Core conclusions:The funds allocated for preparing inventory during Double 11 should be calculated as follows: Forecasted sales volume × Manufacturing cost × (1 + 10% to 15% safety stock ratio). It is recommended to allocate the 1 million yuan in funds evenly among three categories: replenishing popular products, maintaining regular product stock, and testing new products. No new orders should be placed until October 25th.
1. First, calculate the sales volume, and then the revenue.
The first step in forecasting inventory levels is predicting sales volume, not simply estimating stock levels. For factories with historical data, the formula is: “Last year’s actual sales on Double 11 × traffic coefficient.” The traffic coefficient depends on the platform’s promotional resources, live streaming schedules, and distributors’ willingness to invest. In normal years, this coefficient ranges from 1.1 to 1.3. For new products without historical data, the goal is to estimate how many stores the product will be available in, what the expected monthly sales per store are, and then multiply those figures by the number of months the product will be in stock. For example, if last year’s sales on Double 11 were 80,000 units, and this year the platform provides additional promotional resources, the traffic coefficient can be set at 1.2. Thus, the predicted sales volume would be 96,000 units. Assuming a unit cost of 45 yuan, the total value of the inventory would be approximately 4.32 million yuan. Multiplying this by a safety stock factor of 1.12 gives a required inventory amount of about 4.84 million yuan. It’s better to estimate lower figures than higher ones. The loss from selling out on Double 11 is significant, while delaying sales and keeping unsold goods in inventory can lead to cash flow issues.
II. How to allocate the funds: 6:3:1
Taking 1 million yuan as the capital for inventory preparation as an example: 600,000 yuan should be allocated to those popular products with a high probability of selling well (these are the main products that account for more than 70% of predicted sales), 300,000 yuan should be used for regular products’ inventory management (to maintain a safety stock and replenish stocks as needed), and 100,000 yuan should be set aside for trial sales of new products (testing products in small quantities before launching them). The proportion of safety stock should be between 10% and 15%; if it’s less than 10%, there’s a risk of stockouts. If it exceeds 20%, the products will be sold off after the promotions end. It’s important to closely monitor the production schedule for popular products. After placing orders, check the production progress weekly. If any product is delayed, immediately shift funds to alternative products that are progressing smoothly. Set a stop-loss limit for trial sales funds. If no natural conversions occur within two weeks after launching a new product, remove it from the market and use the funds for popular products. Regarding payment terms, before major promotions, dealers are more willing to pay in advance. Try to keep the percentage of credit sales below 30%, and prioritize shipping to customers who pay in cash.
| Funds section | proportion | use |
|---|---|---|
| Bestselling products with regular replenishment | 60% | The main product that accounts for more than 70% of sales predictions |
| Regular models for turnover purposes | 30% | Safety stock of 10%–15%, replenished as needed during sales. |
| New products are being tested in the market. | 10% | Small-scale testing of products. Sell them and then place additional orders. |
III. When to stop: Three specific time points
Stop issuing new production orders by October 25th. Based on a production cycle of 15 to 20 days, it is likely that orders placed after October 25th will not be able to reach storage before the major promotion. All confirmed orders should be stored by November 1st, allowing sufficient time for listing and processing orders. After the major promotion ends on November 12th, only those products that have received significant interest from customers will be ordered again; the rest will follow the normal schedule. By setting these three deadlines, funds will not be used excessively. Logistics also need to be arranged accordingly: during the week before the promotion, there may be shortages in delivery capacity. Therefore, pre-order orders and the first batch of products should be delivered first. Excess inventory and newly placed orders should be delivered at different times to avoid overcrowding on November 11th.
IV. How to distribute products with dealers
The major promotions involve a multi-channel approach, with both online and offline sales competing for the same products. The distribution rules for dealers should be specified in advance: quotas should be allocated based on the amount of funds received and historical sales figures. Online direct sales should be offered at the same price as those through dealers, to prevent price gouging. For popular products, there should be a limit on the number of units that can be sold per person. A common issue in previous promotions was that dealers found that products were cheaper online, so the pricing conditions (promotion authorized prices, bonus offers, etc.) must be determined by mid-October, rather than waiting until the promotion page is launched. For dealers who are willing to pay early, they can be given priority in receiving deliveries, making the collection of payments before the promotion a key factor in scheduling production. This is much more efficient than trying to coordinate production levels on a last-minute basis.
V. How to wrap up after the major promotion
Complete the following three tasks by November 15th: First, conduct an inventory audit to compare actual sales figures with forecasted levels. Items with discrepancies exceeding 20% need to be re-evaluated in terms of forecasting methods. Second, reconcile accounts receivable. In periods of heavy promotions, invoices should be issued immediately, without delaying until December. Third, handle products that are not selling well. Consider three options: sell off surplus stock, offer discounts to distributors, or repackage products for re-release next year. It’s better to clear these items as soon as possible, as the money tied up in storage can still be used next spring. The quality of this final step directly affects the funding available for next year’s inventory preparation. The faster you complete these tasks this year, the more cash you will have when negotiating terms with suppliers and distributors next year.
6. Common questions
1. How can we predict the sales performance of a new factory with no historical sales data?
Using the target-based backward calculation method: First, determine the target sales amount for the major promotions. Then, calculate the required inventory based on the gross profit margin. In the first year, it’s advisable to maintain a minimum safety stock of 10%. It’s better to experience stockouts and then replenish inventory, rather than filling the warehouse completely from the beginning.
2. If the supplier decides to increase prices, should they stock up on raw materials in advance?
It is not recommended to stock up if the price increase is within 5%. After major promotions, prices of raw materials usually decrease. If the price increase exceeds 5% and it is confirmed to be a sustained trend (such as in the case of metals and chemical raw materials), then stocks can be maintained for two months’ worth of consumption. For the rest, purchases should be made according to the production plan.
3. What should I do if the popular products are sold out?
First, post the product information on the pre-sale page and synchronize it with the distributors. Then, issue urgent orders to those who can handle small quantities of products, or to local suppliers. At the same time, offer coupons to customers who are affected by the shortage, so that they can be directed to alternative products. Don’t let the traffic go to waste. Once the products are available again, arrange the order fulfillment for pre-sale customers in advance. If the pre-sale period exceeds the expected time, negative reviews and returns will likely follow.
For factories engaged in domestic trade, preparing inventory for Double 11 doesn’t simply involve stockpiling more products. Instead, it requires careful consideration of three key factors: forecasting, splitting inventory, and determining when to stop accepting new orders. A customized inventory planning tool tailored to the company’s specific product categories can be obtained by contacting Qihang Zhilian at 180-0327-6609.
Qihang Zhilian Foreign Trade Research Institute
