Determining how much inventory your boutique needs is a balancing act. Generally speaking, it is better to sell out of an item than to have unsold inventory sitting around, tying up your cash. But, of course, you don't want to be so conservative that you limit your sales. "How much inventory do I need to start a boutique," is an important question to answer as you plan your boutique and determine your budget.
You'll need to evaluate many factors to answer this question, and the most important is your business model. For example, will you be buying inventory for a boutique in a brick-and-mortar location? Do you need startup inventory for an online boutique, or will you have an online boutique using drop shipping, where your wholesale boutique clothing vendor manages the inventory and ships items directly to your customers on your behalf?
Let's look at how to calculate how much inventory you need and how it is affected by each business model. For each business model, you'll have three common factors to consider when determining how much inventory you should start with:
- How large is your selling area? For a brick-and-mortar boutique, factor in the floor space dedicated to displaying and selling your inventory. Include shelves and racks, and determine how many pieces are needed for the shop to look full and welcoming. For an online boutique, how many products appear on each category page of your website? Aim for 8-12 to start.
- What categories do you sell? Each category you offer will need to have a good variety of merchandise to offer. Different categories include tops, bottoms, dresses, seasonal, basics, specialty, plus sizes, regular sizes, accessories, etc. Be specific as you figure out your categories. Next, determine how the sizing runs for each. For instance, do you offer women's tops in small, medium, and large sizes per style? Or do you offer women's jeans in 12 sizes per style?
- Your total budget. When starting a boutique, allocate the total dollar investment available to your different startup costs. Your boutique's startup costs will include space rental (either for a physical storefront or your website), licenses and insurance, supplies and equipment, staff salaries, marketing, and of course, inventory. Typically, your inventory will account for a minimum of 25% of your starting budget.
Inventory for your Brick-and-Mortar Boutique
If you have a bricks-and-mortar boutique, you'll need to carry more stock than the inventory for an online boutique, yet your target audience is smaller. You cannot afford to have empty racks and shelves give your customers the impression that you have little to offer. This may affect your final average margin, as you'll likely need to mark down some of the stock to move it, particularly for seasonal items.
As a brick-and-mortar boutique owner, you can realistically hope to appeal to customers within a 15-minute drive of your boutique. A National Consumer Study Survey conducted in 2016 found that 87% of consumers travel 15 minutes or less. Rural customers typically travel a bit more, with urban dwellers expecting to travel less. It can be difficult to quantify distance as traffic patterns and congestion must be taken into account, as well as the types of other businesses nearby. Focus on the categories, styles, and sizes you believe will appeal to your target customer base within your geographic area.
When buying inventory for your boutique, your wholesale vendors will offer case packs with multiple sizes in each pack per item you order. For instance, when you order this color block tank top in women's sizes, you'll receive a case pack that is 2-2-2 / S-M-L, meaning you'll get two small tops, two medium, and three large in this style. If you discover your customers purchase more of the smaller sizes, you may want to look for items sold in 3-2-1 / S-M-L case packs, where you receive three small tops, two medium, and one large.
An excellent way to buy your startup inventory for an online boutique is to order a single case pack for each item you offer.
Inventory Storage for Brick-and-Mortar Boutique
While researching how much inventory you need to start a boutique, don't forget about storing it safely. Your stock must be kept in pristine condition. If you're opening a brick-and-mortar shop, you'll have the racks and shelves in place on the sales floor.
Inventory for an Online Boutique
When deciding how much inventory you need to start a boutique, an online store has a couple of significant advantages over a brick-and-mortar location. First, as long as you have at least one piece for each style, color, and size within a category, your boutique appears full to your customers. Second, your customer base may live and shop across the entire country. In short, you are not limited to a small geographic area to sell your inventory.
Because your online boutique reaches a broader audience nationwide, you have a better opportunity to sell specialty items that speak directly to a narrow slice of the public. You’ll have less need to stock “basics” than a brick-and-mortar boutique.
When you open an online boutique that carries inventory and handles the shipping, plan ahead for proper inventory storage. You must maintain your stock in perfect condition. You'll also need plenty of room to photograph your pieces and organize your stock for packaging each order. As your business grows (and it will!), you can revisit these storage options.
Drop Shipping your Boutique Clothing
If you set up your online boutique using drop shipping, your inventory questions are radically simplified. The wholesale boutique clothing vendors you do business with that offer drop shipping will remain responsible for storing inventory. When a customer places an order on your boutique site, you place the same order with your vendor. The drop shipper packages up the exact order and ships it directly to your customer, using your company information as the shipper on the label. In turn, you are free to focus on marketing your online boutique and provisioning exceptional customer service.