Start up inventory

onlinestartup

I am in the process of starting up an on-line retail store...it is a children`s boutique and I`m trying to determine how much I should budget for inventory.  Since it is on-line, obviously space isn`t necessarily as much of an issue as if I were going to have a brick and mortar store.  It is high-end designer items so they are expensive even at wholesale prices.  Any suggestions or experience?

minimegeology

Hello onlinestartup,
 
Craig is exactly right about the relationship between how fast you can get product and how fast you promise to ship.  You will find that vendors vary widely on how fast they ship to you and depending on your location to the vendor, the transit time will matter as well. 
 
You should also consider what you think your best sellers will be.  You will find that certain items move more quickly than others but it may take several months to find out what those items will be.  Buy enough to get you through initial sales but don`t stock up on any items until you know they will move fast.  Personally, I was surprised to find out which of my items sold the most because it was not the items that I had anticipated.
 
Good luck and let us know your web address when you launch!
 
Tracy

DeenaEsq

As a manufacturer of baby products (baby carriers, diaper bags and nursing jewelry) and having spent some time around other manufacturers at trade shows, you may want to see if any of them are willing to dropship for you.  Many are (for a fee) and that will cut down both the amount of inventory you have to have in stock and the amount of time it will take you to ship....  Just a thought.
 
Deena
 
 

minimegeology

Deena,
Do you actually drop ship for customers?  I was wondering if you have any idea of a typical percentage of sale that manufacturers give to customers when they drop ship for them.
 
Tracy

DeenaEsq

I have in the past.  I don`t know what`s typical, but since typical wholesale is 50% in the baby and childwear industries, I`d imagine it`s around 40%.  I`m a really small business and so when I`ve done it, I give 50% minus a $5-10 handling fee and the actual cost of shipping...
 
Hope that helps.
 
Deena

onlinestartup

Thanks so much everyone!  I have contacted some vendors that will drop ship, but my boutique is going to be designer items and more high end and most of the vendors do not drop ship.  A lot of them require minimum initial purchases even.  I just don`t know how much to buy of each item (how many of each size), how much from each vendor, etc, etc in order to make my store look full of merchandise, but also not break the bank since I`m just starting up.  I guess I`ll just pick a number that fits into my budget and go from there.

minimegeology

I think you are running into one of the hardest parts of starting up an online retail store.  You`ll figure it out though.  Look for vendors with low reorder minimums.  That way, if you order three of everything to meet the high initial order amount and run out of only two sizes, you won`t have to order more than you want to in order to restock.  I have one vendor that has higher priced merchandise than my others and they had a high minimum order initially.  But, they allow you to order one of anything and the reorder amount is so low you could just buy one or two items if you need to.  Vendors like that are great to find.