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Part II: Building Your Store > Stocking Your Store

Chapter 8. Stocking Your Store

One of the great things about owning a Web store is that no one needs to see how, where, or what you actually stock. On the other hand, initially it can be difficult to find cooperative distributors and/or producers to work with. As the Web has grown this has become easier, but the size of your business, its financial stability, your cash flow, and your confidence in the salability of your products are among the factors that determine the size of your inventory. To top it off, the idea of a Web store can be a bit frightening to distributors who aren't as impressed by or as educated about Web retailing as you are.

Many Web merchants have successfully minimized their risk by keeping inventory as small as possible. They rely on speedy distributor turnaround or patient customers. As customers place orders, the store receives the required products from the distributor or manufacturer and ships them. Although the store appears to have a large stock, in fact it is primarily paying for pre-sold items. This can backfire if the order is for a hot item and it is impossible to get the item in the customer's hands when he wants it. Usually a next-day order needs to be in stock to satisfy customer demand. In most cases, Web stores follow the 80/20 rule: They stock the 20 percent of available products that they expect 80 percent of the customers to regularly order. Remaining products are special orders. In this model, knowing which products are worth stocking and which ones aren't is crucial to your store's success. Until you have a good handle on that, the smaller the stock you can carry, the better.


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