When to Buy Stock and When to Clear It
Trade’s daily decision is stock: when to buy, how much to buy, when to clear. Answered by feeling, the warehouse fills and the bank empties; answered by numbers, trade settles into a cycle.
The numerical frame sits in the margin and cycle guide and the whole map in the complete guide.
When to Buy? Three Triggers
The first trigger is the reorder point: order when stock falls to what you will sell during the supply lead time. If supply takes 15 days and you sell 10 units daily, 150 units is the reorder moment.
The second trigger is pre-season buying (timing guide). The third is an opportunity: an offer clearly below the usual price. But the third has one condition: knowing the price history. Without it, every offer looks like an opportunity.
How Much? Three Limits on Quantity
The first limit is cash: never exceed what funds one full cycle. The second is turnover speed: never buy a quantity whose selling time you cannot estimate. The third is shelf life and fashion: selling time must be shorter than the product’s life.
A practical measure: divide the quantity by average daily sales. If the resulting days exceed the stock period you can accept, the quantity is too large — however good the price.
Small and Often, or Large and Rare?
Large, infrequent orders lower unit cost but tie up money; small, frequent orders keep cash free but raise freight and unit costs. The right balance depends on the product.
The rule: fast turnover means small and often, slow turnover means rare and calculated. For a beginner, small and often is always safer — because mistakes stay small too.
When to Clear? Three Warnings
The first warning is exceeding the target period: passing your planned selling time by half means the product is not turning as expected. That is the first signal for a discount decision, not the last resort.
The second is the season turning: goods left as a season closes tie capital until the next one. The third is a new model arriving: in technical and fashion-led products, old stock loses value daily once a new version appears.
The Mathematics of Discounting
A trader’s hardest decision is selling at a loss; yet the arithmetic usually favours the discount. Held goods produce three costs: tied capital — the purchase you cannot make with that money — storage, and value loss.
A simple test: if I sold this at cost today and put the money into a new cycle, what would I earn in three months? If that exceeds the gain from waiting, discounting is right. Dead stock is not profit but buried loss (six reasons).
Stock Records: What Is Not Measured Is Not Managed
Every one of these decisions rests on one thing: records. What came in, what went out, what remains, which product turned in how many days. Even a simple table suffices; what matters is keeping it regularly.
A trader without records does not know which product earns and mistakes the best-selling product for the best-earning one. The two are often different — one is decided by turnover, the other by profit.
Field Note
A trader held a lot for six months saying “let’s wait, the price will recover”. It did not, the product aged, and it finally sold at a lower price. The arithmetic came later: had the same money turned twice in those six months, it would have earned three times the discount loss. Waiting is also a decision — and it has a price.
Quick Summary
Buying triggers: the reorder point, pre-season, a genuine opportunity. Three limits set the quantity: cash, turnover speed, shelf life. Fast turnover means small and often. Clearing warnings: exceeded period, season turning, new model. Dead stock is buried loss, not profit.
Frequently Asked Questions
Sık Sorulan Sorular
Constant, unplanned discounting does; end-of-season and stock-renewal discounts are normal. A discount with a clear reason loses no trust.
When you know the price history and the channel to sell it is ready. Without both it is not an opportunity but cheap dead stock.
A simple table suffices at first: product, entry date, quantity, cost, exit date. Move to software as volume grows.
Next step: Answer “how many days has this been here” for every product in your storage today; clear anything past six months by the rule in the mistakes guide.