A purchasing strategy ensures that you save costs and put your organizational goals into practice. After all, you don't want a warehouse full of stock that remains there for too long. On the other hand, you also don't want an empty warehouse when customer demand is too high. So your stock needs to be balanced. But how do you get this done? An effective purchasing strategy could be the solution. Especially if you sell via online marketplaces. Data and technological tools make buying for these platforms even easier. In this blogpost you'll read how data and technology contribute to a smart purchasing strategy, so you can generate more sales from marketplaces.
Back to basics, what is a purchasing strategy?
With a purchasing strategy you determine how purchasing goals will be achieved. It defines what the policy will look like, which suppliers will be collaborated with, which purchasing systems will be used and which other collaborations are important. Setting up a purchasing strategy is the perfect opportunity to put the core values of your brand or wholesale business into practice. If your brand stands for sustainability, then within your strategy you look for suppliers who are also sustainable.
Do you want to sell on a marketplace? Then a good purchasing strategy will ensure that you don't end up with insufficient stock. Marketplaces give penalties when you run out of stock, because platforms want you to keep delivering. This has a negative impact on your rankings, even if your product is back in stock later. However, your customer has already easily moved on to a competitor and it will take some time before you get your old position back.
When you purchase stock for the marketplaces, you have to make data-driven decisions at strategic, tactical and operational levels and use tools that help you do this. The goal is to save as many inventory and purchase costs as possible. By keeping the purchasing costs down, you can keep the selling price of your products very competitive, without losing margin. A good purchasing strategy will not only give you a good ranking, it will also increase your gross margin.
Determine an effective strategy for your marketplace
Technological developments have caused automation to increase at a rapid pace. Think of Artificial Intelligence tools that use algorithms for data-driven analyses to determine the most optimal stock levels. Purchasing decisions are based on figures such as old sales, but also current stock levels. This gives you more insight, reduces costs and allows you to forecast sales. Here are a few reasons to make your purchasing strategy smart.
Analyze data in an efficient way
The key to targeted purchasing is knowing your inventory. To know your inventory, you will need to keep track of the right data, especially when you are selling through different channels, this can prove to be a challenge. With the right tools such as the order integration from EffectConnect and the inventory optimizationsoftware from Optiply you ensure that relevant data comes together. An order integration ensures that orders from different marketplaces are transferred to your own e-commerce environment. This allows you to efficiently update your inventory levels, so you can determine the minimum and maximum stock to buy on time. Because without data-driven forecasting it becomes more difficult to prevent having to decline a sale and that is the last thing you want for your customers.
Technology makes it easy to connect webshops, marketplaces and stock optimisation software. If you don't use marketplace integration software, keeping track of information can become a big challenge, especially when your company is growing. For example, technology speeds up the purchasing process because you will know more quickly which products you can buy in greater depth. Think of an ABC analysis, where you automatically get more input about the turnover rate of products. This also applies to the transfer of stock and purchasing information both internally and externally. This reduces the need for departments to switch, because information is quickly accessible. By integrating multiple marketplaces and inventory systems with each other, the chance of making inventory and purchasing mistakes becomes smaller.
Enter into sustainable partnerships with suppliers
A clever purchasing strategy not only helps to create a balance between stock and purchasing costs, it also helps with supplier management. On average, suppliers are responsible for over 70% of the turnover. This means that the role of suppliers is crucial during purchasing. With a clear strategy you are more selective in choosing the right supplier. You look at price, order size and delivery time. Suppose one of your core values is 'sustainability', then you can adjust your purchasing strategy to this by choosing sustainable suppliers. In the cooperation with suppliers it is above all important to create trust between them. The more you can trust a supplier, the better the service levels will be and the more turnover you will bring in as a brand or wholesaler without incurring high costs.
Optiply's stock optimization solution and EffectConnect's order integration make it possible to use data to create a smart purchasing strategy for marketplaces. This ensures that information from various source systems is centralized. When you do this well you will have a good customer demand forecast and a balanced inventory.
With this you create within a competitive market, a strong ranking position on marketplaces by making low inventory costs and competitive sales prices and above all always have everything in stock.
Optiply is the number one purchasing software provider for a more sustainable supply chain. With its AI purchasing algorithm, Optiply is able to automate 90 percent of all purchasing decisions. This allows webshops and wholesalers to balance their stock. This way you will never have too little stock, so you will not miss out on turnover due to stock outs. And you will not have too much either, so you will have a better cash flow.