CS: What have been your toughest inventory-projection challenges in the past two years, and how have you overcome them?
Hammond: Forecasting for new categories of products is a challenge. That’s when you wish you had that crystal ball. That’s when you need the guidance from your vendors.
To overcome that challenge, we ask vendors for quick turnaround times. So if it’s a new product for us, we’ll buy a bit less, but we’ll be sure the vendor can ramp up production if the item turns out to be a runaway bestseller. It’s a tricky proposition, though. We sell primarily handcrafted items made in the United States. Some of our vendors are working, literally, at their kitchen tables. But the upside is that these small vendors often can give better turnaround time than big vendors. Our artists will work all night if they have to because they often appreciate getting the big orders more than a larger company might.
Second, forecasting for holiday orders is always a challenge. By the time you know you have a winner, it’s often too late to order more. We try to test earlier in the process, either by posting new items on our Web site or featuring them in our newsletter, which we e-mail to about 120,000 customers. If we see that we’re selling a lot of the new products, that helps us to project inventory levels for when the item hits the print catalog.
Cary Tennis, executive vice president, co-founder and co-owner, Crow’s Nest Trading Co., Wilson, NC
Product: home furnishings
Size of warehouse facilities: 6,200 square feet.
SKUs: 478 in current catalog
Catalog Success: What criteria do you use when deciding how much of any one product to stock?
Tennis: We drop-ship 16 percent of our products, but that accounts for 53 percent of our revenue. These are items such as furniture, rugs, lamps, etc. So one of the things we look for when selecting product is, can it be drop-shipped? Other parameters include a supplier’s lead time, our own sales projections for the product, quantity discounts, product cost and seasonality.