How to influence a retail buyer to place purchase orders

Alloy:
What are the best practices you can recommend in order to sway buyers to place POs when you identify out of stock problems?

Haftevani:
I think that’s one of the biggest challenges on our side is inventory control. On the buyer side, it’s also inventory control. We’re on the opposite sides of the coin, but we kind of want the same thing. We want to best serve the customer with the least amount of risk.

When you are trying to convince buyers or replenishment managers to purchase more, it’s about having a tight-knit plan or being clear about the data that you’re seeing. I would go down to the store level, down to the SKU level and really show weeks of supply. You can do weeks of supply historical or to-forecast, you can show trends of how we’re trending up. Or that you’re running marketing and that you expect this lift to be 30% more, you’re going to be on feature or on promotion.

And then it’s just doing the math: “Here’s what I have a hand, here’s what I have coming in. And based on my current turn, I’m going to be out of stock.” That’s not something the retailer wants or that you want. And so I think it’s showing a really clear picture that in the next two weeks, you’re going to start hitting really high out of stocks if more orders aren’t hit, is the best way to convey that information. And to get the buyer, their replenishment manager, to agree and to write bigger orders.

On some level you’re helping them with their job. We are just one brand, and as DTC startups, we’re probably a really small percentage of their current portfolio until you start to have a bigger presence within these retailers. And so they’re looking in like — I’m speaking as a previous buyer — like I was always looking at my biggest brands. Those are the ones that were really moving the needle on my business. And so the little ones were the ones that were not always getting the attention. Although, if you don’t nurture the small ones, they’re never going to be able to grow.

And so I think that’s where a lot of the pressure is put on small brands to then do some of this work and to come to the buyer or the replenishment manager with the plan and with the data saying, “Look, this is based on my math, we’re going to be really in poor shape. And so I need you to write bigger orders.” You really help them do the analysis. And now all they need to do is upload some information. And usually they’re pretty receptive.

Also, I think understanding the retailers’ expectations of weeks-of-supply is important. So maybe what I consider a healthy weeks-of-supply, is not what the retailer considers a healthy weeks-of-supply. I think getting alignment there is crucial. Because that’s kind of like the middle point of when the system that orders replenishment would start to get triggered into ordering bigger orders. If your weeks of supply expectations are incorrect with your buyer or they’re misaligned with your buyer, then that could definitely be leading to out of stocks, as well.

Alloy:
What are some best practices for store allocation? I.e, weeks of supply for an item might look healthy at the aggregate, but out-of-stock percent could be high due to that misallocation at the store level. Have you had any success influencing retailers, like Walmart, with store allocation?

Haftevani:
I feel like that’s actually what keeps me up at night, which is kind of scary. Yeah, like weeks-to-supply on an aggregate look kind of great or like out-of-stocks look great because you have stores who don’t sell. Perhaps they’re just low performing doors and they’re ruining the average because they’re like they zero-out against a highly productive store.I think it’s looking at data, looking at inventory on a per-SKU, per-store basis. Which is a lot, especially if you have a lot of SKUs and a lot of distribution. But I think that with a few pivots and trying to work with that data, that is the granularity you need. I think that’s the granularity you need as you think about phantom inventory, as well.

And so, based on the resources of each company, it’s important to ask, “is this something we do on a weekly, monthly, quarterly basis?” It should be getting done and you should be looking at it like that granularly, at least four times a year, if not 12 or more.

Alloy:
Tell me about your conversation with my buyer? Are there tactics that you’d use to address those store-specific issues?

Haftevani:
I think it’s important to put yourself in the buyer’s shoes. They also don’t want out of stocks; they also don’t want stores having zero sales for weeks and weeks on end; they’re also very worried about that. They also understand the climate of their stores right now. On top of that, it is hard to get staff in. Most stores are understaffed. And so shelves are not getting replenished at the rates that they were two years ago at all.

So they’re constantly thinking about that. If you’re able to come to them and say, over the last four weeks, these stores have zero sales, they have zero inventory, there’s nothing coming in.

I think showing a clear path to say, “here’s the issue, here’s how to fix it.” And then all of it is rooted in data. Because we’re looking at the same data, especially with Walmart. Exactly what we’re seeing in Alloy is exactly what the buyer is seeing. It’s just a matter of whether they’ve had time to dive into your business yet or not. By you doing the work and showing it to them, you’re letting them skip a step and going straight from issue to solution. And I think data, in general, internally or externally, it’s the number one thing that helps to sway people’s minds.

Alloy:
When you identify store or DC level issues, do you show this to your buyer or to your broker? One of our attendees says they’ve been showing findings to their broker, but have gotten pushback from them on escalating to the buyer. In this case they have less than one and a half weeks on hand and on order.

Haftevani:
If I’m looking at less than one and a half weeks of supply, I mean, unless you’re a very slow turning product, that feels dangerous.

I think I would push back on broker, and try to understand why they wouldn’t want to speak to the buyer. Is there something bigger? Are you super inventoried in something else, and so they feel like it’ll bring a microscope to your whole inventory business? There has to be a reason why your broker wouldn’t want you to have a more comfortable weeks-of-supply, more comfortable inventory position.

Alloy:
Larra, I don’t know if you’ve used, for instance, in Alloy, our lost sales quantification. Which is Alloy’s estimate of how much you’re missing out on for having out of stocks. That would be a compelling number to bring to a broker and say, “Hey, we’re missing this amount of sales. We need to raise this to our buyer.”

Haftevani:
Yeah. I think every data point. Every way you’re able to slice into this to give different perspectives. And especially if all the perspectives are showing the same outcome. Then yes, something is wrong.

Alloy:
How do you use Alloy to make your business successful on a day to day basis?

Haftevani:
It’s looking at weekly sales, looking at trends of total sales — by category and by channel — if you’re in multiple retailers. It’s about monitoring the health of your inventory, so looking at weeks-of-supply, your out-of-stocks. Then some inventory, zero sale doors, zero sale doors over even several weeks. Unfortunately you can’t visit every store when we’re working with these mass retailers. And so this is the best way to get an idea of what’s happening in those stores, down to the store level. And then actioning against that.

To learn more about how Billie is using data in Alloy to build a strong relationship with Walmart watch the full webinar replay on-demand.