What constitutes "good" inventory?

Is "good" inventory a lot of things to sell? In a marketplace context, we often speak of one platform having better inventory than the other. Please correct me if I'm wrong, but this is often a statement that comes out of an inside-out view. Let me try and explain. 

My usual method to feel the elephant in the room, regular readers know by now, is to ask questions. So, when we say a platform has good inventory, do the customers also say that? Is buyer-feedback good enough on this topic or is non-buyer feedback equally if-not-more important? Let's take an example of shirts. If you have a million shirts and none in my size, do you have good inventory? If you have a million in my size but none that I like? What if you have a thousand that I like in my size and like the ones I like, and I'm not able to find them using your search and browse? What if I find what I need but I don't like the price or terms of delivery? Feel the elephant? Isn't it bigger than we imagined? The end of all these paths is no sale. 

But like they say, no two silences are the same since both could be the absence of a different word.

Let's get the basics out of the way. Having a lot of products to sell, on the shelves, is not a guarantee to a perception of good inventory. Second basic, the perception we just mentioned, is reality. There is no other sense of 'good' or 'bad' inventory. Third, all enablers we keep worrying about - having the right sellers or suppliers on-board, getting them to list everything they can - are all just that - enablers, and the customer doesn't think of those as inventory. 

Consumer in, the first thing to build would be Demand. If the consumer doesn't want it, or is not aware that the category exists on your platform, why even bother? The second could be findability. Through browse or search, the consumer must be able to find or discover the product. The third bit could be decision-tools if needed (spec-compare, shade-match, size-converter etc) along with the completeness of range (could mean SKU coverage for standard cataloged products and width otherwise). Then there is the catalog itself, or listing quality if the category is uncatalogued - often a stumbling block for marketplaces. And the picture still isn't complete without the all-important wrappers of price, payment and delivery terms. If all matches, and these don't, it is still, after all the effort, not a sale. 

Before we link a perception of bad inventory to bad sourcing, therefore, we should check for where the funnel is broken. It is possible for customers to, rightfully, feel you have bad inventory for more reasons than that. 

Are you building a Concorde?

All of us know about the concorde - sorry, let me correct myself - about Concorde, right? You have to get it right, so I hear.

So here's what happened, broadly.

An Anglo-French JV (Aérospatiale and the British Aircraft Corporation) built Concorde, a supersonic passenger plane (out of two ever built) that halved transatlantic flight-times, a proposition that'll still sell if you were to poll potential passengers today. It flew for 27 years but only 20 aircrafts were built. While there are multiple theories on its efficacy, it is known as a supreme technological feat. It is also known that it never made money. Finally after the one accident it had, and in face of mounting losses, the program was shut in 2003. This was despite Government subsidies and sponsorship, despite the muscle of Aérospatiale and BAC, but importantly, despite a very strong consumer proposition – halving transatlantic time, the hype value of flying cutting-edge etc.

Or was it? Was it really a strong value proposition? I'm not an expert there, I've not seen the value-prop, but I assume that while it was undeniably good for the customers to half their flying time, maybe it wasn't important enough to pay the ticket price premium. Why I say this because had it not been the case, I assume other supersonic passenger jets would have been built.

What is known is that costs spiraled to 6 times the initial estimate. For perspective it was $ 23mn. Note, in 1977 dollars. Post retirement, Branson offered to buy British Airways’ Concorde planes, first offering their nominal original price of £1 each, then increasing the offer to £1 million each. Note, this is in 2003 pounds.

Also quoted is the fact that the big reason behind Concorde's grounding, apart from the cited reasons of the 4590 crash, fuel cost etc, was that it was more profitable to carry passengers at subsonic speeds.

The existence of technology, and a thumbs-up from potential customers sometimes blinds us into confusing these things as a 'buy-in'. Today, a faster website, faster delivery, better packing, better consumer service will all be things that a customer wants. Without a sensitivity curve along all the value-prop axes, however, these are all directional and that's all. What we should be researching is how many customers will pay what it takes to get these desirables on the table. What we should also do is check if there's a margin buffer between original price and a post-spiral price for long development projects.


I'm never against cool technologies. I love them. I'm genuinely sad to see Pandora, Wikipedia and WorldSpace bleed. Maybe not wiki - they made a choice not to make ad-money, but WorldSpace was in it to make money. Customers loved it. Just not enough customers maybe, not enough love perhaps, not enough love to pay. This is an important litmus for those of us in the In Tech industries especially, it is common to see over-spec-ed products. It's an engineer's / designer's self-actualization, but let’s remember all that is useless if there aren't enough people who pay for those specs.

What do you think?

Who's your Competition?

I'm sure all of us strategy guys get this all the time. How do we get competitor information? How do we confirm it? How do we spell-out risks and mitigation plans? How do we make plans around their weak points? What's our competitive strategy? How have we reverse engineered competition's strategy? Then the usual stuff around deep dives, war-game simulations, scenario planning and so on. I often feel another question should come first.

Who's our competition?

Now one approach is to dismiss this questions as too basic (come on, how old are you?). The other common approach is an exercise around competition mapping. The question, however, is different - it's not about listing but defining. Let me try and clarify, but before that, another basic question at this point, who should be defining competition for us? Aren't all of us senior guys smart enough to do this? Well sorry but no.

Our consumer defines who our competition is.

Let me try and peel the onion here. I work for an eCommerce firm. Our consumers aren't people who have a need for eCommerce because no one really dies without eCommerce, we're one of the channel choices (s)he makes. The need is perhaps for a Juicer. Maybe the consumer doesn't even need a Juicer but Juice. Maybe not even Juice but refreshment or health. Now given this hypothetical flow, a competing product is one that gives him / her a competing option, an alternate route to refreshment or health. Here's what - this is illustrative. I'm not claiming to define this for consumers and neither is the peeling of the onion complete. The point, however, is to show how competition is a) defined by the consumer's need-states and b) wider than we think.

I've worked in the Durables and Appliances industry. I know for most of the time, we feel what competes with our juicer is another juicer. We don't think much about any threats that are not appliances while the truth is that if packaged juices get better and cheaper, if someone sets up juice-vending machines all around, no one will buy our juicers. If someone brings dissolve-and-drink juice-pills to the market (I realize it sounds like an ugly idea but who knows, so did rock music to the classical guys), then the juice-story also dies.

What hit pagers was not cheaper, better pagers. Film-photography, personal-computers, walkmans, watches and so many other products were killed because execs were too bothered looking for competition in the room while the consumers simply shifted to a better source to, literally, get their juice. I'm sure you will know many more examples of these occurrences than I can list, where, as someone says in Sharp Teeth by Toby Barlow - "the bullet that hits you is never the one you're running from".

How much Variety is good?

a) a lot?

b) sufficient / enough?
c) too much?
d) any other_____?

It is not as simple as it looks. Sometimes I'm in a hurry and I just want to go right to the counter and pick up my stuff, sometimes I have the time to wallow. That's just me. Sometimes I feel a store isn't even credible if it doesn't have five brands of shirts, and sometimes I get annoyed when the salesperson 'encourages' me to try just one more brand. Imagine being led through a thousand shirt-options, to be told in the end it's not available in your size!! Extremely non-funny, this.

So it is complex, and all this while it's still me. There are other kinds on the planet with their own preferences. Mars and Venus, I  hear, are different. Mission-shopping and Impulse-Shopping is different. Routine and Occasional shopping is different. Variety could satiate or irritate. So is it that complex or are we looking through the wrong lenses?

Maybe yes. What the consumer looks for is availability, when it is mission-shopping and assortment, when impulse-shopping. Variety is the backend lever that leads to availability and assortment. A good retailers knows it is not wise to put your entire assortment on the shelf. I was chatting with an experienced retail CXO recently and he told me about this very interesting incident. Their shoppers complained of low variety, while their SKU count was actually higher than competition. After a drastic reduction in SKU-count, the customers turned around and said now you have variety. Counter-intuitive? Maybe not.

Maybe what gets articulated or captured as variety is simply the ability to find or discover your product.

Don't get me wrong - again - I'm not saying variety is bad, and I'm not saying the buyer wants only one choice (aside - views from Google might be interesting, I really want to know who the search engine impresses with the total number of results and time, and I really want to know how many ever clicked the "I'm feeling lucky" button).

But if we are on the same page, implications are many-fold for retailers and marketplaces. When one is creating the initial assortment, variety adds to the experience and lends credibility. Beyond a point, it could add to confusion. This is super-critical in the online world, where one might feel real estate is free or unlimited, while it is actually not. The first-fold of the homepage is not unlimited space. More important, the buyer's ability to process information and his / her patience is always limited. It could be cool to say I have 247,000 results for your search, but unless we guide the buyer to what (s)he wants or needs, it's just noise. The buyer knows 246,999 out of these results are not what (s)he's looking for, and maybe we're giving him / her more and more of what (s)he's not looking for.

The two broad approaches could be either to curate via a Tailored Shopping Experience (i.e. we as store-owners decide / guess what you need, and show you only that one item you most-probably want, not the endless variety it takes to ensure we find a match) or via decision-aiding tools. Give the user a set of check-boxes and sliders to reduce the 247,000 to just 4 items (s)he can now compare on key attributes.

In a retail store, they lay out some key designs of shoes, in some sizes, in a way that looks most welcoming and least threatening. It will be scary if every size in every design is laid out on a table. You probably realize that's how good offline sales-people work. They just ask the buyer a few initial questions, narrow their eyes, lean back slightly and say, "I think I know what you're looking for", smile, and pull out four shoes you love.

Image courtesy: wallpaperscraft.com