Tony Sarno20 February 2007, 9:00 PM
A decision that can make or break you: how much stock to hold for launch? Suddenly, we were carrying a business risk.
We purchased $23,950 worth of stock for the Geek Gear launch. This is the point at which this exercise became a real business and we now started carrying a business risk.
We could have taken a safer route by experimenting with the drop-shipments approach, which has found favour with some online stores. Here, an online store doesn’t hold stock but acts as a middleman, arranging for the goods to go directly from supplier to consumer.
But we felt that this has several disadvantages. One is that suppliers will never be as committed to you as if when handing them cash for their goods, and two, if the store is selling products from multiple suppliers, co-ordinating their delivery and ensuring it reaches customers within an appropriate time frame becomes a nightmare. And of course, the suppliers can eventually cut out the middleman.
So we bought real stock. This includes 700 T-shirts of various slogans (in small, medium, large, extra large and extra extra large sizes), 900 caps and 850 gadgets. Once the products were been selected, the securing stock from the suppliers was straightforward. With each we put in an order, and they sent us invoices for each job lot. We paid by cheque.
In fact, it turns out that the most difficult thing in getting product for Geek Gear was actually deciding what to sell in the first place. "Nightmare" would be a simple way to describe the virtually infinite choices of products, suppliers and pricing.
NEXT: Delivery of product