Specialize—or Vary Your Inventory?

When you buy in bulk, you have some choices to make. Obviously, if you buy 1,000 pairs of baby shoes, you’re going to be selling baby shoes for some time. But what do you do when your inventory runs out? Do you order more baby shoes or move onto something else? For that matter, do you sell baby shoes exclusively or order additional lots of some other type of merchandise to sell simultaneously? In other words, do you specialize in one type of bulk item, or do you vary your inventory?

Specializing in a given type of item has appeal, in that you can tailor your operation to that product category. There’s a downside, however; you’re stuck if the category fizzles out. It may be better, in the long run, to move in and out of various types of merchandise—baby shoes this month, sunglasses the next, DVD players the month after. Although, to be fair, every time you change categories, you’re essentially starting up a new type of business. You’re a shoe seller this month, a sunglasses merchant the next, and an electronics retailer the month following.