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The importance of diversifying your product range

The importance of diversifying your product range

The importance of diversifying your product range

Guest article by Avasam

 

Online retailers have a lot on their plates right now. Right now, we’re in quarter four, which means making loads of sales – but it also means you’re gearing up for busy times, if you aren’t already there! If the appeal of your inventory to your customers is high, and you’re making plenty of sales, then you might be inclined to ride the wave and leave expanding your business until the new year. But your customers want more from online retailers right now, especially since COVID-19 means fewer people are heading to the high street – for the time being at least.

 

Why should you diversify your product range?

 
If everything is going well at the moment and you’re happy with your sales figures, why should you extend the number of products you sell? Increased sales opportunities are an obvious one, but let’s have a look at some of the other reasons to add to your inventory.
 

Customer satisfaction

 
As we’ve already mentioned, your customers want more from retailers they buy from. They expect to be able to buy everything they want and need in a single place – which very often is Amazon, sometimes eBay. When they are able to find what they are looking for at both a great price and in a single location, your business benefits. We’re talking about benefits like increasing customer satisfaction, and good word of mouth that helps to increase your customer base further – all of which are pretty excellent reasons to increase and diversify the types of products in your range.
 

Supplier discounts

 
When you can buy in bulk, you’re almost certain to gain access to better wholesale prices. This means you can make a better profit on each item – or you can pass those savings on to your customers, increasing the chances of being the preferred seller on a marketplace.
 

Zero delays

 
Customers want their orders promptly – and there are just no ways around that. This is why 68% of businesses are now offering 48-hour delivery, and 61% are offering next day delivery. Retailers must respond to that in order to stay ahead. When you have stock in your warehouse, you have complete control over your orders being dispatched on time. You minimise the chances of needing to cancel orders because products are unexpectedly out of stock, because you’ll be working with an inventory and order management system that prevents those type of issues occurring.
 

Merchandising and promotion

 
If you have a bricks and mortar retail outlet as well as your online presence, then you’ll know the value of having fully stocked shelves. It looks great, means you can move stock to optimise sales (eye line is ‘buy line’!) and it means that customers trust that they can come to you and will be able to get what they need, when they need it. That applies to your website too – lots of out of stock messages can cause customers to question whether they will receive their orders, particularly if they haven’t purchased from you before.
 

The problem with diversifying your product range

 
Increasing your sales inventory quickly can mean bigger profits, particularly through the busiest period of the year, so why would you wait? Well, sometimes it is hard to diversify your product range. There are some major challenges that can lead sellers to delay expansion of their range – and these are some of the reasons we hear pretty often:
 
• Don’t want to tie up cash in stock – unproven products and dead stock is too much of a risk
• Not enough space in the warehouse
• Staff are already working at capacity
• Minimum quantities required by wholesalers price us out
• Finding the products from additional suppliers
 
When increasing your sales inventory is an issue due to having funds available to invest, or you simply don’t have the storage available for the items, the logical thing to do is to put those ideas for expansion aside until your company has grown a bit. But without additional sales, it is difficult for your company to grow. It is a chicken and egg situation – you need one to create the other.
 
Some suppliers are happy to provide credit or have low minimum order requirements, but that isn’t always the most desirable solution, especially where products are seasonal, or haven’t yet proven as successful for your target customers. And it can be risky to work that way – the chances of losing money on stock that doesn’t sell, or that you need to hold onto until that season comes back around means many sellers don’t want to chance it. But these issues don’t mean you can’t increase your inventory – you just need to think outside of the box.
 

Diversifying your inventory with no investment

 
UK suppliers are offering an alternative solution for businesses that allows you to sell their products without needing to invest in inventory. For many professional sellers, DropShipping has been disregarded as a retail opportunity, with most people immediately thinking of shoddy products from the far east that take weeks to be delivered. It has been marketed by so many influencers that now it looks like a get rich quick, scam type arrangement – and we’re pretty sure you will have seen the type of ads we’re talking about.
 
But in reality, the DropShipping model has been around for years, and thousands of retailers extensively used the model long before the rise of eCommerce, because it is an ideal way to increase the numbers of products you can provide for your customers. It means that bigger ticket items that are bought less frequently can be offered, without needing to buy the product in or to store the product. Customers that have already chosen your brand and return to buy from you regularly are more likely to continue to make purchases from you – because they trust the service you provide.
 
The key to using DropShipping successfully in your business today is to consider how businesses of yesteryear did it. We’re talking about working with suppliers that are known and trusted, and that have products already in their UK warehouses ready for dispatch to your customers the same, or the next working day. Finding those suppliers, and working with more than one of them has typically been a bit of a challenge. While some have offered DropShipping arrangements, they have had their own technical setups, which has either meant additional manual work (which isn’t helpful if you’re already busy) or needing the assistance of a developer.
 
Working with a DropShipping platform to automate and manage your DropShipping activity is the easiest, and best way to offer the most to your customers. You’ll almost certainly know of Oberlo and some of their competitors, but all of those issues that we mentioned about products from the far east are still a problem, even with the faster ePacket shipping.
 

By opting for a platform that connects you with verified UK suppliers, connects with your inventory and order management software as well as your sales channels is essential to making DropShipping really work well. DropShipping this way reduces risk and allows you to work with multiple suppliers – which means your potential income, as well as the product range you have access to, is unlimited. Costs are low and are vastly outweighed by the profit margins from additional income.
 

The benefits

 
Your customers will benefit from you extending your offering using DropShipping – you’ll be able to offer them a greater choice, with less chance of seeing out of stock messages on your listings. They will have accurate product information, and they’ll get their order quickly since suppliers dispatch from UK warehouses either the same day or the next working day.
 
By working with suppliers who DropShip orders to your customers, you’ll maintain better cashflow, and be able to maximise the value of the stock that you hold yourself (if any). You’ll be able to focus directly on selling, optimise your listing and marketing campaigns, and handle customer service – as you’re already doing.
 

Enhancing your service

 
While you’re diversifying and extending your inventory, you still need to remain on top of every other aspect of your business – so you’ll need to maintain the high standards of customer service you’re used to providing. In addition to that, you’ll need to ensure that your shipping, and your returns and refunds process can be dealt with swiftly.
 

Customer service

 
Parcelhub found that 69% of mid-market retailers struggle to manage their customer service queries to the required level. That means if you can get your customer service right, you’re more likely to get your customers to convert to long-term, repeat customers who will advocate for your brand. Good word of mouth is incredibly valuable – as you no doubt already know. With this in mind, here are a few action points when you’re tackling this:
 
• Consider using AI to automate some of your customer service – only around 32% of small and medium businesses are doing so at the moment, so doing this will get you ahead of the pack
• Look at how you can reach your target customers wherever they want to shop – whether you decide to work towards an omnichannel strategy or not
• If you’re selling on multiple sales channels, using a multichannel order management system can really help you manage the process – but just 29% of businesses are using them
 

Shipping

 
Finally – but by no means least – one of the biggest considerations you’ll need to make is how your shipping impacts on your business. Although working with the cheapest option might seem like the right thing for your business in order to maintain your profit margins, but customers want more.
 
Free delivery is increasingly seen as essential for customers, but in reality, you need to be looking at alternatives too. Customers may be prepared to wait a day or two for free shipping, but in other cases, they may be happy to pay for faster delivery. Not only do you need to consider the cost of shipping – many customers want to know what shipping companies are doing to support the environment.
 
All this adds up to the fact that diversifying your shipping options is just as important as diversifying your product offering. But if you’re using a mix of DropShipping and inventory in your own warehouse, that can be even more complex – and even more so if you’re one of the 47% that are shipping to the UK and internationally. Each business will face unique challenges, but here are a few things to consider:
 
• Offer a range of delivery options – working with a delivery management specialist like Parcelhub means that you can save time and money on different shipping rates
• Highlight the green credentials of your shipping provider
• Consider outsourcing your delivery tracking to a third party
 

Returns and refunds

 
It would be lovely if all of your customers loved what they ordered and never needed to return anything. But unfortunately, we’re a long way from that ever being a reality – and even when customers buy in a bricks-and-mortar outlet, they still want to return things! To keep your customers happy, and increase their confidence in buying from you, you’ll need to keep on top of your returns game. Only 55% of businesses are offering returns as standard, so getting your returns and refunds process in place will put you in a much better position overall. Don’t treat your returns and refunds as an afterthought. Take action to get your process in place now:
 
• Offering free returns will help increase sales and customer satisfaction – yet just 56% of businesses do so
• Look for a DropShipping platform that automates returns and refunds, so that you don’t have to wait for suppliers to reply to your emails
• Provide a range of return options, such as with third parties or directly into carrier networks
 

The takeaway

 
By fully understanding your target customer – which you no doubt do, as a successful business – then you know the types of products that your customers might be looking for. By diversifying your inventory using the DropShipping model with UK suppliers, you can ensure that your loyal customers come back to you when they want to make additional purchases, whether that is for much larger or smaller items, or for seasonal products.
 
If you diversify your product offering using DropShipping suppliers now, after the busy Christmas and New Year period is over (and you’ve taken a minute to catch your breath of course!) you’ll have a head start on 2021. Not only will you have made more sales, when you run your reports you’ll be able to clearly see which products worked well for you – and more importantly, which didn’t. This will help you to make informed choices about what is worth buying in bulk for the year ahead, or whether you decide to continue to DropShip certain items – which will remain an option, however you decide to move forward and scale your business.
 

To extend your inventory without needing to invest in stock, visit the Avasam website, or set up a call with the team to discuss the requirements of your business.

Avasam

Avasam is a fully automated DropShipping platform providing all the tools you need to source and sell quality products from verified suppliers and grow your business.

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