Holiday Inventory: How to Buy Merchandise You Need Before the Rush (2019)

With the 2019 holiday season on the horizon, it’s time to start thinking about how to prepare your business for the coming rush. You’ll need to take on extra staff, update your store hours and, of course, stock up on inventory.

Strategic holiday inventory planning should help you meet customer demands at peak times during November and December. This includes both the hottest seasonal items, and customers’ timeless favorites. Many business loan options are available to help cover the cost of bringing in all this extra stock, and provide backup funding for last-minute orders.

Holiday Spending Statistics: Planning for Peak Sales Days

Just how much inventory do you need for the season?

Every year, there are more key sales days to consider. Black Friday has expanded into an event that includes Thanksgiving, Small Business Saturday, Cyber Monday and the entirety of the following week. The spending frenzy runs into December as shoppers continue to seek the perfect items for everyone on their gift lists.

According to the numbers, failing to stock up on inventory means you could be missing out on a huge opportunity:

• Holiday retail sales in 2018 revealed a 5.4% increase in spending, with U.S. consumers blowing through $998.32 billion during the shopping season. 
• eCommerce sales showed the biggest increase at 16.7%; sales at brick-and-mortar stores climbed by 3.9%. 
• The 2019 retail sales forecast for the coming season shows a continued upward trend, but slightly slower growth with a 3.7% spending increase, amounting to a total of $1.035 trillion.
• Holiday purchases make up 19.2% of annual sales in the retail industry.

You want to enter the season prepared to maximize profits and bring in enough money to support your business during the rest of the year. Planning for, purchasing and managing inventory plays a big part in achieving these holiday sales goals.

The Importance of Inventory Planning Before the Holidays

The last thing you want during the holiday rush is to find yourself unable to keep shelves stocked or fulfill online orders.

Good holiday inventory management starts with a close look at past sales data, current market trends and which products are set to be the most popular for the season. Use this information to forecast demand and determine how much inventory you’ll need. If you stock any special items for the holidays that you don’t keep on hand the rest of the year, include these in your projections.

Next, you’ll want to perform a full inventory audit. Subtract what you have now from the total amount of inventory you need for the holiday season. As you draw up a budget from these numbers, don’t forget about items like extra bags, register tape and, if your store offers gift wrapping, wrapping paper and tape.

Add a little extra to give yourself a buffer in case your projections turn out to be off. This can help you avoid replenishing stock at the height of your busy season.

It’s a good idea to double-check your projections for accuracy before making any orders, because having too much inventory can be just as bad as having too little.

Every year, the U.S. retail industry loses an average of $50 billion on dead inventory – products that simply don’t sell. While you might be able to get rid of some of these items during post-holiday sales or donate them to charity, you still wind up suffering a significant loss.

Good inventory planning also involves timing your orders strategically. Ideally, everything should arrive far enough in advance for staff to organize, distribute and pack out before the craze begins. Check with suppliers regarding any potential delivery delays during times of high demand, and adjust your ordering schedule accordingly.

If it becomes clear the cash you have on hand won’t cover your inventory needs, you may want to consider a business loan. This can help you supplement your working capital and keep up with competitors throughout the holiday season.

Pros and Cons of Small Business Loans for Inventory

Taking out a loan doesn’t only enable you to get your warehouse and shelves stocked in time for the holidays. The extra funding also:

• Provides an affordable solution for short-term cash needs
• Allows you to take advantage of bulk discounts when purchasing inventory
• Gives you a competitive edge in a market dominated by large retail outlets
• Makes it possible to offer your customers a great shopping experience in the midst of a crazy season

Detailed holiday inventory planning can help you avoid taking out a loan that’s either too large or too small. Before applying for funding or making any orders, you should be fully confident in your projections.

Best Small Business Loan Options to Stock Up for the Holidays

To cover inventory purchases, you generally want to look for smaller loans with shorter terms than you would for a major business expense. Here are a few of the best options:

• Small business loans are best for medium and large businesses in need of significant inventory and extra warehouse space for the season. Short-term options are available to minimize the amount of time spent paying off the loan.
• A revolving line of credit provides funding as needed for inventory purchases and other holiday expenses. This is the most flexible option for small businesses and can be helpful for a quick infusion of cash in emergencies.
• Purchase order financing allows you to “sell” outstanding customer orders to a lender and use the money to pay your suppliers in the event you require more inventory for fulfillment, but can’t afford the cost.
• A merchant cash advance is a fast way to get money in advance of upcoming credit card sales. Paying back the loan requires a percentage of each sale you make during the holidays, so you’ll have to factor the payments into your budget.

Alternative lenders can provide these types of loans quickly prior to peak sales periods. Nonetheless, be sure to check application requirements and the average time between approval and funding so that you don’t find yourself racing against time with your inventory orders.

Need Help Financing Your Holiday Inventory?

If you don’t have the cash on hand to get the inventory you need to meet your retail holiday sales goals, now is the time to consider a business loan. A financing advisor at National Business Capital & Services can connect you with the most appropriate type of funding to cover your inventory purchases and other seasonal expenses.

Don’t wait until the last minute to prepare for the holiday rush. Applying for a business loan today can put cash in your account in time to make orders from suppliers, get your inventory organized and have shelves stocked before the first wave of customers comes in the door for the start of the shopping season.

The Business Financing Advisors at National can walk you through your options to find the best small business financing choice for your store!