Having a wide variety of products can be fun, but what happens when you have too many SKUs? Too many SKUs can lead to a decrease in revenue, customers, and valuable time. It’s imperative to learn about common large catalog concerns before you begin to feel the effects.
Industry leaders share their recommendations for sellers with large catalogs on how to overcome and avoid common problems. We hope their creative and practical advice helps your business continue to flourish.
1. Keep Stock Moving
“The more SKUs a merchant sells, the bigger the complexity of the whole operation. At a certain point, the human brain cannot comprehend all the possibilities. At this point using technology to manage inventory and product portfolio is a must. From our data, we know that anything above 100 SKUs is better managed by a computer algorithm as opposed to common sense. Important thing is to fight advanced merchant-based fraud, you need advanced solutions. It is important to look at the full context of each transaction, analyze the surrounding ecosystem, continuously monitor merchants in your portfolio, and analyze hundreds of thousands of data points. It's simply impossible to find hidden connections between merchants and real identities without taking advantage of Big Data.” - Tania Manzo of Inventoro
2. Address Sizable Sustainability
“When a merchant has a broader catalog, it can be challenging to provide a vast combination of packaging styles (boxes, poly mailers, etc.) when there is an order which has requested a big variety of items. As a result of this, the cost goes up and it also affects the overall sustainability of the order. We address this problem by offering the best kind of combination of custom packaging with specific dimensions that are the most suitable for the product. This enables us to optimize the overhead shipping and packaging cost and create a sustainable experience for our customers by reducing waste that excessive packaging may cause." - Haneya Zuberi of Arka
3. Create a Seasonal Line Sheet
“A common problem that merchants with large catalogs face is not developing a seasonal line sheet document. A seasonal line sheet consists of rows of product information from a season organized into single-header columns, making it easier to analyze. Attributes are each assigned to a column, then all their unique product details for the season are in one file, enabling detailed insight gathering with the help of pivot tables, graphs, and other data interpretations. Most ecommerce platforms allow for product catalogs to be managed and edited via CSV file, so it’s usually a good idea for your external line sheet files to match the CSV catalog formatting provided by your shopping cart. Many online retailers today rely on their shopping cart, or inventory management systems to house all their product data. These types of tools are extremely useful for organizing and analyzing product data, replenishing inventory, and automating tasks. But an external line sheet document is especially helpful to sort, study, and translate product and sales data into useful business insights.” Taylor Daniel from FOMO Agency
4. Clean Your Catalog
“One of the most time-consuming tasks we see when a merchant has a huge catalog of SKUs - (> 5,000) is identifying and setting "active" SKUs vs. Inactive SKUs. Syncing inventory with small and medium catalogs causes very few issues, but we see a lot more difficulty when merchants have 10,000 SKUs and only 500 of them are truly active. Making sure you have a clean catalog makes for a far easier time when setting up automated fulfillment integrations. Also, making sure that your SKUs exist on both the sales channel side and the warehouse side are imperative to a seamless integration experience. Orders will be rejected from the warehouse/erp/wms if the SKU doesn't exist on both sides.” - Samantha Maze of DropStream
5. Make Bird’s Eye View Investments
“For larger catalogs, you need to invest in a PIM if you want to be granular with managing product information in a more efficient manner. In terms of keeping the physical inventory organized, you need to hire a reliable warehouse team and invest in a solid WMS if you can spare it. If you are using pen and paper to keep track of this stuff, you are doing it wrong. In short, you just need to make sure you have a bird's eye view of your inventory; if you don't have the time to do this yourself, then hire someone to run the operations.” - Rodolfo of Skubana
6. Lower Balance Sheet Costs
“You need to quickly understand what is selling vs what is taking up storage space. Ultimately, you don't want to keep high costs on your balance sheet. It's hard to understand in the beginning what might be causing the product not to sell. It may tie into the cost and/or quality of the good, the amount of marketing spent behind, the value proposition, and other factors not mentioned. With that, are you being charged on storage space at your fulfillment center or warehouse? Adding more products inherently adds more cost.” - Dan Magida of Anvyl of StoreAutomator
7. Consider Your CLV and AOV
“Larger catalogs are just more complicated to manage effectively, which is why so many great modern DTC brands have significantly smaller & simplified catalogs. The biggest risk of having a bigger catalog is purchasing optimal levels of stock for all SKU's and thus risk running out of stock for the best performing SKUs and overstocking on the slow movers. I'd advocate for periodic analysis of how SKUs actually contribute to Customer Lifetime Value (CLV) and Average Order Value (AOV) to identify the slower movers and weaker performing SKUs. For those, I would then regularly pull them from the catalog and reprioritize the working capital for one's best SKU's.” - Adii Pienaar of Cogsy
8. Maximize Automation
Merchants with a high SKU count often have an exponential amount of work cut out for them compared to those with relatively fewer products. This can include the overhead of doing restock orders for different types of products, handling returns for items with different care requirements, and even training support reps on different categories. In order to properly manage an ever-changing catalog, merchants should have very organized spreadsheets or a central place to see the important properties of each SKU, and to track how each one sells. This way, they can use that data to automate the support, returns, and other processes that require specific context on each product.“ - Sara Du of Alloy Automation
9. Focus on Your Top 20%
“Often products are developed without fulfillment in mind. Size, shape, packaging, SKU count, etc. For example, some brands will develop a product with tiny iterations (color is a common one) but it gets quickly out of hand. We encourage brands to focus on the top 20% of their top-selling SKUs and consider discontinuing the bottom half. Also, we encourage brands to leverage virtual bundling to sell less popular SKUs and increase average order value.” - Brian Tu of DCL Logistics
10. Delete Dead Stock
“With a larger catalog, the visibility in terms of dead stock becomes a significant problem, knowing what is selling and what is not. Aging inventory is not easy to track without a tool in place. Having a robust tool with a full analytics suite is crucial for a larger catalog. Next, having forecasting capabilities to make sure no item is dropping below critical values and is being replenished appropriately. Keeping enough stock on hand per warehouse can be very difficult. Finally, maintaining inventory values to the channels in a fashion that makes the most sense is also crucial, your top performers need to be visible to the channels that they are winning on, not the ones they marginally acceptable.” - Shannon Sharpe of Extensiv
