Strategies to reduce the risk of overstocking of imported home textiles

Introduction

In the imported home textile industry, the inventory backlog is like a time bomb, which seriously threatens the capital liquidity and operational stability of enterprises. Imported home textile products from foreign procurement, transportation to enter the domestic market sales, many links and a long cycle, during the face of many uncertain factors, easy to lead to inventory backlog. Inventory backlog not only occupies a lot of capital, increases storage costs, but also may cause asset impairment losses due to product obsoletion, damage, etc., hindering the sustainable and healthy development of enterprises. Therefore, it is of great practical significance to study and effectively reduce the risk of overstocking of imported home textiles for imported home textiles dealers.

The reasons for the risk of overstocking of imported home textiles

(1) Deviation of market demand forecast

Changing consumer demand: With the improvement of living standards, consumers’ demand for home textile products is increasingly diversified and changing rapidly. From style design and material selection to functional features, consumer preferences continue to evolve. For example, in recent years, environmental protection, smart home textile products are favored by consumers, if imported home textile dealers fail to catch this trend in time, still a large number of traditional style products, it is easy to lead to inventory backlog.

Insufficient market research: Some imported home textile dealers lack sufficient in-depth market research before purchasing decisions. There is no comprehensive understanding of the demand differences of different regions and different consumer groups in the domestic market, as well as market trends, competitor dynamics and other information. Purchasing only based on previous experience or supplier recommendation makes the purchased products out of line with the actual market demand, resulting in overstocking.

(2) Procurement and supply chain management issues

The procurement plan is unreasonable: the procurement cycle of imported home textiles is long, involving complex links such as cross-border transportation and customs clearance. If the dealer procurement plan is not reasonable, such as too much purchase, improper grasp of the procurement time node, when the market demand is not up to expectations, it will cause inventory backlog. For example, a dealer expected a certain imported blanket to sell a considerable amount in winter, and purchased a quantity far exceeding the actual demand. As a result, the winter temperature was high that year, and the demand for blankets dropped significantly, resulting in a large inventory backlog.

Slow supply chain response: imported home textile supply chain involves foreign suppliers, logistics providers, customs and other subjects, any link problems may lead to supply chain delays. When the market demand changes, it is difficult for dealers to adjust the purchase plan in time and cannot respond to the market demand quickly. For example, delays in production by foreign suppliers and force majeure in logistics transportation may cause the arrival of products to lag behind time, miss the best sales opportunity, and cause inventory backlog.

(3) Defects in sales channels and marketing strategies

Single sales channels: Some imported home textile dealers rely on traditional sales channels, such as shopping malls, stores, etc., sales channels are limited, and the coverage is narrow. In the case of fierce market competition, it is difficult to effectively reach more potential consumers, resulting in slow product sales and a gradual backlog of inventory. In contrast, those enterprises that actively expand online e-commerce platforms, live streaming and other emerging sales channels have faster product circulation and relatively low inventory overstock risk.

Improper marketing strategy: If imported home textile dealers fail to develop effective marketing strategies, they can not highlight the differentiated advantages of products and attract consumers to buy. For example, in the process of product promotion, the quality, design concept and brand story of imported home textiles are not fully displayed, and consumers lack awareness and interest in the products, resulting in unsalable products and inventory. In addition, the timing and intensity of promotional activities are not properly grasped, which may not be able to effectively drive sales and exacerbate the inventory backlog problem.

(4) The product itself

Product homogenization is serious: the homogenization of products in the current imported home textile market is relatively common, and many dealers purchase products similar in style, material, function and other aspects, lacking unique selling points. In the market competition, consumers can choose a large number of alternative products, if the product can not stand out, it is easy to fall into the dilemma of slow sales, resulting in inventory backlog.

Slow product replacement: home textile industry product replacement speed is faster, fashion trends are constantly changing. Imported home textile products due to transportation, customs clearance and other links take a long time, from foreign design and development to enter the domestic market sales, the time interval is large. If the product replacement speed can not keep up with market changes, it is prone to product obsolescence, resulting in inventory backlog.

Strategies to reduce the risk of overstocking of imported home textiles

(1) Accurate market research and demand forecasting

Multi-channel collection of market information: imported home textile dealers should establish diversified market information collection channels. On the one hand, the Internet big data platform is used to collect and analyze the search records, purchase evaluation, browsing preferences and other data of consumers on the e-commerce platform to deeply understand the demand trend and potential demand of consumers for home textile products. On the other hand, through field research, questionnaire survey, consumer interviews and other ways to directly communicate with consumers, to obtain first-hand market information. At the same time, pay attention to industry exhibitions, fashion conferences, professional media reports, etc., timely grasp the latest design trends in the home textile industry, material innovation and other information.

Use scientific forecasting models: Use professional data analysis tools and forecasting models, such as time series analysis, regression analysis, machine learning algorithms, etc., to accurately predict market demand. Combined with historical sales data, macroeconomic data, seasonal factors, social hot spots and other variables, to build a demand forecast model suitable for their own business. For example, the use of time series analysis to predict the sales trend of different styles of home textile products in different seasons, and make procurement planning in advance. In addition, you can also invite industry experts to consult, combined with expert experience to correct and improve the forecast results, improve the accuracy of the forecast.

(2) Optimize procurement and supply chain management

Make scientific purchasing plan: Make reasonable purchasing plan based on accurate market demand forecast. According to the product sales cycle, inventory level, procurement lead time and other factors, determine the product type, quantity and time node of each purchase. The use of small batch, multi-batch procurement method to reduce the risk of inventory overstocking caused by excessive one-time procurement. At the same time, establish close cooperation with suppliers and strive for more flexible procurement terms, such as allowing some products to be replenished or returned according to market sales.

Improve supply chain coordination efficiency: strengthen communication and cooperation with foreign suppliers, logistics providers, customs and other links of the supply chain. Establish an information sharing mechanism with suppliers to grasp the production progress, raw material supply and other information in real time, so as to adjust the procurement plan in time. Select reliable logistics partners, optimize logistics transportation routes, improve transportation efficiency, and shorten product transportation time. Prepare for customs clearance procedures in advance to ensure smooth clearance of goods and reduce the risk of supply chain delays. For example, through the signing of service level agreements with logistics providers, clear transport time, cargo damage compensation and other terms, incentivize logistics providers to improve service quality.

(3) Expand diversified sales channels and innovate marketing strategies

Expand online and offline sales channels: On the basis of consolidating traditional offline sales channels, vigorously expand online sales channels. Settle in mainstream e-commerce platforms, such as Taobao, Jingdong, Pinduoduo, etc., open brand official flagship stores, and use the traffic advantages of e-commerce platforms to expand the scope of product sales. At the same time, we actively carry out emerging online sales models such as live streaming and social e-commerce, and improve product exposure and sales through the display and recommendation of anchors. In addition, it can also establish cooperative relations with offline home stores, supermarkets, etc., increase product sales outlets, and improve product distribution rate.

Innovative marketing strategies: Develop differentiated marketing strategies to highlight the unique value of imported home textile products. In the process of product promotion, through story marketing, content marketing and other ways, to convey to consumers the brand culture behind the product, design concept, production process and other information, to enhance the added value of products. Targeted at different consumer groups, carry out precision marketing activities. For example, targeting young consumer groups, using social media platforms for interactive marketing and launching personalized customized products; For middle and high-end consumer groups, hold high-end tasting meetings, member-exclusive activities, etc., to enhance brand image and consumer loyalty. In addition, the rational use of promotional strategies, according to different seasons, festivals, product sales stages, to develop flexible promotional activities, such as discounts, full reduction activities, gift promotions, etc., to stimulate consumers to buy.

(4) Product innovation and optimization

Strengthen product research and development innovation: imported home textile dealers should increase investment in product research and development, cooperate with foreign suppliers or independently carry out product research and development and innovation. Pay attention to the development trend of the latest technology and materials in the industry, apply new environmental protection materials and intelligent technology to home textile products, and launch products with differentiated competitive advantages. For example, research and development of home textile products with antibacterial, anti-mite, self-cleaning functions to meet the needs of consumers for healthy life. At the same time, we pay attention to product design innovation, integrate domestic and foreign fashion elements, and create unique product styles to attract consumers’ attention.

Optimize the product portfolio: Optimize the product portfolio based on market demand and sales data. Eliminate those products with poor sales and serious inventory backlog, retain best-selling products, and constantly introduce new products to supplement and update. Reasonably adjust the proportion of products in different styles, materials and price ranges to meet the diversified needs of different consumer groups. For example, launch corresponding product series for different seasons, launch light and breathable bed products in summer, and launch products with good thermal performance in winter to improve the marketability of products.

(5) Inventory management and risk early warning

Implementation of fine inventory management: The use of advanced inventory management system, such as inventory management software (inventory management module in ERP system), real-time monitoring and fine management of inventory. Set reasonable safe water level of inventory, when the inventory level is lower than the safe water level, timely replenishment; When the inventory level is higher than the alarm level, corresponding measures should be taken to reduce the inventory, such as increasing promotion efforts and negotiating with suppliers to return goods. At the same time, the inventory products are classified management, according to the product sales speed, value and other factors, the products are divided into A, B, C three categories, respectively adopt different inventory management strategies. For example, to maintain A low level of inventory for class A best-selling products, fast turnover; Focus on cleaning up Class C unsalable products.

Establish inventory risk early warning mechanism: Establish a sound inventory risk early warning mechanism, set a series of inventory risk indicators, such as inventory turnover rate, inventory ratio, inventory cost rate, etc. Through the real-time monitoring and analysis of these indicators, when the indicators exceed the normal range, the early warning signal will be issued in time. For example, when the inventory turnover rate is lower than the industry average for two consecutive months, the system automatically sends an early warning to remind enterprises to pay attention to the risk of inventory overhang. Enterprises take timely measures to adjust according to early warning signals, such as optimizing procurement plans, strengthening sales promotion, etc., to reduce the risk of inventory overhang.

Case analysis

(A) Our North American C company case

C Company is a distributor specializing in importing high-end home textile products. In the past, due to inaccurate market demand forecasts and unreasonable procurement plans, inventory overstocking was serious and capital turnover was difficult. To solve this problem, C company has taken a series of measures.

First of all, strengthen the construction of market research team and invest a lot of resources to collect and analyze market information. Through the big data analysis platform, in-depth understanding of consumers’ demand preferences and purchasing behaviors for high-end home textile products, combined with industry trend forecasting, a more accurate market demand forecasting model has been developed.

In terms of procurement, C Company has established long-term and stable cooperative relations with foreign suppliers, and adopts small-batch and multi-batch procurement methods according to the forecast results of market demand, and has won more flexible procurement terms. At the same time, optimize supply chain management, cooperate with logistics providers to optimize transportation routes, shorten transportation time, and ensure timely arrival of products.

In terms of sales channel expansion, in addition to opening counters in high-end shopping malls, C Company also actively expanded online e-commerce platforms, cooperated with well-known e-commerce platforms to open official flagship stores, and carried out live delivery activities. Through the combination of online and offline sales model, product sales have increased significantly.

In addition, C company increased investment in product research and development and innovation, jointly developed high-end home textile products with unique design and functions with suppliers, optimized product portfolio, and eliminated unsalable products. Through the implementation of refined inventory management and the establishment of inventory risk early warning mechanism, C company can monitor the inventory level in real time and adjust the inventory strategy in time.

After a series of efforts, Company C successfully reduced the risk of inventory overstocking, significantly increased inventory turnover, significantly improved capital liquidity, and significantly improved business conditions.

The case of our European D company

D Company is a comprehensive distributor of imported home textile products, covering many grades and categories. In the process of development, D company is also facing the problem of inventory backlog, especially some low-end imported home textile products.

In view of this situation, D company first carried out in-depth segmentation of the market, and formulated differentiated marketing strategies according to the demand characteristics of different consumer groups. For medium and low-end products, mainly for price-sensitive consumer groups, through online e-commerce platforms and offline discount stores and other channels, launch cost-effective product portfolios, and carry out frequent promotional activities to attract consumers to buy.

In the procurement process, D Company strengthens the communication with suppliers to jointly optimize the procurement cost and reduce the product price. At the same time, according to the market sales data, reasonably adjust the purchase plan, reduce the inventory overhang.

In terms of product innovation, D company upgrades the functions and optimizes the design of middle and low-end products to make them more in line with consumer needs. For example, add antibacterial and anti-mite functions to ordinary bedding to improve product competitiveness.

By expanding diversified sales channels, innovating marketing strategies and optimizing product and procurement management, D Company has effectively reduced the inventory overstocking risk of middle and low-end imported home textile products, and improved its market share and profitability.

Conclusion

Reducing the risk of overstocking of imported home textiles is a systematic project, which requires imported home textiles dealers to start from many aspects such as market research, procurement and supply chain management, sales channel expansion, product innovation, inventory management and so on. By accurately grasping market demand, optimizing procurement plans, improving supply chain synergy efficiency, innovating sales channels and marketing strategies, strengthening product research and development innovation and inventory management, we can effectively reduce the risk of inventory overstocking and improve the capital operation efficiency and market competitiveness of enterprises. In actual operation, different enterprises should formulate inventory management strategies suitable for their own development according to their own business scale, product positioning, market share and other factors, and constantly optimize and improve. At the same time, it is necessary to pay close attention to market dynamics and industry development trends, and adjust business strategies in a timely manner to cope with the changing market environment and achieve sustainable development of imported home textile business. With the increasingly fierce market competition and the constant changes in consumer demand, imported home textile dealers can only continue to improve inventory management capabilities in order to be invincible in the market.