Inventory Planner: STAT Coding and retail stock management

Seeing an advertisement for a product, only to go to the brand’s website and find it not in stock is one of the most frustrating experiences a customer can have in eCommerce. You may even see that tons of other products are in stock, causing further frustration still. 

Of course, any well-established eCommerce brand will have insight into what products are and aren’t in stock, but without complete forecasting of both how well individual stock keeping units (SKUs) sell, and how many of each SKU is being added back into stock, you’ll have little clue as to what products to market and when. This is the primary reason that customers will see ads for products that aren’t in stock and in turn get frustrated with your brand.

What is inventory planer?

Inventory Planner is an eCommerce stock management and stock replenishing software that provides reliable inventory forecasting and demand planning for eCommerce merchants. It uses sales data to identify customer demand patterns and provides recommendations on when and what to buy to meet the demand.

We use the Inventory Planner tool in tandem with our native stock priority categorising methodology: Stock and Transactions Analysis Tracking, or, simply, STAT Coding.

What is STAT Coding?

STAT Coding is comparable to the well-known Boston Matrix model, which tracks market share and market growth to plot how popular a product is on a graph, therefore allowing businesses to analyse their product portfolio. However, instead of using two axis to roughly categorise products, our STAT Coding methodology puts products into one of five cold, hard categories - no guesstimating needed. The category a product is in will help inform replenishment, marketing pushes, sales and markdowns, and determine how key collections are merchandised.

How we categorise stock - our five product categories

• Core products - These are your year-round, evergreen best-sellers, and, ideally, these are always in stock.
• Seasonal products - These products sell well at certain times of year, but not as well during the rest of the year
• “Prove it” products - This is the category that most products will fall into. So, new and otherwise products have no information about how well they sell and therefore need to prove their worth. Similarly, core products that may not have performed as well as they previously had, will be “downgraded” to this category, therefore we can see if continuing to restock this product is a good idea or not.
• Expiring products - This is a product that has not performed well as a “prove-it” product. These products ideally need to be shifted before a new collection has been brought in, as to not risk becoming dead stock
• Dead stock - These are left over units of expiring products that have failed to sell before the introduction of new products. These need to be liquidated quickly and are often found in the “on sale” category.

What are the benefits of using Inventory Planner?

Using Inventory Planner, we can keep track of our total product availability. Availability is a relatively self explanatory stock metric that we track weekly, it refers to the percentage of all product variants that are in stock and available to purchase instantly. We also use a second metric, committed availability, which is the sum of the stock we have currently available and the stock on order. So, the committed availability percentage is always going to be higher than the availability percentage.

We can link both of these metrics back to our STAT coding methodology. For example, we want all variants of our core products to be labelled as “fully available” at all times. 

Using Inventory Planner, we can drastically speed up how quickly we get insight into how well a product is selling. 

Some tools may tell you that X amount of a product has been sold over X number of months. This can be a misleading metric as that product may have only been available for a small window within that period, may have sold out quickly, or there may not have been much stock in the first place. 

With Inventory Planner, we get instant visibility into the sales velocity of individual SKUs i.e. how well that SKU performed relative to the total days that it was in stock, and this can all be done at a variant, product and category levels too, allowing you to have as granular of an insight as needed. This gives us a much more accurate set of insights into how well products are performing.

Tracking the product availability alongside the sales data, not only gives insight into what has actually occurred but also enlightens you to what could have happened had your stock been 100 percent optimised. Looking at your stock-out periods identifies the key opportunities where you lost out on revenue and allows you to plan more effectively to avoid losing out going forwards.

The merchandising process is ultimately meant to be a virtuous cycle, and by getting these weekly metrics for each product, we can see how quickly a product is selling against how much stock is available, which then informs what stock needs ordering, how collections are merchandised, what ads should be pushed, what products need to be marked down and by how much. Availability should also be considered when establishing media budgets for a given period. 

How do we use Inventory Planner?

We have seen great success using Inventory Planner with our clients. The tool allows us to instantly measure a number of product performance metrics, which you have to do complex workarounds to extract from your standard set of eCommerce tools. Additionally, we can get insight into the performance of any SKU at any time, giving visibility into the performance of the whole product portfolio. This means we can instantly answer questions like…

• Have sales picked up since launching that campaign last week? 
• Is this product getting the expected number of page views?
• How much stock cost is invested in our summer shirts category?
• How well did this design sell over the Christmas period in 2021? 

Furthermore, Inventory Planner integrates directly with Shopify and Google analytics, giving you insight into the previous 2 years' worth of stock data (upon sign-up; you get more than 2 years if you’ve been using the tool for longer) and allowing you to connect your inventory facilities respectively. Finally, it enables you to issue product orders directly through the platform with its built-in replenishment tool, informing every stock investment you make.  

To learn more about retail stock management, click here.