Inventory is typically the largest expense and asset of a catalog or ecommerce retailer and significantly impacts cash flow, a key metric of a healthy retailer.
The example below presents the expected cash flow gains for a direct retailer with $10 million in annual sales and modest annual growth of 3%, reflecting the following improvement assumptions over a 5-year period in the four areas where Direct Tech software most directly impacts cash flow:
Improved gross margin rate of 0.5% resulting from declining overstocks
Improvement in annual inventory turns from 3.0 to 3.2
Reduction in backorder costs through a 2.0% increase in initial order fulfillment rates
Increased sales through a 1.0% improvement in total order fulfillment rates
The figures represent the annual expected gains for each of the five years presented.
The results above are typical and reflective of the stated assumptions.
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