The global race for businesses to meet client demand is what propels enterprises all around the world. As more enterprises enter the market, the total supply and demand network grows more complicated and crowded. This calls for businesses to keep a regular check on their stocks to keep their operations running smoothly.

The back-and-forth movement of raw materials entering, processing, and distributing the final product to end-users requires a high level of teamwork, precision, and quality that meets or exceeds consumer expectations. This brings up an essential aspect of supply chain management and stock optimization that businesses must understand well. In this article, we'll talk about how you can grow your sales online by optimizing your stocks the right way, let's get going.

Challenges for Online Marketing

Let's have a look at the marketing challenges and how we can overcome them to grow sales and optimize our stock levels. When growing online sales you have three clear challenges today:

• Increased Cost-per-click: It doesn't matter if you run ads on TikTok, or Google Ads typically a cost per click goes up year over year
• Competence: It's typically a challenge to retain key competence in your company because we see it if you have a performance marketing manager or performance marketing team and it's quite often that they change jobs within two or three years. The competence level to stay up to date on what is happening is a big challenge
• Product Margin: The third part is product margin and the pricing because you have more global companies offering more marketplaces

All of these three forces need to be managed on top of the privacy challenges that we face. So the approach is to do it in a way that’s safe for the future. These challenges are not something that will vanish, they will only become a bigger issue for the future.

Collaborate Between Purchasing/Supply and Marketing/Demand

Collaboration between the supply team, financial team and the performance marketing team can be a game-changer for your business. This is due to the fact that in the marketing perspective, there are a lot of interesting lead indicators that you can use and educate the supply team. So from the marketing team, you will get an insight on whether the click-through rate looks promising. Here are some key insights you can share:

• Signals about activation or low in stock
• Lead indicators for a wrong price point or price elasticity
• Shared targets and access to data that everyone understands

This collaboration can become challenging if you have large a assortment with many products or brands, multiple markets or seasonal effects. This needs to be addressed and it is imperative that the performance team has insights about real stock levels and on if the business is overstocked or understocked.

This will also clarify whether they should push more marketing or draw back and utilize the funds for something else.

Marketing Budget Based on Customer Journey

The best way to look at marketing budget is to take a step back and think from the customer's perspective. Try to make each step of your sales funnel as engaging as you can. A great way to be more proactive higher up the funnel is by tracking the metrics of top-funnel activities like videos on TikTok, Facebook or Reels on Instagram and tracking their views and engagement. For feed-based ads, use catalog ads, collections ads or smart shopping to make the most out of your marketing budget.

Making Your Segments Based on Customer Behavior

There are a lot of  key things that will affect performance marketing. One of those is to think about what type of company you’re in. Let's say, if you work at IKEA with a lot of different categories, including everything from furniture to kitchenware, compared to GymShark, a consumer brand that sells products just for the fitness industry, there are a lot of variants on how to assess the assortment, how to predict it and identify what to target.

Make your segments from a customers perspective rather than what's easier to filter in Google Sheets. Having a smart way of filtering your items, based on looking at the performance marketing data is critical.

Communications Between the Teams

It's very interesting to note how the KPIs connect across various departments in the company. For example, the growth rate in Google Shopping is an important metric for a marketing team but it's also highly dependent on the performance team. So the right information must be shared seamlessly within departments. If you have 30 percent fewer stock levels or 30 fewer products compared to last year in the most important category during this season, there's isn't anything that you can do in terms of making major leaps in Google Ads just to solve that. That is something you should be aware of and be able to signal early on.

Optimizing Stock With Pricing

It's important to evaluate where you are on the burndown chart. Have you just released this product, or are you actually, in the end, the entail of it?

• How should you work with marketing?
• Based on that, how to be smart in setting up campaigns and what can you do before the real campaign starts?
• What type of experiments can you run even before you start the real campaign so you know what will perform the best based on lead indicators?
• And how to continuously experiment with a price?

A lot of our customers tell us that they have a lot of data but they don't know how to use it smartly. The pricing part (Always-on) is the core assortment that is just always running. If you look at IKEA they have a lot of products that just continuously run. Of course they also have seasonal products and campaign periods like a Black Week. You might have two sales periods every year instead of one, in that case, you need to address those differences and forecast the amount differently.

Price Comparison VS Click-Weighted Price

We see a lot of brands that do price analysis on their assortment and it's typically done by the finance or the purchasing team. They have a scraper and they try to match part of the assortment compared to three to five competitors or they look into price comparison sites like price runner where are we in terms of the average price compared to our competitors. But there is a very interesting way to look more into the click-weighted price. Below is a Google Shopping result, notice that Bugaboo Fox 2 has a lot of different prices here.

The click-through rate means that if you have seen the product and somebody clicked on it it's going to be very different based on the price and it's a really good early indicator in terms of how this price point performs. That's why the click-weighted price is something that we think is important to educate the purchasing team. It is also important to educate them on how to use it and enable that data.  You can educate the team and then set out data streams so they have access to it. In turn, they can work with the prediction models in terms of where you are with the price point currently.

So, the click-weighted price can be analyzed as mentioned in the above picture. Every point here is a product and the size of the product is the revenue. So, if you have a big bubble here then you have high revenue and you can plot that versus clickbait price. You can compare that to ROAS. It could be the cost of sales or it could be profitable on ad spend.

Let's say that you're selling an iPad Pro, and they have two different price points. You can also segment that in the B sector. We have products that are lower priced compared to the competition but this seems like the ROAS is not that great here. So, there is a reason why the customers don't buy this from you or it's very expensive for you to sell and that is something maybe you should skip spending money on because it's not working that well.

Then in the C sector, you have a good price or a low price compared to the competitors. If products are not that price sensitive, maybe you can increase the price and keep the same volume on these products. For example, in the third sector, here we are high priced but the ROAS is good on this one so it is an opportunity to grow and to adjust pricing based on this. Having these kinds of insights and working with the sourcing team to optimize them is key.

Conclusion

It's common for eCommerce businesses to find it difficult to optimize their stock levels or feel stuck in their journey. But applying the above tips can propel your sales and help your business grow.

Looking for help with optimization? Schedule a FREE meeting with our eCommerce expert to get actionable tips tailored for your niche.

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