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Inventory management is one of the most important daily operations for any dispensary or cannabis store. Keeping track of your inventory helps ensure that you keep your shelves well-stocked and that your most popular items are always available for customers to buy. Not only that, but certain inventory metrics can even help you maximize your […]
Inventory management is one of the most important daily operations for any dispensary or cannabis store. Keeping track of your inventory helps ensure that you keep your shelves well-stocked and that your most popular items are always available for customers to buy. Not only that, but certain inventory metrics can even help you maximize your cannabis dispensary profits.
Nowadays, most cannabis dispensaries use cannabis POS software to help with their inventory management. These advanced systems can help dispensary managers track which items customers are buying the most, what kind of items they need to order more of, and various other valuable information. These analytics can then be used to boost their sales.
Proper inventory management can also help dispensaries reduce their losses and predict customer behavior. As such, every dispensary operator should ensure that they’re regularly collecting all kinds of inventory metrics to enhance the overall success of their business. But what specifically should you look for? Here are the top 10 inventory metrics you can use to maximize cannabis dispensary profits.
One of the most helpful inventory metrics for any cannabis dispensary is product performance. Tracking the sales of each product can be incredibly helpful in many ways. You’ll learn which products are the most popular among buyers and also gain a good idea of how much you should order in the future.
For example, you might find that strawberry cannabis gummies are your highest-selling product. Using that information, you can order more of the same brand and flavor when you’re restocking your shelves. You can also order other flavors from the same brand, or even order other products such as tinctures and soft chews in the same flavor.
Additionally, you might discover that certain products are selling faster than you thought. This will give you the foresight to order more of those products during your next stock order. In doing so, you’ll keep your shelves well-stocked and keep making sales consistently. You can also identify low-selling products and consider whether you should order less of them or even replace them with other products.
Much like you can gauge the performance of individual products in your dispensary, you can also see how certain categories are performing. Most dispensaries sell a range of cannabis products – that includes multiple types of strains as well as products such as edibles, tinctures, topicals, capsules, and more. Analyzing the performance of each category helps you make smart decisions about your inventory.
For example, if your dispensary has just introduced cannabis edibles to your shelves, you might find that edibles are outselling tinctures and topicals significantly. You can then use this information to order a wider range of edibles. Alternatively, you might find that topicals or tinctures are among your best-selling products.
You can also delve into information on subcategories of products. For instance, if you find that you’re selling more sativa strains than indica strains, it might be a good idea to diversify your range of sativa strains. If you find that you’re selling barely any cannabis patches but selling a lot of cannabis creams, you can order fewer patches and more creams to boost your cannabis topical sales.
Lost sales is a metric that tracks how much money you’ve potentially missed from a particular product not being in stock. For example, if you haven’t had White Widow in stock for 3 days, and you make $350 a day on average from White Widow sales, this could add up to $1050 in lost sales.
Using this metric is particularly helpful as it can help ensure that you don’t miss out on potential profits. If you find out that a popular product is regularly running out of stock, you can order more of it in your future orders. This will ensure that it’s always available to customers, meaning your sales will go up.
In some cases, you might even find that your sales go above the expected levels. By keeping popular products in stock, customers will visit your dispensary more often and buy more of these products. Either way, you’ll prevent your dispensary from missing out on the potential profit from these products and keep your revenue high.
Periodic Automatic Replenishment (PAR) levels help you determine the amount of an item needed to ensure that it’s always in stock. This usually involves using historical sales data to analyze how popular each item is and how often it’s likely to run out. You can then use this information to finetune your stock orders to ensure each item is always in stock.
Monitoring par levels and adjusting your stock orders appropriately will help ensure that you don’t miss out on lost sales. Popular products will always be in stock as you’ll have the foresight to order more before you run out. What’s more, you’ll save money as you aren’t ordering an excess of unpopular products and only ordering them when you need them.
A good dispensary POS system will help you gauge and monitor the par levels for all the items you stock. This information will help you increase your revenue as you can then order fast-selling items before they run out of stock. What’s more, it can also help you decrease your losses as you’ll be ordering more of what you need and less of what you don’t.
Another top metric that every cannabis dispensary should pay attention to is average cart size. This refers to the number of products that each customer buys on average. This is an important metric as it can help you discover how much your average customer is buying and how you can work on increasing it.
Ideally, you should be encouraging your customers to buy as much as possible from your dispensary every time they visit. It helps to offer as many types of products as possible. It also helps to offer a range of cannabis accessories – you might even want to place branded cannabis accessories at your point of sale to encourage customers to buy more.
A good customer rewards program will also encourage customers to buy more from your dispensary with each visit, especially as they’ll gain rewards for doing so. Whichever way, keep an eye on the average cart size of your customers and, if it seems too low, figure out how you can boost the number.
Closely related to average cart size, average cart value calculates how much each customer spends at your dispensary on average. Collecting this information is useful as you can see how much customers are spending and figure out how to boost these numbers to ultimately enhance your profits.
Many of the same strategies you use for increasing average cart size will also help increase average cart value. For instance, a good customer rewards program can encourage customers to buy more from your dispensary. Offering accessories such as grinders, lighters, and rolling papers is also a good idea as many customers will add these products to their shopping cart.
Another approach is to finetune your prices. Slightly raising the price of your most popular products can help increase the average cart value of customers. However, you must be careful to ensure that you still offer competitive prices, otherwise customers may become disgruntled with your business and shop somewhere else.
Time per transaction is another important metric that can help you enhance your sales and ultimately increase the success of your business. This metric gauges how long, on average, it takes to complete each transaction. This can be affected by various factors and, by identifying and solving any problems, you can ensure you make more sales.
For example, if transactions are taking too long, you might want to employ more cashiers. More staff can help you complete more transactions faster. Not only will this help you complete transactions quicker, but it’ll also help prevent your dispensary from losing customers as they’ll be impressed by the fast and efficient service.
Other factors can also come into play. For example, offering contactless payment at your point of sale will help you reduce the time per transaction. It can also help to allow customers to order their products online and simply pick them up at the dispensary. Not only will this help reduce the time per transaction, but it can also help you increase overall transactions – especially if you offer more payment options.
One of the most obvious metrics that every dispensary should track is total sales. Simply put, this is the total amount of sales your dispensary has made. Tracking your sales can help you figure out how well your marketing efforts are working. It also gives you a number to improve upon – your dispensary should always aim to make more sales.
Not only should you track your total overall sales, but you should look at your sales per year, sales per month, and even sales per week. You can set targets for your business to aim toward and try to improve each week or month. You might also find out that some months are better for sales. For instance, you might make more sales during the holiday season.
Make sure you track your sales regularly and work out how to improve upon them. For instance, if your sales seem too low during one month, it might be time to adapt your marketing efforts to attract more customers. You can also try to improve your repeat sales by using methods such as email marketing or offering coupons to loyal customers. Dispensaries with multiple locations can also compare sales information between branches.
Your gross margin refers to the net value of your sales once the cost of goods sold is deducted. This helps you figure out how much your dispensary is making from product sales while also considering the cost of your stock. Naturally, this is an important metric to keep track of for various reasons.
You’ll need to regularly calculate your net margins and gross margins for tax purposes. However, keeping an eye on these metrics can also help you maximize your dispensary profits. For instance, you might find out that your gross margin is too low as you’re spending too much on low-selling products. You can then adjust your stock strategy to boost your profits.
Naturally, you should pay attention to your gross margin for each month and each year. Not only will this help you improve, but it’ll also help you identify patterns in your sales. Over time, you’ll figure out how to finetune your stocking strategy to maximize your profits. You’ll also gain some idea of how well your marketing and pricing strategies are working.
Shrinkage compares your recorded stock quantities to how much stock you physically have. This requires manually counting your stock regularly to ensure you’re not missing any stock. This metric is important as it can help you discover lost or stolen stock and solve the issue before it gets worse.
If you find out that the amount of stock you have in your store and warehouse doesn’t match what’s on your system, you might find out that you’re suffering from customer theft. You might even find out that a staff member is stealing from your stock. You can then improve your security and solve these problems as quickly as possible.
Of course, shrinkage doesn’t always mean that your products have been stolen. You might find that products are being stored incorrectly and ultimately lost. You might also find that there’s an error with your system. Whichever way, solving these problems swiftly can help you avoid missing out on profit.
Tracking inventory metrics is an effective way to maximize profits for your dispensary. You can identify your most popular products and sell more of them. You can also find out what you need to order less of. On top of that, tracking the right metrics will help you finetune your marketing, stocking, and pricing strategies to ensure you make as many sales as possible.
You don’t need to figure out these metrics manually, either. A good dispensary POS system will help you keep track of all kinds of inventory and sales metrics, helping you to improve your business. For more information and resources for maximizing dispensary profits, visit Cannabis Promotions.