1. Turnover rate: time and efficiency from warehousing to sales
The turnover rate refers to the time and efficiency of the product from warehousing to sales, which is also a factor that must be considered when evaluating the product. The turnover rate can reflect the utilization rate of funds. The higher the turnover rate, the higher the utilization rate of funds, and the higher the benefits of limited funds. When calculating the turnover rate of a product, it is generally calculated in years or months, and the calculation formula is as follows.
Turnover rate = product sales/average inventory
Average inventory = (beginning inventory + ending inventory) /2
For example, if the monthly sales of a product is 1 million yuan and the average inventory is 100,000 yuan, then the turnover rate is 1 million yuan/100,000 yuan, that is, 10.
That is to say, in one month, the product has a total of 10 turnovers.
When evaluating the turnover level of a product, in addition to the turnover rate, the turnover days are also a focus that needs to be paid attention to. Turnover days refer to the number of days required for a product to turn over, and the calculation formula is as follows: Turnover days = average daily inventory / average daily sales.
For example, the sales of a product in June was 120,000 yuan, and the average daily sales was 120,000 yuan/30 days = 4,000 yuan; at the same time, the average daily inventory was 2,500 yuan, so its turnover days were 4,000/2,500 = 1.6 days.
E-commerce companies can analyze the turnover rate and turnover days of products of different types, sizes, and colors, and analyze which products have good sales and which products have poor sales, so as to adjust product selection strategies and procurement plans.
Tips
A high turnover rate not only means high utilization of funds, but also low storage costs of products, which will further increase the profits of e-commerce companies.
Second, the secret behind the 9.9 yuan free shipping product
If you are a consumer, when you see that you can buy a product worth dozens of yuan on the market for only 9.9 yuan, and it is also free shipping, will you be tempted? Of course, after all, low-priced, high-quality products are always the goal pursued by consumers. When 9.9 yuan free shipping is no longer a gimmick created by e-commerce companies for hype, consumers will think that such products are too cost-effective, because 10 yuan may only be enough for a most ordinary fast food lunch in real life.
Among the 9.9 yuan free shipping products, consumers can pick daily necessities and fashion trends. Moreover, they will also feel that even if they buy products that are not particularly satisfactory in quality, they will not lose much.
For e-commerce companies, it seems to be a loss to sell products that sell for dozens of yuan in the market for only 9.9 yuan, but it is not. Many e-commerce companies can still make profits by selling these products, because these products are directly purchased from factories, which are first-hand sources, and the cost is even only 1 yuan, and there are no additional costs such as rent and decoration. In addition, with the large volume of goods, e-commerce companies can also lower transportation costs. It is said that some e-commerce companies can control the average postage below 5 yuan. If the procurement cost and packaging cost can be compressed to less than 4.9 yuan, then the e-commerce company can make a profit.
In addition, most of the 9.9 yuan free shipping products are small, light and easy to package. If the products are well selected, there will be a large number of buyers willing to buy multiple pieces at a time. In this way, the postage borne by multiple products is the same as that of one product, and the e-commerce company can further increase its profits.
Therefore, e-commerce companies that sell 9.9 yuan free shipping products will basically not lose money. Moreover, through this method of small profits but quick turnover, e-commerce companies can also attract buyers and earn repeat customers. However, some e-commerce companies will also lose money due to the high cost of the products they choose, but these e-commerce companies can still make profits in other aspects, such as winning reputation, increasing the second purchase rate, obtaining sales of related products, creating hot sales, and realizing brand communication effects.
While ensuring characteristics and quality, 9.9 yuan free shipping products can also attract more buyers, increase transaction volume, and allow e-commerce companies to earn more lucrative profits. In short, by offering free shipping for 9.9 yuan products, e-commerce companies can increase their total revenue and create a larger profit margin by using the method of small profits but quick turnover.
Tips
In order for the method of small profits but quick turnover to work, there is a very important premise, that is, there is a huge demand for the product without considering the price. If consumers do not have enough demand for the product, small profits will not only fail to increase sales, but will be counterproductive.