A smoke shop can be a very lucrative business that offers a great small business opportunity for many entrepreneurs. While success depends on many factors, managing inventory well is perhaps the most important. So, what does it mean to manage inventory and why is it so important?
Inventory, of course, is a list consisting of every item in your stock, giving you a clear overview of what is available in your store, what is not, and how many of a certain item currently exists. With such a consolidated list, it’s possible to calculate your profits or losses and determine which items require replacement. Retailers can identify problem areas, keep optimal stock levels, manage their vendors and ordering, and increase the overall efficiency of their business operations.
Smoke shop businesses are certainly no exception to this rule. In fact, they may be more heavily reliant on great inventory management than most other retail businesses. Smoke and vape shops now have more product to manage than ever before, especially those that sell cannabis.
Despite sounding rather straight forward, managing an inventory is not easy. You need a great inventory management system to succeed. So let’s go over how to manage your smoke shop inventory and run a profitable business.
1. Choose The Best Inventory Software
The first and most important thing to consider for inventory management is picking the right software. With your point of sale software, you’ll have a far easier time handling the inventory of your smoke shop.
Shop around for different systems and sign up free trials so that you can see exactly how it works. Don’t sign up for anything without first doing proper research and making sure it’ll work for your business. You’ll also want to consider training and customer support. Managing a complicated inventory comes with a learning curve, so it’s important that you have adequate assistance with each step of the process, better allowing you to take advantage of the powerful software.
2. Come Up With Par Levels
Another way you can effectively manage your smoke shop inventory is to set custom par levels of every product in your shop.
Par levels indicate the number of each item that should be in your shop at any particular time. Retailers can implement them to help keep their stock at ideal levels. They help prevent overstocking any item, which can lead to reduced shelf space, unsellable stock, and a lack of cash flow. But they also help avoid stockouts, which lose sales and send shoppers to your competitors. Both situations are extraordinarily detrimental to business and must be prevented.
When setting par levels, you need to know a bit about your products. Every item might have different levels. Of course, items that sell well will have higher par levels, while your lesser sellers will be lower.
You can use your POS sales reporting features to better identify product performance and structure optimal par levels. KORONA’s ABC retail analysis is a powerful feature for doing so.
3. Have A Good Relationship With Your Supplier
Maintaining great relationships with your product suppliers is a key to long-term success. Strong connections with your suppliers allow you to negotiate prices and receive bulk discounts, get access to the newest or most popular products, and learn about unusual items that aren’t always marketed to the average business.
A strong relationship also helps ensure added convenience and flexibility. You’ll be more likely to receive last minute orders on time, freebies, case breaks, or other friendly kickbacks from your vendors.
Smoke shops are likely to have a significant inventory and therefore work with many vendors. This means that it’s important to implement a strong vendor management system. The best way to ensure this is by using a great point of sale software. Your POS system can keep all your vendors organized and under one umbrella, keeping the process more streamlined and efficient. Even better, it can manage custom par levels for each product by setting automated ordering for your entire store. This helps your business avoid stockouts or overstocks, ensuring optimal levels throughout.
4. Track Sales
It’s also important for businesses to automatically track all sales by various metrics. Simply eyeing up product performance often times falls short and leaves you with insufficient data for analyzing your business’s performance.
With KORONA POS, each product that is scanned or manually entered will automatically be uploaded into your system and available in various reporting features. Sales reporting must be customizable and personalized to fit each business’s needs. There are hundreds of different ways of breaking down your data into digestible pieces and KORONA has you covered for each of them. Below is a sample of some of the most common:
- Overall sales
- Sales by location
- Sales by hour
- Individual employee sales
- Gross margin return on investment
- Sales against foot traffic
All metrics are broken down in easy-to-understand ways. These provide you with far greater insight into your smoke shop than you’d ever be afforded by manual processes. Together, such sales reporting helps businesses with their pricing, ordering, seasonal stocks, marketing, staffing, and much more.
5. Run Smart Promotions
There are ebbs and flows in sales for any business. So it’s likely that you’ll find yourself with some excess stock from time to time. This is especially the case following the holiday season. Retailers often order a large amount of products during November and December and find themselves with a little left over come January.
This is where great retail promotions come in. To get rid of excess stock, businesses can simply come up with smart ways of moving the product. Post-holiday sales, bundle deals, or even giveaways can help get rid of some of this extra product and keep your business on people’s minds even after the busy season.
And once you have a new promotion up and running, your POS system can keep track of its progress and success. It’s simple to measure the profitability, making sure that no promotion is ever running at a loss. Monitoring a promotion is simply another powerful extension of your sales reporting tools.
See also: How Profitable Is A Smoke Shop
Manage Your Smoke Shop Inventory with KORONA
For more advice on how to manage your smoke shop’s inventory, reach out to us at KORONA. Sign up for a free trial below to see for yourself how the software works. Your free trial requires zero commitment and you can use it for as long as you’d like. Plus, one of our product specialists can walk you through the software, showing you exactly what it will look like in your system.