Growing Gradually: How to Manage Product Supply and Demand

As a small business owner, you are your own boss, which can have its ups and downs. On the plus side, decision-making is very efficient and action-focused. But managing an extraordinary variety of tasks can put you outside of your comfort zone.

For many small business owners, securing and maintaining retailer relationships is one of those tasks. We talked to three successful small business owners about how they have been able to navigate an unfamiliar and uncertain process of creating and fulfilling demand for their products. Their tips can help you gain some knowledge and perspective on how to add the role of product manager to the other growing list of “hats” you wear as a small business owner.

Prepare for Changing Retailer Requests

JAM Paper & Envelope, a New Jersey-based paper and office supply company that sells primarily through e-commerce retailers, says that working with retailers is a bit of a gamble, but one that they have found can pay off if you are able to respond quickly to their requests, such as increasing product volume or shipping faster.

“Retailers continue to ask things of you that you are not comfortable doing. As a smaller brand, it’s an advantage in that we have the ability to say yes. There’s just no excuse not to figure out how to get it done,” said Andrew Jacobs, director of ecommerce at JAM Paper.

“Part of the challenge is you never know what retailer partners are going to order, so our product is essentially made-to-order. We don’t really carry any inventory,” said Stephanie Kriebel, partner and director of marketing and operations, OMG! Pretzels. The Plymouth Meeting, Pennsylvania-based company has found opportunities to bring their gourmet flavored sourdough pretzel nuggets to untapped markets where pretzels are rarely found.

“We’ve also found that the grocery stores we work with are not warehousing as much product as they used to. You just have to get comfortable with the fact there’s often no regularity to when and what people order.”

It’s this unpredictability that causes many small businesses to only sell to consumers through their own websites, bypassing the opportunity of working with retailers altogether. But, recent GS1 US research found that small businesses that experienced more than 25% growth in the past year use 3.1 sales channels, and that 97% of respondents who work with online retailers experienced some level of growth within one year. While it may present challenges, working with retailers can take a company to new the next level of sales success.

Rely on Your U.P.C.s (Universal Product Code)

Many small businesses are investing in U.P.C. barcodes, which carry a unique product identifier recognized globally, to help manage the movement of product through different sales channels.

“When we were first starting out, I hesitated to go through the process of properly licensing my barcodes. At the time, I just didn’t understand the doors that could be opened up by assigning U.P.C.s to each of the products we offer. Now, I do. The second you have U.P.C. assigned items, they become real items. Now when retailers ask about your product line, it’s much easier to manage supply and demand,” said Jacobs.

For FloLogic, a small company that offers a product that monitors water activity to prevent flooding, U.P.C.s have been like a passport for them to work with new distributors and wholesalers. While Chuck De Smet, the company’s founder and CEO, started with just one product that is installed right in the water pipes, he has expanded over the past several years to accommodate different sized pipes.

“In the beginning, we realized that barcoding was an oversight on our end. Just having one product at the time, we only bought one barcode from a third party barcode seller. But then we realized it wasn’t going to work for us as we grew, and that if we were going to be available through big distributors, and big plumbing wholesalers—some of which have 1400 outlets in the United States—we needed to meet the requirements of their systems, to make it work for them. So we contacted GS1 US and got barcodes that could work with our partners’ systems, and we were able to calculate how many we would need as the product line grew,” said De Smet.

Managing “Overnight” Success

For companies in the startup phase, it might seem like a dream come true to wake up one day and have your inbox filled with hundreds of orders. But, in reality, managing these opportunities requires patience and a long term business plan for accommodating growth.

“Growth is difficult. People say it’s a good problem to have, but it’s still a problem. For example, the software we had when we were shipping 200 orders a day is just not the same operationally that you need when you’re shipping 5,000 orders a day. All of a sudden, you wake up one day and you’re no longer a tiny business,” said Jacobs.

For help finding the right type of software and other partners to support growth, many small businesses have found credible options through the GS1 US Solution Partner Program, which certifies solution providers that are able to provide guidance and services most in line with retailer standards.

Ultimately, by planning for gradual growth, small business owners can build a positive reputation, sustainable sales, and the added benefit of mental sanity to enjoy the journey. “We’re okay with not going from $100,000 in sales to a million dollars in sales in one year, because we don’t know how we’d do that yet. That would be a huge jump and one without the proper tools in place. Our reputation would tank. We’ve been very conscious of not growing too fast,” said Kriebel.