Retailer test-sells a smaller number of new products in order to avoid an unsalable inventory.
Test-selling a product for possible addition to your line can be dangerous. If you add the item, you'll buy big quantities to get the best price. But if it doesn't move during your test, you can be stuck with an unsalable inventory. Which is why, says Stew Leonard, paying more is sometimes a better deal.
Before Leonard places a big order for a new item, he'll order a smaller lot and sell the item for less than he paid. "Sure I lose a little money, but I find out if it really is a good deal," says the Norwalk, Conn., retailer. "If I sell out, I'll buy the truckload. If I don't, I'm not stuck with something I can't sell.'
It's a lesson he learned the hard way. "We were offered a truckload of shaving cream at 99¢ a can, or 10 cases at $1.39. I took the truckload because I was sure we'd sell out. We didn't. I initially priced it at $1.19. I finally sold it at 69¢, buy two get a third one free.'