Should your customers have fewer choices?

Even simple choices - "Do I want it in red or blue?" - can be a hindrance to a decision. If we have too many options, most people feel that they should consider it all again. In many cases, too much selection equals no decision.

We may have all tried to think “Since the red one is out of stock, I will take the blue one!” Because basically we have made up our minds that we want to buy. But it was really a stock status that made the choice for us about which, more than ourselves.

Limited supply can thus help us make choices - perhaps because we feel that one of the options is disappearing. If the red variant was almost sold out, the choice could then fall to red instead of blue, in the example above, based on psychological principles of scarcity and thus what others (surely) have chosen.

By thinking about these things you can have quite a big impact on what your customers choose. It's worth remembering when optimizing your business.

Variants of the same product mean greater tie-down of capital for you as you need to stock more products. You should consider how offering multiple variants can potentially impact your sales and whether it is good business of tying capital in multiple variants of the same product, rather than other products that better compliment and expand your overall product range - and then provide better opportunities for additional sales, as a complimenting product moves the choice away from "either-or" to "both”.

How do you find out?

In Nexus, you can use the Product Mix report to gain insight into which items sell to whom and when. You really work with two product mixes: the total range that your business offers and the range that your business actually sells. The Product Mix report looks at your realized mix, ie sales.

Through the Product Mix report, you will gain insights you would otherwise not easily get, and certain items - which you thought actually sold okay, may turn out to sell (and earn) scary little compared to the capital tied up in those products.

If your company is like most other companies in growth, then free capital is in short supply because capital is tied up in inventory and debtors. By optimizing your product mix and the volumes you stock, you can release significant capital for your continued growth, and strive to wisely make the most of your inventory and turnover.