In interview with e-commerce expert Claes Winterfeldt

Claes Winterfeldt boasts extensive experience in the field of commerce, with over two decades in retail and nearly as much in e-commerce. He has accumulated a wealth of knowledge and insights, drawing from both successes and lessons learned from failures.

Claes initially started his career in wholesale, working with brands like Puma and Timberland, and later transitioned into the retail sector. In 2010, he joined the newly founded Sportamore, a prominent sports e-tailer in Sweden, which eventually developed and carried its own successful brands. When Sportamore finally was sold to Footway in 2020, Claes worked in Oslo, heading the category department at XXL. There he played a key role in shaping a new strategy to define and purchase a commercially successful assortment to expand the customer base. In recent years, Claes has been consulting with brands and retailers, assisting them in building and optimizing their e-commerce operations.

It is safe to say Cleas knows his way around the e-commerce and retail space. In this interview, we got to discuss Claes's learnings on inventory planning strategy, managing overstock, and why focusing solely on pricing is not a sufficient business strategy.

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Let’s dive into the interview.

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THE COMPLEXITY OF E-COMMERCE

‍Claes, you specialize in assisting brands and retailers in establishing and strengthening their e-commerce presence. What common challenges do physical brands or retailers typically encounter when transitioning their operations online?‍

The primary challenge involves effectively categorizing and structuring the product assortment. This entails detailed planning and budgeting for the intended range to align with the preferences of the target customers your strategy aims to attract. Determining whether your acquisition strategy will focus solely on conversion or also on building brand awareness online, adds complexity to assortment and inventory planning that many brands underestimate.

Are these the same obstacles you have faced yourself during your career?

Definitely. Stocking your store may seem simple, however, the real challenge lies in strategically procuring optimal quantities of high-demand items and limited quantities of low-demand ones, all while avoiding unsellable items. This requires a well-crafted plan outlining your objectives, ensuring you can offer customers the right products at the right time and price. Simply buying broadly across the product range for variety is not ideal for achieving excellent turnover overall, which is crucial for maintaining a healthy cash flow.

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PLAN WITH PRECISION

Is adopting a broad purchasing strategy a common mistake you think brands make? Can you elaborate on what you mean by that?‍

Brands often fall into the trap of buying a broad range of products, thinking it's a safer strategy to ensure sales. I recommend a focused approach - identify top sellers and invest more narrowly. It's like "reverse Robin Hood," shifting resources from underperformers to high-profit potential items. Brands must be willing to take calculated risks and embrace occasional mistakes. When executed well, you often find that demand for top-selling products far surpasses initial expectations. Finding and nurturing superselling products is not necessarily easy, but it is a fundamental aspect of running a successful business.‍

Can it be challenging to ensure a steady supply of these high-demand products? Many brands and retailers often need to procure specific quantities of items from their suppliers, right?‍

Sure it can, but to maintain a reliable product flow that meets demand, establishing strong communication with suppliers is crucial. In the context of direct-to-consumer (D2C) operations, allocating resources for the production of these high-demand products becomes imperative. Of course, this is a bigger question as it comes down to your supply chain setup and securing favorable lead times from your factories for your desired supply. You may need to consider nearshoring to acquire more favorable MOQs for example. In any way, you need to really hone in on the details of your supply chain to figure out where your margins lie.

It’s not an easy nut to crack, but really paying mind to get your supply chain in order to deliver on your business objectives is crucial.

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THE OVERSTOCK ISSUE

Right now many brands are struggling with overstock due to the hardships with planning and purchasing the right amount of inventory. Do you have any advice on how to avoid falling into that trap, or how to get out of it once you are there?

First off, you need to take action in time. A lot earlier than most brands do. Maybe it’s harsh - but kill your darlings and stop suffering from the perpetual “buyer’s sickness” of continuously adding new styles. If an item hasn't sold within the first few weeks of the season, chances are it won't. Take action - activate it.

When facing significant overstock, you may need to focus on safe bets and best-sellers over a few seasons while offering discounts to quickly clear out excess inventory and free up capital.

However, there are cases when you don't want to devalue your brand in your primary sales channel. Then you must find another outlet for these unwanted products. This might involve exploring partnerships with outlet businesses or selling the items to another entity that can introduce them to the market, even if it means taking a hit on profit margins. This aspect also needs to be included in your planning - having a contingency outlet to move excess inventory without disrupting your core operations.

Do you think it's more worthwhile to take an additional hit on profit margins to distribute the products through another channel rather than running a regular sale in your own channels?

In some cases, yes, it can be. It's often quite expensive, but in certain situations, it is the better option. It depends on your brand and overall strategy.‍

Is there a risk of waiting too long to see if a product starts selling?‍

Acting promptly is vital for managing inventory turnover and cash flow, especially in dynamic industries like sports and fashion with frequent seasonal shifts. Balancing core and novelty products is challenging, requiring continuous planning and monitoring. Failing to promptly address underperforming niche products can lead to excess inventory and cash flow issues, Keep an eye on them and never hold off on activating products that aren’t moving fast enough.

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STAYING ON TRACK

Do you have a process to keep track of specific products to monitor more closely?

We had a system where we divided products into six or so categories at Sportamore for example, representing if they were news, seasonal, campaign products, or products that needed action. What you call them is not important, the important thing is that you have a system that makes it possible for you to track and follow up on your products sufficiently. 

So how do you incorporate analysis and follow-up into your inventory planning processes?

It needs to be on an ongoing basis and you need to have a system that allows you to easily follow up on your inventory. Having tools for this is a significant asset. 

Madden Analytics has an advantage with its built-in algorithms and models for analyzing trends and sales development in relation to your inventory. This is a crucial detail for day-to-day work during the season. It allows you to keep track of your assortment and offerings so that you can supplement your purchases for items selling faster than expected or activate products that aren't performing well enough.

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THE BUSINESS OF SELLING BETTER

Have you noticed a trend among successful brands and retailers you've worked with over the years?

It's those who go beyond the basics of product and price, injecting an extra layer to create real value. Success comes to those who build genuine connections and brand loyalty, transcending the limitations of price competition. As you delve into offering more than just products and competitive prices, you'll discover that establishing a strong customer connection makes the price game less crucial – and that's where the real magic unfolds. Competing on price, after all, has its clear limitations and you’ll be left with no margins and no competitive edge.

Any closing words of wisdom?

Successful purchasing depends on a sales-oriented mindset. If you don't consider sales while buying products, you’ve already lost. You should want to showcase to the rest of the organization that the purchased inventory is driving sales and the right profit margins, rather than simply filling up your stores.

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If you want to learn more about Madden’s solutions and how we can support your brand, book a free demo and we’ll be in touch!