Efficient Inventory Management Tips for Your Handmade Etsy Shop
Table of Contents:
- Introduction
- Should I make an inventory of all of my Etsy products?
2.1 The importance of tracking sales data
2.2 Creating stock based on sales data
- How much inventory of my supplies should I have?
3.1 The 80/20 rule
3.2 Ordering supplies based on demand
- Setting realistic expectations for processing time
4.1 Communicating processing time in listings
4.2 Using eRank to determine competitive processing time
- Benefits of making products to order
5.1 Offering a larger selection
5.2 Increased motivation and purpose for makers
- The recommended approach for new handmade shop owners
6.1 Starting with no stock
6.2 Establishing inventories for high-selling products
- Additional resources for selling on Etsy
Article
Should I Make an Inventory of My Etsy Products?
As a maker opening an Etsy shop, one of the common questions you may have is whether or not you should make an inventory of your products. This is a smart question to ask because carrying inventory involves both time and money. In this article, we'll explore the different approaches to inventory management and provide you with our recommended approach.
1. Introduction
Before diving into the question of inventory management, let me introduce myself. I'm Deb, the Founder of Tizzit.co, a membership community for makers and handmade shop owners just like yourself. In this article, I'll share valuable insights and tips to help you make informed decisions about managing inventory in your Etsy shop.
2. Should I Make an Inventory of All of My Etsy Products?
When it comes to inventory, there is a wide range of advice out there. Some suggest having at least 5 products in stock, while others recommend stocking a larger number. However, my perspective on this is clear - you don't need to have stock at all, especially when you're just starting out.
The key is to track your sales data before making any decisions. By analyzing your sales, you can identify which products are selling consistently and in high demand. Once you have solid sales data, you can start considering creating stock for those products. This approach allows you to be more efficient with your time and resources.
2.1 The Importance of Tracking Sales Data
Tracking your sales data is crucial in determining which products are popular among your customers. It enables you to understand the demand for each product and helps you make informed decisions about inventory management. Instead of making products blindly, you can focus on creating the ones that have proven to be successful.
2.2 Creating Stock Based on Sales Data
Once you have identified products that sell consistently, it's time to consider creating stock for them. Knowing the approximate number of sales per month allows you to produce these products in batches, saving you time and increasing efficiency. By waiting until you have solid sales data, you avoid wasting time and resources on products that may not sell well.
3. How Much Inventory of My Supplies Should I Have?
In addition to managing the inventory of your finished products, it's essential to consider how much inventory of supplies you should have. The 80/20 rule is a useful principle to keep in mind. It suggests that 20% of your products will bring in 80% of your revenue, meaning that not all your products will sell in large quantities.
Instead of over-ordering supplies for products that may not sell well, it's better to have responsive suppliers who can deliver materials when needed. This way, you can adjust your supply orders based on the demand for each product. It's also important to clearly communicate the processing time in your listings, setting realistic expectations for your customers.
4. Setting Realistic Expectations for Processing Time
When customers place an order, it's crucial to manage their expectations regarding the processing time. Whether it takes 5 to 10 days or 1 to 3 weeks to create a product, make sure to explicitly state it in your listings. This transparency helps avoid misunderstandings and ensures that customers are aware of any potential delays.
4.1 Communicating Processing Time in Listings
Clear communication is key when it comes to processing time. By being upfront about the time it takes to make a product, you set realistic expectations for your customers. Providing this information builds trust and allows customers to make informed decisions before placing an order.
4.2 Using eRank to Determine Competitive Processing Time
If you're unsure about what a reasonable processing time is for your product or niche, you can utilize software like eRank. This program allows you to look up the average processing time for a specific keyword or product type. By aligning your processing time with the industry average, you stay competitive and attract more customers.
5. Benefits of Making Products to Order
Choosing to make products to order instead of stocking inventory offers several advantages. Firstly, it allows you to offer a much larger selection in your shop. Without the need for pre-made stock, you can provide more options to your customers, increasing the likelihood of making more sales. Additionally, many makers feel more motivated and purposeful when creating products that are already sold.
5.1 Offering a Larger Selection
By making products to order, you can offer numerous product variations without the need for stocking each one. This flexibility expands your shop's selection and appeals to a broader range of customers. For example, if you sell macrame plant hangers, you can offer multiple designs of a certain color without the need to pre-make stock for each design.
5.2 Increased Motivation and Purpose for Makers
Knowing that your product has already been sold can ignite a sense of excitement and motivation while creating it. It's rewarding to think that someone specifically chose your product out of all the options available. This enthusiasm translates into the quality and craftsmanship of your handmade products.
6. The Recommended Approach for New Handmade Shop Owners
Based on all the factors mentioned above, our recommended approach for new handmade shop owners is to start with no stock. Focus on creating products as orders come in, and use sales data to determine which products warrant stocking inventory. This approach ensures that you're not wasting time and resources on products that may not sell well.
6.1 Starting with No Stock
When you're just starting out, it's unnecessary and potentially risky to invest in large quantities of stock. Waiting until you have sales data allows you to make informed decisions about what products to create and stock.
6.2 Establishing Inventories for High-Selling Products
Once you have reliable sales data and identify high-selling products, you can consider creating stock for them. This strategic approach helps you maximize the efficiency of your production process and ensures that your inventory aligns with customer demand.
7. Additional Resources for Selling on Etsy
To further assist you in your Etsy journey, I have two valuable resources for you. Firstly, I recommend watching my video on how to start selling handmade products on Etsy the right way. It provides additional advice and insights specifically tailored to succeeding on the platform. Secondly, I offer a free guide called "The Maker's Roadmap," which provides a step-by-step framework for starting and growing a profitable handmade shop. You can download it by clicking the link below.
Thank you for reading this article, and I hope it has provided you with valuable insights on managing inventory in your Etsy shop.
