Are you a small business selling clothing or shoes online? Startups have turned into big businesses in this industry, including Gilt, Fab, and Rue La La, but one thing they all have to deal with is managing inventory.

These companies all deal with “sized” products, or products that could come in small, medium, or large. And it’s not just clothing and shoes — if your online marketplace sells hats, gloves, or even bed sheets, you need to have the right amount of each size ordered. It sounds like common sense, but Stitch Labs, an inventory management service, notes that inventory costs account for 45-90 percent of all business expenses.

It’s important for online retailers to understand how to stock sizes and how customers buy based on size.

While extra-smalls and extra-extra-larges (XXL) often seem to end up in extra inventory, they still wind up accounting for over five percent of an online merchant’s sales, according to Stitch Labs’ research. The company suggests that retailers move away from the class “1-2-2-1″ inventory purchasing guide. That is, buy one unit of smalls, two of medium and larges, and one of extra large. Instead, it believes that a mix of extra smalls, and extra-extra-largest will help boost sales.

Check out the infographic below for other best practices when ordering your inventory:

Clothing image via Shutterstock

If you visit an Apple store once at the beginning of a week and again at the end of the week, chances are you’re seeing a completely new set of inventory. Impressively, the company turns over its inventory every five days, according to a new study.

Analyst firm Gartner, in its 2012 Supply Chain Top 25 study, says that Apple restocks its shelves 74 times a year, beating out companies like Amazon, Dell, and P&G for most inventory turned. Amazon, which is famous for its quick shipping times, only turns its inventory 10 times a year. Dell has a slightly higher refresh rate at 35 times a year, and P&G falls at five times a year.

Apple’s numbers are actually closer to fast food chain McDonalds, which turns its inventory 142 times a year. Think about it, Apple turns its inventory like a food retailers, whose products actually have an expiration and have to be swept clean by law. In Apple’s second quarter earnings call of 2012, the company announced that it had sold 35.1 million units of its iPhones, which was 88 percent higher than the year before. It also sold 11.8 million iPads, 151 percent higher than last year, and 4 million Macs, seven percent higher than last year.

The company is rumored to be releasing a refresh to its Macbook Pro line at its upcoming developer conference WWDC in June. It’s also said that the latest operating system, iOS 6, will be announced as well.

via The Atlantic; image via goodrob13/Flickr

Inventory management is a boring term for what is actually the central question of any small business: How much stuff do I have left to sell, and where the @$%& is it?

Stitch Labs, an inventory management tool for small businesses like crafters and T-shirt printers, now integrates with BigCommerce, an e-commerce system for selling stuff, making it easier to answer that critical question.

What that means is that if you sell your goods through BigCommerce (which lets you list items for sale on Etsy as well as Facebook, the web, and mobile devices), whenever an order comes in, it will automatically show up in the Stitch dashboard, updating your inventory counts.

The integration works in multiple directions, so if you’re selling on Etsy and BigCommerce, an order placed on Etsy will also be reflected in your BigCommerce console as well as in Stitch.

BigCommerce powers 25,000 storefronts, so this adds a good number of potential customers to Stitch’s audience. The company had already completed an earlier integration with Shopify, and Stitch launched in November, 2011 with support for Etsy sellers.

Stitch was founded in 2011 and is based in San Francisco, California. It raised a $1 million seed round from True Ventures in February, 2012. See below for a couple of screenshots illustrating what it looks like.

Announcement from Stitch Labs: Stitch now integrates with BigCommerce

Photo: Shopping carts by code poet/Flickr

Sept. 9 - 10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Stitch Labs, provider of an inventory management service for small retailers, has integrated its service with online craft marketplace Etsy.

You might not think that the people who make crocheted pot holders and carved wooden iPhone docks have inventory management issues, but a significant number of people who sell on Etsy actually make hundreds if not thousands of items a year, selling them not only through Etsy but also in craft fairs, through wholesale channels and consignment shops.

“It’s unbelievable how much carbon paper floats around,” said Stitch co-founder and “thinker upper” Brandon Levey, referring to the carbon-copy slips still used for credit card transactions at craft fairs and trade shows.

With a bunch of old technologies and a variety of different sales channels, keeping track of the inventory gets to be a pain. If someone places an order for a forest green knitted hemp tea cozy through Etsy, how do you know if you have enough additional tea cozies to re-list the item on the site?

Stitch’s solution is a slick, web-based “cloud” app that can tell you how much you’ve sold, which channels are working best, how much money you’re making and whether you need to start knitting to replenish your stock (see screenshot above). It can also email invoices to customers and automatically create packing slips. Now, with the Etsy integration, it logs sales directly from Etsy — and can automatically repost the listing if you have items left in stock.

The interface gives small business owners a dashboard similar to the sophisticated enterprise resource planning (ERP) systems used by big companies.

It’s aimed at people who have significant but not gigantic operations, with 1-4 people and under $500,000 in annual revenues. For example, one Stitch customer, Girls Can Tell, currently has 152 separate product listings on Etsy, representing about 20 percent of the company’s total sales.

“We’re the first thing you log into in the morning and the last thing you look at at night,” Levey said.

Levey, knows the problem intimately. He used to run a small clothing line, Naked Cotton, on the side (his day job at the time was at Sandia National Laboratory, helping ensure the security of the nation’s nuclear stockpile). As his business grew, his garage filled up with cardboard boxes loaded with T-shirts in various sizes. Invariably, there’d be too many of the sizes that people didn’t want (like smalls) because he wasn’t good at predicting demand, and it was hard to know how many of each size were lurking in the garage.

Later, Levey made bendable paper iPhone stands under the brand name iBend, ultimately selling more than 100,000 for $3-6 apiece.

“We did really well on the mommy blogs,” Levey said.

After attempting to use Google Spreadsheets to track inventory (“that became obsolete in two minutes”), Levey and business partner Jake Gasaway started building what would become Stitch.

Stitch Labs, based in San Francisco, has 3 employees and about 120 customers. It has raised a “friends and family” round of funding, and has just started looking for institutional funding.

The Stich Labs team, left to right: Andrew Lassetter (intern), Michelle Laham (co-founder/creative design lead), Brandon Levey (founder, thinker upper), Jake Gasaway (co-founder/director of business development), Willo O'Brien (marketing and social expert).

Photo courtesy Stitch Labs.

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One of the biggest challenges faced by part-time or bootstrapped entrepreneurs who do business online is scale. Finding a warehouse storage and shipping option that grows with their business, offers flexibility, is cost effective and doesn’t distract from their marketing and sales efforts is not an easy thing to do.

Warehousing and shipping can make up about 10 percent of an e-commerce company’s costs. Other than inventory, in fact, it’s often the largest expense a retail or wholesale business faces.

Setting up a warehouse facility involves a lot of guesswork and often doesn’t give your business the flexibility it needs.  Leasing one forces you to rely heavily on sales volume estimates – and often requires cash up front, along with various other potential problems.

There is an alternative, though. Outsourced order fulfillment finds a warehouse to store your physical inventory. Then, as you receive orders and send them along, packs and ships them onto buyers.

The process allows startup owners to focus on the core parts of growing their business – marketing, sales and product sourcing – while eliminating guesswork and employee overhead. It also provides flexibility to grow, while limiting your exposure if sales slow.

Order fulfillment can be done from one warehouse or from multiple warehouses within a regional or global warehouse network. Having product stored in multiple locations can make sense if you do business on something other than a regional scale. As orders come in, they can be shipped from the warehouse closest to the end-buyer.  There are a few benefits from this:

• Lower shipping costs – You can save up to 35 percent on domestic orders and 75 percent on international ones, since the final shipment travels a shorter distance.
• No customs fees - When shipments cross borders, governments layer on customers, duties and taxes.  Bulk importing goods to an overseas warehouse allows you to sell in an international market like a local seller.
• Faster delivery - Get products to buyers in less time.
• Increased sales.  Cutting shipping times and costs allow you to grow sales and leverage winning promotions, including free shipping.

Outsourced shipping isn’t for everyone, of course. If you’re thinking about it, here are a few things to keep in mind before making the commitment.

• “Try before you buy” - Get a free trial, then send the vendor some sample inventory and ship it back to yourself.  That’s a good end-to-end test.
• Transparent pricing - Since you ‘re likely trying to get away from long-term agreements and hidden costs, watch out for long contracts, volume commitments or minimums.
• Growth Markets - Look for multiple warehouses in major markets where you can grow such as the U.S., Canada and Europe.
• Connections - If you sell online, your fulfillment provider should have a software platform that you can easily plug into your Web store such as eBay or Amazon.
• Help when you need it – Great customer support and knowledge is always important. You’re paying for the company to handle any problems that arise and you want the benefit of smart people to help your business.

Image by keltickelton via Flickr