Presale vs stock: How can the fashion wholesale industry navigate risk management?

Within the dynamic world of fashion and retail, a delicate interplay between wholesale customers and brands involves a tricky balancing act of risk management.

Traditionally, wholesale customers purchased the bulk of their goods via presale orders, which naturally meant they assumed risk since leftover stock would be stuck in their inventory.

However, a significant trend is emerging with customers now submitting more stock replenishment orders than presale orders – placing the risk burden firmly on the shoulders of the brand.

This is problematic for wholesale brands since any leftover stock directly and negatively impacts their bottom line, although it alleviates the issue for the customers.

It doesn’t matter who assumes risk

While the shift may appear at the surface as moving the risk from one party to another, it does raise a crucial concern: the importance of minimising leftover stock in the supply chain.

The delicate balance between presale and stock orders ultimately means that any remaining inventory at either the wholesaler customer or the brand poses a significant challenge.

If excess stock lingers at the customer’s end, it can have lasting repercussions on future orders. Conversely, if surplus stock accumulates on the brand’s side, they will be stuck with goods they cannot shift and a damaged bottom line.

The question, then, is how do wholesale brands and customers navigate this challenge?

Rethinking inventory management

Création Gross – a K3 Fashion customer – is one brand that has already made humongous strides in overcoming this obstacle.

The business adopted a customer-centric inventory management approach to align inventory levels with customer demand, enabling it to strike the optimal balance between presale and stock orders to minimise excess inventory for both itself and its customers.

By harnessing K3 Fashion’s advanced capabilities and extending the solution, Création Gross enabled smaller, more frequent replenishment orders from its stock.

Furthermore, the solution empowered the business to manage the backlog on future production, allowing the supply chain team to plan accordingly for the goods already sold in the next production order.

Crucially, this ensured guaranteed stock for customers and precise delivery dates, leading to increased customer trust and satisfaction.

The approach deployed by Création Gross is just one method for mitigating the risk placed upon brands by wholesale customers favouring stock orders rather than presale.

The goal is always the same

As the industry continues to evolve, advanced data analytics will allow brands to refine their ability to anticipate market trends, customer preferences, and demand fluctuations to better forecast their inventory.

The key takeaway here is that whether the risk is held by wholesale customers through presale orders or assumed by brands through stock orders, the overarching goal remains the same: to minimise leftover stock in the pipeline.

While market trends show that more and more wholesale customers prefer stock orders over presale, brands should not worry too much. The solution lies in rethinking how they conduct business and address their supply chain.

Brands that proactively embrace customer inventory management and invest in their supply chain will stay ahead of their competitors in the ever-evolving fashion landscape.

If you’d like to learn more about how K3 Fashion can support your wholesale channel, please feel free to drop us a line today.