March 27, 2016

Inventory Position = A Customer Acquisition Strategy

Here, in this image from Olive via their Facebook presence, a customer complains that items are always sold out quickly. The employee responds ... suggesting that the customer visit often, because the merchandise assortment is frequently refreshed.

There is a difference in how classic brands view inventory management, and how newer digital/retail brands view inventory management. The classic brand doesn't want to disappoint a single customer. As a result, the classic brand doesn't create urgency through inventory ... maybe via 20% off or 30% off, but not through inventory.

The modern digital/retail brand creates urgency via marginal inventory positions. When the brand has a reputation for running lean, purchases tend to happen NOW. Customers/Prospects visit more often. Inventory turns are faster. Liquidations are minimized. Profit is generated.

The downside, of course, is that the lean digital/retail brand misses out on purchases, simply because not enough inventory is maintained.

Urgency via Inventory Position is a strategy to convert prospects fast. You may or may not agree with the strategy. But at least think about it, ok?