This episode tackles the critical challenge of excess inventory in ecommerce, a stark contrast to recent supply chain shortages. It provides a practical framework for ecommerce operators to navigate this issue by strategically adjusting advertising spend to alleviate warehousing costs and move products, emphasizing the interconnectedness of marketing, inventory, and finance.
Key takeaways
Calculate the daily cost of holding excess inventory (e.g., container demurrage fees) to quantify the financial pressure and inform decision-making.
Develop a flexible advertising spend plan that incorporates inventory levels and adjusts ROAS targets in crisis situations to prioritize inventory movement over standard efficiency metrics.
Use forecasting to model the impact of increased ad spend on inventory reduction and associated cost savings, even if it means accepting a lower ROAS temporarily.
Integrate marketing, inventory, and financial planning to create a unified strategy for managing supply and demand fluctuations. Marketing should not operate in a silo.
Consider temporary price reductions or urgent sales campaigns to rapidly move excess stock, especially during critical periods like impending container unloadings, even if below typical profit margins.
First it was supply chain disruptions, and now it’s … warehouse disruptions? In this episode, Andrew talks about brands currently experiencing an abundance of inventory, the problems this is causing, and how businesses should respond. “Our warehouses are now so backfilled that there’s all these containers and nowhere to put the stuff. Even Target has said publicly they’re going to cut prices in order to move product.” Show notes: Fund your ecommerce business with Wayflyer: https://bit.ly/3arbACq
What does this episode say about supply chain & operations?
Calculate the daily cost of holding excess inventory (e.g., container demurrage fees) to quantify the financial pressure and inform decision-making.
What does this episode say about paid acquisition?
Develop a flexible advertising spend plan that incorporates inventory levels and adjusts ROAS targets in crisis situations to prioritize inventory movement over standard efficiency metrics.
What does this episode say about finance & fundraising?
Use forecasting to model the impact of increased ad spend on inventory reduction and associated cost savings, even if it means accepting a lower ROAS temporarily.
What does this episode say about analytics & attribution?
Integrate marketing, inventory, and financial planning to create a unified strategy for managing supply and demand fluctuations. Marketing should not operate in a silo.
What does this episode say about supply chain & operations?
Consider temporary price reductions or urgent sales campaigns to rapidly move excess stock, especially during critical periods like impending container unloadings, even if below typical profit margins.
