How are D2Cs stocking their inventory?

[BigNerd]

So maybe someone from one of the companies can answer this question:

Why aren't they ordering more for each shipment?

Say you get 1000 orders to fulfill your October shipment... why aren't you ordering 1200 or 1500?

Now I understand if there is some limit from the Chinese OEM you are using but it just seems to me like they are only ordering to fulfill their order backlog instead of ordering extra so they can have on-hand inventory.

Or are they?

Just trying to understand the inventory strategy as it seems like you would sell more bikes having inventory in-stock than waiting to see what orders you can fill.

Or again, maybe I have this all wrong which is why I asked.

 

[antboy]

It's smart business to order more than to just fill the backlog, but it would be bad business to assume that the crazy growth everyone has seen this spring and summer will carry on given the seasonal nature of bikes.

This year was exceptional, but should calm down a bit in the coming months. It would be bad business cash-flow wise base your November order on the sales you were seeing in May.

That being said, there's probably not a lot of inventory sitting around to make Black Friday deals much of thing in bikes this year.

Winter sports and patio heaters are seeing that problem right now, as we head into fall/winter.

 

[BigNerd]

You're right about the seasonal thing, I'm a bit spoiled with SoCal weather (still 80s here).

Not sure how far in advance they have to order these bikes but I assume based on what I've seen from the different sites, it looks like a 2-month lead time that actually closes only a month out. So you can get a pretty good guess based on current orders how much overage you need.

I think if you have a local store like some of these Internet companies, you can order more.

It's interesting because companies like Biktrix and Charge seem to have bikes in-stock.

 

[antboy]

You're right about the seasonal thing, I'm a bit spoiled with SoCal weather (still 80s here).

Not sure how far in advance they have to order these bikes but I assume based on what I've seen from the different sites, it looks like a 2-month lead time that actually closes only a month out. So you can get a pretty good guess based on current orders how much overage you need.

It's been a while since I looked into it (different industry) but to play it safe, but yeah, about 2 months is about right. When I was shopping for a new bike, I noticed some were giving closer to a 3 month lead time for their next "in stock" date.

The typical slow boat from China takes just over a month to travel. Once the cargo arrives, it can take up to about a week to be released to the e-bike company, then they have to inspect and ship. If you're selling 1000 units in June, you have to estimate how many units you'll sell in August or September, which are traditionally slower.

This year being what it is, who knows? Do you roll the profits into a bigger order taking the chance that the sales will still be high? Do you have the warehouse space to sit on a bunch of inventory? Are you planning on offering an upgraded model in 2021?

I think that's why I've seen a number of DTC companies extend their Black Friday deals through a large portion of the winter season.