Our Blog

Time Matters for Online Businesses

Yes, you read that title correctly. I experienced an overnight fourfold increase in sales that tried to kill my company.

But I’m fighting back.

Today, we live in a digital world. From the year 2000-2014, there was a 741% increase in internet usage worldwide. This presents several unique challenges to businesses that sell online, mainly, that more people enter the market each day. Online sales happen at the speed of light, and company reputation, competition, and market supply and demand will all play a role in the health of your bottom line.

Due to the nature of the online marketplace, there can be unpredictable sales spikes which create fires hot enough to burn any business to the ground. A company that has an average of five thousand sales cannot always predict or be prepared for a spike of 10-20 thousand in sales. If they run out of inventory and cannot quickly restock, the competition will grab market share while they stand around for their next order to arrive.

So how can a business be successful if growth may be volatile, unpredictable, and never-ending?

Leveraging Time

The first step to success to begin thinking of time as it relates to your supply chain decisions.
Some of these time factors are:

  1. Production time (also known as lead time) – this is the time it takes to produce your item. We will call this P.
  2. Shipping time – this is the time it takes to land your item into the fulfillment center and for it to be available to ship. We will call this S.
  3. Sell through time – this is the time it takes to sell out of your product. We will call this St.

To find the amount of time it will take to resupply, add production time to shipping time: P+S= time it takes to resupply. We will call this R.

To find the amount of days left in inventory before a stock out, subtract sell-through from resupply: St – R = days of inventory left before a stock out. We will call the O.

Ultimately, “O” needs to be as close to “R” as possible without overstocking, or under stocking. (Both of which generate negative consequences as well).

How I’m handling a massive spike and hockey stick growth curve

The image below shows my sales volume in the month of April. Notice how at the end of April sales spiked and have continued to increase through May. This presents unique challenges that we are currently battling head-on using several strategies.
How a Fourfold Increase in Sales Tried to Kill My Business OvernightHow a Fourfold Increase in Sales Tried to Kill My Business Overnight
There is no need to panic over unnaturally low or high sales days as long as you are aware that they do occur, are watching for trends, and begin developing a strategy to combat the potential negative side effects.
So, what are some of the methods you would use to ensure you can handle sales spikes?

Let me know in a comment below and then read own personal strategy.

Alan Basinger

Alan Basinger

Alan Basinger is CEO of GDW Inc and a 15 year eCommerce veteran. As well as a serial entrepreneur, sought after mentor, coach, and speaker. Alan also is a serial giver and regularly gives his time to others to help them in his quest to help 1000 people get free by running their own profitable eCommerce businesses. You can contact him at support@gdwinc.com.
Alan Basinger

Comments ( 2 )

  • magonz17 says:

    I’m assuming we don’t want to overstock and end up being stuck with a bunch of inventory. I would look at last years trend to see if there are any similarities and if there are not, be cautious when ordering and attempt to figure out what could be causing this spike.

  • admin says:

    good ideas and most of the time I am looking at trends but as you can see from the graphs this happened literally overnight. It was not a slow manageable growth but a rocket ship. Stock is a challenge for all, but with massive growth it takes everyone a while to catch up so there will be periods of out of stock. Not a huge deal in this case as the demand is insane.

Facebook Auto Publish Powered By : XYZScripts.com