommerce. What may be your best-sellers now, may not be in a couple of months.
3. Use First In, First Out (FIFO)
‘First in, first out’ is a straightforward concept. Your oldest inventory is your ‘First in’ gets sold first ‘First out’, not your newer stock. This concept is vital in an event where you offer anything that is perishable, so you do not end up with expired or unsellable items. It is as important to use this concept with non-perishable items. The longer it sits in the warehouse, it will get worn out and not look fresh. Especially if suppliers change the product packaging over time and you would not want to end up with stock that is obsolete that you cannot sell.
4. Diligent Quality Control Checks
Another possible reason for overselling is that you have the actual stock in your warehouse, but it’s become damaged, lost, or cannot be sent out for some reason. You might find boxes or packaging ripped or out-of-date. The older items may even have been updated with newer versions. Managing your actual stock is as important as managing stock levels, so keep your picking and packing areas as clean and organized as possible, and always practice the FIFO method – First In, First out – to ensure products are rotated and any older stock gets shipped out before newer stock.
5. Stock Control
A big part of inventory management is being able to accurately predict demand. This is not an easy task. There are a lot of variables and unpredictable issues involved, but you should get a general idea when you look at - market trends, your business’s growth rate, overall condition of the economy, promotions that you have pending and consider other factors that may affect sales so that you can accurately predict future sales.
Here are 5 ways that you may take to avoid overselling. On the other hand, there is a solution that can automatically eliminate the risk of overselling. Automate your business and fulfill orders without the risk of human error. This is the most straightforward way to track your stock levels and deliver your items.