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Online Company Store - Should YOU own the inventory?

Online Company Store - Should YOU own the inventory?

Did you catch the post about Vendor Financed Inventory? If not, check it out, too!

Customer Owned Inventory

Customer owned inventory is what it implies: you own the inventory and have allowed the vendor to manage it for you. It can have risks, but risks that can be avoided if set up with the right accountability parameters.

When you own the inventory, it is a matter of control. The vendor should present marketing suggestions and product ideas, but you ultimately hold the trump card for any decisions made on your inventory. 


Pros

Cons

Complete brand control

Up-front financial obligation (small in most cases)

Complete product selection control

Reviews for possible obsolescence

Complete marketing control

 


Questions to ask yourself and your vendor:

  • How will the inventory and subsequent reporting be handled?
  • What sort of inventory management processes does the vendor employ?
  • How will purchasing and reimbursement be handled?
  • Will the vendor absorb any existing inventory we currently have? If so, what would be the cost?
  • What type of reporting will you process? Will it be monthly? Quarterly?    

A final note on vendor-financed inventory: There are few things regarding stores that create more frustration than to partner with someone who promises no-risk, yet commits very few resources to making your store a success.

Why wouldn’t a vendor do everything in its power to make your store successful? Because their capital is tied up in what seems like the greatest service they can offer: financing your inventory. This is why vendor-financed inventory stores are rare and why they have a higher failure rate.

The puzzling part about vendor-financed inventory is that we take great pains to ensure brand control yet because of a perception of no-risk, we abandon controls by allowing someone else to own our branded assets.

The most aggrevating experience in starting a company store is having to start over. More often than not, vendor selection can be hastily made on a couple of hot-button issues, inventory-financing being one of them. Don’t sacrifice the service your colleagues will demand for short term gain or you could be rebuilding your store within a matter of months.

Vendor-owned inventory stores must be approached with caution, just as client-owned inventory. However, with client owned inventory, you call all the shots and you make the rules. 

Want to learn more about online company stores? 

 

Did you catch the post about Vendor Financed Inventory? If not, check it out, too!