Fashion Retailing with Zero Inventory Costs

  For any fashion retailer, optimal merchandising is a means to rationalizing of its management. It is important how many different products (width) to purchase and to have the assortment (depth) of those products. In addition, for product support, it is also important to sustain optimal inventory.

  Among them, it is very important to maintain an adequate level of inventory in fashion retail management. If a retail shop has insufficient inventory and stock quantities, it cannot immediately satisfy the needs of customers. Then, the retailer’s business image may be damaged, and some of customers may soon be lost.

  On the other hand, if there is too much inventory of a product in the retail stop and the product does not sell well, the burden of inventory costs increases. Of course, when the demand for the products stocked in the shop increases and the retail price rises, then the inventory itself becomes a voluntary investment. However, as the sales volume of a product decreases and its stock increases, the cost of inventory increases accordingly. 

  Inventory management & practices, therefore, are a crucial part of businesses involving retailing as they can make or break profits.

  In preparation for this situation, many fashion retailers understand the techniques of inventory management and adopt strategic tools to sustain economic order quantity. What is called, economic order quantity (EOQ) is the ideal order quantity, a shop should purchase to minimize inventory costs such as holding costs, shortage costs, and order costs.

  Unfortunately, it is not so easy to apply these strategic tools to reduce inventory costs in retail management. Instead, fashion retailers need to use easy-to-access management techniques such as. 

  That is, it (1) possible stock quantity reduction, (2) order directly from supply firm, (3) manufacture on demand (produce the items only after they are sold), (4) hunt for wholesaler deal, (5) negotiate on minimum order, (6) eliminate unused warehouse space, (7) avoid intermediaries, and so on. + 

  Among these strategies, alternative inventory management would be better to deal with merchants in Dongdaemun market, who produce a variety of fashion products in small quantities and quickly resupply them according to consumer preferences. 

 

-Some of the popular Dongdaemun fashion items we exported last week, seoulclick.com- 

  As is widely known, people in Dongdaemun market are proud to make and sell ‘different’ designer products or items with ‘newness and its diversity’ very quickly in 3 days at more than 30,000 stores.

  These Dongdaemun fashion products are supplied under a unique supply system that cannot be found in any other country. The supply system consists of three steps. In the first stage, it is a trend-based creative work performed by about 100,000 designers working in and around the market as well as production planning of the Dongdaemun wholesalers. In the second step, these designed and ordered fashion products are manufactured at 15,000 small-scale sewing factories located in the Gangbuk area of Seoul. As a final step, only fairly good manufacturing products suitable for consumer preferences and demands are shipped to wholesalers through competition for an appropriate supply price.

  As long as any fashion retailer or buyer can purchase customized fashion products in small quantities, they will be able to maintain stable retail management without the pressure of excessive inventory costs. Like one proverb, 

 “Better wear out than rust out.”

  One book, ‘Retail is Detail’ was discussed earlier how some of retailers have made great improvements in managing their inventory, literally to work with their suppliers to conform to item-level inventory control, and why other retailers continue to follow the wrong path. ++ An intellectual, Dale Carnegie, developer of self-improvement courses said.

  “The successful man will profit from his mistakes and try again in a different way.” +++

  One of the detailed alternatives is to have a supply-side partnership with a trading company that takes the lead in online and Un-tact trade with market competitive advantages such as product, speed, price, and inspection. ++++


+ 12 Ways to Lower Inventory Costs/Practice Ecommerce, July 8. 2019.

++ Bill Scott and James Hawkins, Retail is Detail: The Retailer's Playbook to Beating Walmart Paperback – July 29, 2011.

+++ Johnnie L. Roberts, The Big Books of Business Quotations, Skyhorse Publishing, 2016, p.276., Dale Carnegie, How to Win Friends & Influence People, 1936, Paperback- January 1, 2011.

++++ http://dongdaemunfashionexpress.com:3000/

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Bong Sul, Advisor, SeoulClick,

http://dongdaemunfashionexpress.com:3000/


 Read more: Bong (Bong Sik) Sul, Dongdaemun Style, ebook.kstudy.com, Seoul, 2019.

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