Inventory management can be one of the most complicated parts of running a business.
The goal is simple: Stock items your customers want and keep them selling quickly. But to accomplish this, you have to track many variables — including supply levels, order quantities, sales data, and seasonal fluctuations.
As the owner of a craft store, your plate is already full, so it’s easy to make mistakes when it comes to your inventory. When you address these issues and refine your strategy, you can run your shop more smoothly and boost revenue.
In this blog, we’ll discuss eight common inventory mistakes to avoid so you can keep items moving and sales high.
Even the most conscientious business owners can fall into bad habits. If you find yourself making these common errors, taking steps to improve can help you sell more craft supplies faster.
Some business owners purchase stock based on “gut feel.” While it’s valuable to observe what shoppers seem to buy or avoid day to day, you should always review reliable data before making final decisions.
Modern point of sale (POS) systems track sales data and allow you to customize reports so you can get insights about your customers’ behavior. Look at revenue from individual products and categories over time to see what’s popular and what’s struggling to sell.
For example, you may find that paint and brushes are gaining popularity, while knitting supplies have been sitting on the shelves. In response, you might increase orders or expand your paint-related offerings while cutting back on knitting tools.
As you adjust your product mix based on your customers’ preferences, you can reduce both stockouts and overstock.
Most retail shops experience some kind of seasonal fluctuation in sales. For craft stores, fall and winter are popular times for holiday-related crafts and decorations, like Halloween and Christmas items. To navigate these changes in demand, pay attention to past trends.
Maybe you want to stock plenty of holiday craft paper to prepare for higher demand, so you buy 60 packs. But when you check last year’s revenue figures, you see you only sold 35. After the season passes, you realize you sold fewer than you expected and end up with stacks of extras that are hard to move.
If you find yourself in this situation, placing leftover seasonal items on clearance can help you increase turnover. But if you make informed purchasing decisions, you can prevent the issue before it arises.
When you plan ahead and buy the right amount of stock, you can maximize sales while avoiding tying up too much capital in merchandise that’s hard to move.
Related Read: Financial Planning for Craft Stores: 7 Tips for Managing Highs & Lows
Small retail businesses tend to get their merchandise from wholesale suppliers. Look for ones who offer:
Often, the best way to achieve this is by working with multiple sources.
Using a variety of vendors allows you to expand your product offerings and protects your craft shop from supply chain issues. If one vendor suddenly experiences delays and can’t ship your merchandise, you can buy from another and keep your shelves stocked.
Say you place an order for 100 spools of ribbon in anticipation of a busy gift-giving occasion, and one vendor can’t deliver on time. You could miss out on a major revenue boost. But by ordering 50 spools from one supplier and 50 from another, even if one experiences a shipping delay, you can still make most of the sales.
Do you ever find yourself running out of your most popular products? Many POS systems let you set an automatic reorder point when stock reaches a preset minimum. Decide the minimum and maximum quantities you want on hand, and the system automatically places an order to restock the item when the minimum is reached.
Pro tip: You don’t need to set up auto-restock for every product — just those that tend to sell out. This ensures you never lose a sale because of a stockout.
Disorganized shelves make it harder for shoppers to find what they want and for employees to do their jobs. Organize items on the sales floor logically by category, such as:
Arrange items so they’re orderly and easy to see. Don’t forget the backroom — use shelves and bins to separate products by category, making it easier to locate stored goods and restock the sales floor. This saves time and keeps merchandise moving consistently.
Pro tip: Display top sellers front and center in your craft store to catch shoppers’ eyes and boost revenue from these items.
Related Read: Craft Store Layout: Why Customers Can’t Find What They Need (+ How To Fix It)
A weak labeling system creates confusion for both employees and customers, especially as inventory grows. A clear, consistent labeling process makes it easier to manage stock, navigate the store, and keep everything running smoothly.
Start with these essentials:
Part of successfully managing your inventory is paying attention to key metrics. One of these is the sell-through rate, which tells you how much of the merchandise purchased in a given period has sold. It’s calculated by dividing the units sold by the units received within that time frame.
Consistently record this information and compare one week or month to the next. You might set a goal of 60% or 70% and try to improve. If you fall short, consider marking down the price slightly to encourage more sales.
You can monitor the sell-through rate for your entire craft store or for individual products.
If a certain item is lagging behind, you can:
These strategies often increase sales for individual products.
Digital tools make it easier to keep track of stock counts. When you receive a new shipment of art supplies, for example, you can print a barcode for each product and add them to your digital inventory. Then, when an item is sold, the system automatically deducts it from the total.
On paper, these numbers should always be accurate, but in practice, they can sometimes be a little off. You might miss a product and never barcode it, or a unit could be lost or stolen. To keep counts accurate, it’s important to perform occasional manual audits.
Count each product’s quantity and compare it to the total in your system. If there’s a discrepancy, adjust the digital count to match what you actually have. Conducting these audits periodically for every product helps you project sales accurately and know when to reorder stock.
Taking steps to avoid these common inventory mistakes and implement sound strategies helps reduce waste and increase profits at your craft store.
To successfully put these strategies into practice, you need digital tools to support them. Rain is a cloud-based POS solution built for craft shops. With Rain, you can use data to identify your highest- and lowest-selling items, improve purchasing decisions, and track inventory levels to keep your shop profitable.
At Rain, we want to help you get the features you need at a price you can afford. Check out our Build and Price tool to find the plan that’s right for your craft store!