Prime Day and The Inventory Conundrum

Robert Zoch
July 15, 2019

If you’re reading this, there’s a very good chance you’re buying something to take advantage of Amazon’s Prime Day, or at least having a look to see if one of their short-time deals is right for you. With more than 100 million products sold last time around, it’s become something of a “Christmas in July” for the e-commerce age. As the linked article makes clear, the event provides a boon for smaller businesses that leverage Amazon’s sales platform, as well as larger retailers holding their own competitive events.

For most smaller businesses using the Amazon platform, Prime Day offers an opportunity to clear excess inventory at a price that grabs consumers, hence the hoopla. Yet while this is a win for buyers, it might constitute a “making the best of a bad situation” proposition for sellers holding inventory. After all, selling TVs and Roombas (Prime Day 2018’s most popular deal) at a significant markdown is better than simply giving them away, no?

For apparel retailers, however, this “bad situation” is needless in the digital age. Indeed, the elimination of the traditional fashion cycle, while decimating a great many brands unprepared for it, presents a golden opportunity for those agile enough to fulfill sudden demand, whether on a mass or individual consumer level. Ever ahead of the game, Amazon understands the value of being able to produce imprinted apparel on demand, without being hamstrung by inventory. Indeed, others have built extraordinarily successful brands around this simple business model, while more traditional, localized businesses have adapted to this dynamic for long-term success.

Think about it. Which of the following propositions would seem to offer greater opportunity for customer satisfaction and profitability?

“We’ve lowered the price of this product you’ve yet to buy—and which has been sitting in our inventory—to a level where you might consider it worth buying.”

“We can provide you with the exact item you’ve wanted, at a fair price, immediately.”
Is there any doubt the second is more conducive to long-term success?

But wait—there’s more!

In addition to providing a more viable long-term business model to brief clearance prices on inventoried goods, the produce-on-demand business model still empowers businesses to capitalize on flash sales and marketing extravaganzas like Prime Day. Consider these hypothetical promotions:

On this day, each hour of the day will bring a different graphic print, which you can have on a t-shirt for $5.
On this day, we will print any image you submit, no minimum quantity. $10 for t-shirts, $20 for hoodies.
On this day, you can purchase custom swimwear, in any pattern of your creation. $10 per piece.
For a print shop using Kornit Digital textile print technology, each of these flash sales would generate profit, because the cost of printing any such garment is low and constant. If you use $1 worth of ink to print one shirt, that cost will be the same whether you print one or one thousand.

Furthermore, profitability increases simply because there is no risk of inventory waste; you print exactly what they want, when they want it, and conserve resources. This model works independent of the design coming from the customer, or your in-house image files.

Perhaps most importantly, you gave them what they were looking for, and being the business that can do that earns repeat customers.

Something to think about.

Happy shopping, and selling!