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This is Part 4 of a 10-part series on the Start-Up Mix, which is the selection of goods a retail store orders prior to opening its doors. Why a 10-part series instead of a quick list of tips? Because as you’ll come to see, the start-up mix is pretty crucial to a store’s success in its first few months of business. And as you may able to see from looking around your town, the first few months are a pretty crucial factor in whether an indie retail shop thrives or fails.

See Part 1 in this series on the importance of nichification in your start-up mix.

And check out Part 2 for ideas around budgeting for your start-up inventory mix.

Part 3 explores start-up inventory principles unique to online stores.

If you’re an indie retailer who’s also a passionate shopper, you might have some reigning in to do.

Today’s post is a big caveat to all retailers, whether brick and mortar, online, or both. For a certain type of retailer personality — the passionate shopper, i.e. people who get into retail largely because they love to shop — this is probably one of the most important principles to protecting their early success.

Ready? Here it is.

Don’t overbuy inventory. Ever.

Overbuying is tempting. When you first start out, you might be flush with loan money or a brand new credit card. Buying great stuff for your new store feels like a worthwhile investment. And the stuff you’re buying seems so great that you can’t imagine it not selling. You’ve been told you have great taste. You know you have great taste. You feel like you have a really good idea of what your right people want and will buy.

Still, I repeat the same advice:

Do not overbuy.

No matter how ‘on’ your instincts are when it comes to what your right people want, I promise you that your instincts will be honed and adjusted every season. Not that you’re wrong  in your instincts about what your right people like — you simply don’t yet have the qualitative and quantitative firsthand data that proves to you what your right people really buy versus what they say they want. As you’ll come to learn, these are often two different things.

So buy conservatively, but especially with your first fill, no matter how well-versed you feel in your retail concept. You need to get a feel for what sells, what customers are attracted to, and what they express to you that they’d “hoped you’d have.” {You’ll hear a lot of that, as customers are very vocal with offering opinions.}

What constitutes overbuying?

A conservative definition of overbuying is: buying more than the minimum quantity required by the vendor on any items except for consumables {candles, gourmet items, apothecary — anything people use up and replenish}.

For start-up, you just want to order enough to fill your shelves or create attractive, full enough displays with very little, if any, backstock. Reorders can often ship quickly {depending on the vendor and the time of year, sometimes a reorder can ship inside of one week}, so if you sell down and are running low on one line or another, it’ll be okay. Except for proven lines, I would stick pretty close to the Opening Order Minimums set by the vendor.

Who especially needs to take this advice?

• People who have never owned or worked extensively in an independently owned retail shop before {in other words, working at a national department store or big box store isn’t the same thing — same universe, different planets}
• People who aren’t independently wealthy to the point where they won’t miss a loss of thousands of dollars

Now, this advice does not mean buy ones and two’s of everything and make your store look like an odds-and-ends shop.

There’s a balance between not buying too deeply into any one item and buying too randomly so that there’s no cohesiveness to your store design. How you achieve this balance is an algorithm you create of your square footage, the breadth of categories you plan to carry, your sell-through rate, and your display style {clean and orderly? spare and avant garde? multilayered and vignette-based?}. Your displays should look well-stocked, well-balanced, and aesthetically pleasing {a whole ‘nother post unto itself}, and do not need to be jam-packed to overflowing.

This “do not overbuy” advice applies to online stores, too.

Overbuying for an online store is a huge mistake. Go back and read the third post in this series, which divulges some insider financial tips for online boutique owners. The bottom line here is, when you’re “stocking” an online boutique, you only need to spend as much as you want to. Your customers can’t see into your store like with a brick and mortar, much less into your stock room. If you’re brand new to online retail and have virtually no built-in customer base {such as you might if you have a fairly well-trafficked blog already, or if you have a brick and mortar store with enough tourist traffic who’d be all too happy to buy from you once they get home}, then you might only want to buy 1’s, 2,’s or 3’s of all your items until you get some traffic, start selling, and start seeing patterns in what sells.

In other words, be conservative!

Remember, retail is part art, part business, and part psychology experiment. In all three respects, there’s considerable risk involved. It pays to hold onto your pennies wherever you can — and not overbuying start-up inventory is one smart way to start.

Retailers, what are your personal rules for how much to buy? What advice would you give a newbie retailer on how much start-up inventory to buy?

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This is Part 3 of a 10-part series on the Start-Up Mix, which is the selection of goods a retail store orders prior to opening its doors. Why a 10-part series instead of a quick list of tips? Because as you’ll come to see, the start-up mix is pretty crucial to a store’s success in its first few months of business. And as you may able to see from looking around your town, the first few months are a pretty crucial factor in whether an indie retail shop thrives or fails.

See Part 1 in this series on the importance of nichification in your start-up mix.

And check out Part 2 for ideas around budgeting for your start-up inventory mix.

So far in this series, we haven’t talked about the differences between brick and mortar specialty stores and online stores, which can be quite profound. In future posts in this series, I’ll address those differences where applicable. The insights and advice offered in this post apply to online-only stores as well as to brick and mortar retailers adding an online entity.

Google, send me some impulsive online shoppers!

When opening an online boutique, there’s lots to think about beyond just inventory: there’s your hosting platform, your shopping cart interface, your security layer, your site design, your information architecture, your naturally niche-y marketing plan. But those are issues for another day and another post. In keeping with the topic of this series, today we’ll focus solely on what online retailers need to think about in regards to their merchandise mix.

Start-Up Inventory for the Online Boutique: Stuff to Consider

The niche rules online.

The niche rules online every bit as much, if not more than, in an offline retail space. Look for points of differentiation from other online boutiques in your niche. Chances are, people who like the online boutiques that you admire and aspire to emulate will also like your boutique if you’re creating one of a similar ilk. Online retail niches are relatively small and cozy universes unto themselves — for instance, shoppers who like vintage-styled home furnishings probably regularly check 15 or so online boutiques catering to this niche — so it’s important to differentiate yourself early and with aplomb.

A tight, fantastic merchandise mix is better than a broad but less stellar mix.

It’s better to launch an online store with 7 or 10 items that represent your niche, are of great quality, are priced for value, and are sold virtually no where else on the web {or at least not on several high profile reputable sites in your niche} than it is to launch with a wide assortment of products that are sold everywhere and are just okay. Just because you have access to the vendor and see other people selling the product online does not mean you should sell it online. If 5 or 10 other notable online stores sell it, then you’re only competing on price, and that’s really a drag.

Keep your categories manageable.

Most online retailers group their products into categories for site visitors to browse rather than listing all products together on a single page. Create product categories that feel expansive and flexible and allow you to evolve your merchandise mix over time as you see what sells. For instance, a category called Girly Bits is probably better than a category called Pink Things, which is too specific. Aim for 3 to 7 categories to start with. Any more than that can feel unmanageable. It’s better to show several items in one category than it is to have only one item sitting all by its lonesome on a category page.

Aim for a mix of price points.

A mix of price points is always a good idea, though it’s not as important online as it is in a brick and mortar store. Online shoppers tend to be a bit more impulsive than offline shoppers. The reason? Plastic, baby. The credit card or PayPal account  makes purchasing online feel less “real” than purchasing in person. Online shoppers haven’t yet held your product in their hand. It’s the desire to do that — to make theirs the item that you have made look so juicy in your well-staged, brightly lit, nicely composed product photo — that makes them buy. It’s the not walking out with a bag to hide in their closet upon arriving home {do you know how many of my female shoppers at THE BLISSFUL told me they did this regularly?} that compels them to throw caution to the wind and click Pay when they’re shopping your online store. The item they’ve purchased will arrive a few days later and they can deal with any feelings of guilt then.

Note on the above point: As an online retailer, you’re not morally or ethically responsible for the actions of customers who buy things they don’t need or can’t afford. Your role is to offer great products at a price people are willing to pay while you mind your income needs and your lifestyle interests. But understanding the psychology behind online shopping is a big part of embracing your role as an online retailer.

So back to that mix of price points. Just like in most offline stores, it’s important to offer a mix of price points for your online customers, too. Based on your retail concept, what price points are you comfortable selling? If you’re planning to offer mainly notions and crafting supplies, you may never retail an item for over $50. But if you’re a designer apparel retailer, more than half of your merchandise mix may retail over $50 per item. That’s entirely for you to decide. But whether your boutique skews higher end, lower end, or is middling, it’s good to offer somewhat of a range. In the example of an online designer apparel retailer, you might offer $36 cotton tee shirts, $78 jeans, $120 shoes, jewelry that ranges from $20-100, and hats from $15-$40. So there’s a little something there for everybody.

How many of each item should I buy?

Fewer than you think — at least at first. Would you be surprised to know that for THE BLISSFUL‘s online boutique, I never bought one extra dollar of product earmarked specifically for sale online? The items I sold online were pulled directly from my sales floor. This might not be a comfortable set-up for all retailers depending on how deeply you buy and how quick your sell-through is, but it worked for my store. {Remember — as I’ve shared before in a blog comment, although we shipped every week, our online sales never accounted for more than 3% of our total monthly revenues.}

In most cases, if you have no experience retailing a particular item in your brick and mortar store and thus have no idea how quick the sell-through might be online, it’s best to stick to the vendor’s minimums. If the vendor requires you to buy 4 of an item, buy 4, not 8. If you love an item and are convinced it’ll sell and the minimum’s only 2, buy 4, not 12. Shoppers have absolutely no idea how many of an item you have or have already sold. They don’t know if you’re storing your product in a tiny little 9″ x 7″ office or in a 700 square foot warehouse space. If you sell your only two of an item, good for you! You can either reorder or try something new. When you mark an item Temporarily Sold Out in your online boutique, customers don’t know if you’ve just sold through two or two hundred. Unless you’re publishing those kinds of stats on your site {like with a site visitor counter or an items available counter} — and let it be known that I don’t think you should — people have no idea what kind of traffic you’re getting. And the average internet user wouldn’t think to go looking for your site traffic data.

As with an offline store, online offerings are at least somewhat seasonal, depending on your niche. If you’re launching your online boutique in May and you live in the U.S., make sure you stock it with a healthy supply of Summer-oriented goods or goods in a Summer-y color palette.

So how much should I budget for in starting up my online store?

Let’s keep this answer simple: only as much as you can afford to lose if you sell nothing and have to discount all your goods or give them away as Christmas gifts to your friends and family.

As an online retailer, you have a tremendous advantage over the brick and mortar retailer. You don’t have to feather out a physical space for shoppers to wander through. Your prospective right people only see what you choose to show them in your online store. You can stage your photographs on a corner of your porch and make them look totally cool and not pay for retail space. You can work in your jammies!

So when it comes to stocking your online store for the first time, just keep three words in mind: Do. Not. Overbuy. {More on this principle in an upcoming post in this series.}

The best two pieces of advice I can offer online retailers when it comes to your inventory?

1. Buy shallowly until you see what sells. Time will bear this out.

2. Market the h-e-double-hockey-sticks out of your online store. Be everywhere online that your right people hang out and offer great, valuable, free content to your right people. Establishing a relationship that is not first and only about selling will lead to sales over time.

Active online retailers, does your experience of selling online bear out my advice? Or have you taken a different tactic that’s been successful?

Online retailers-to-be, what other inventory-related questions do you have?

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