When Getting Punched In The Nose is a Good Thing

Figuratively, of course.  For several months, my online business was running as smoothly as I ever could have imagined.  Sales were exceeding expectations, gross margin was strong, and inventory turns were solid.  It was almost too easy.  Then the inevitable happened.

Sales dropped by 17% from the previous months, weekly sell-through dropped by almost 33%.  I felt like I hadn't changed anything, but all of a sudden the wheels were coming off the bus.  It was like getting punched in the nose, but it inspired me to dive even deeper into the metrics to get to the bottom of what was going on.

I started to keep track of my inventory's age and weekly retail value more closely.  When my overall sales were strong, I didn't pay as much attention to problem items that needed price adjustment.  I realized that too high of a percentage of my sales were tied to too few SKUs, so I needed to expand my offering.   I now have a better understanding of the correlation between the sales rank of an item and how many competitors there are effects how many units I can sell per week, which helps me buy better so inventory turns fast.  I check my reserved units (items that have been ordered by customers but haven't shipped yet) daily, and when it goes below a certain threshold, I know it's time to re-price and add more items to my inventory. 

The results: sales are profit are back above expectations, and now I'm revising my plan for the rest of 2013 to ensure the holiday season is as strong as possible, and taking an early look at 2014 to hatch an aggressive plan to double my sales.

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