Pros and Cons of Having Inventory

If you sell physical products, then you need to consider whether you want to keep an inventory yourself or use another method like drop shipping. This will go over the pros and cons of keeping inventory so that you can make an informed decision.

Pros

Better Stock Management

Keeping your own inventory means that you can get ready for large orders. You can talk directly with your suppliers and ensure that everything is running smoothly. You can’t do this with drop shipping. You’ll have to hope that the drop shipper can keep up with your demands so that your customers get their orders on time.

Entice More Customers

The problem with drop shipping is that you don’t know what the packaging looks like. At best, the packaging is just a blank box with the product inside it. At worst, the drop-shipper is including their own marketing and enticing customers to their website.

Keeping your own inventory means you can customize the packaging. You can get custom boxes, place custom marketing and coupons in the box and use other simple tactics to entice customers to come back. Even a small retention rate of five per cent can increase profits by 95 per cent. That can be very important for your business’s success.

Direct Shipping Information

Using a drop shipper means that they are handling all the shipping and deliveries. Usually, this means longer shipping times and delayed responses to problems. It also means that you’re out of the loop and can’t do much if there is a problem. Having your own inventory and shipping it yourself means that you can stay on top of the delivery information, and you can instantly provide service if something goes wrong.

Cons

Investing in Inventory

You have to buy all the inventory outright, which is a large upfront expense for most companies. Many new companies won’t even have enough money to order more inventory until their current stock sells. Small business loans can help boost inventory and fulfill orders quickly when the inventory is not in stock.  You should always make sure that you do your research before taking out an SMB loan, it’s always best to review options on a comparison site like Lantern Credit to ensure your business gets the best rates and terms.

Outdated Inventory

Buying in bulk allows you to save money, but only if the product sells. If the product suddenly isn’t selling anymore, then you’re stuck with lots of inventory and no room for other products. This is especially true with seasonal or fad items. You have to be careful to balance supply and demand properly.

Needing Space

You need to put the inventory somewhere. A small inventory can likely be saved at the store location, but a larger inventory will require you to buy storage or warehouse space. You might also need to buy insurance to cover damage or theft. This can be especially problematic with products that aren’t selling.

Conclusion

There are pros and cons to having your own inventory and you must consider which is right for you. Some people will find that drop shipping is right for them while others will store their own inventory for the added benefits.