Are You Stockpiling Inventory Against Shortages?

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Car Audio Product Shortages

Now that most markets are open for business, and many car audio dealers are seeing unprecedented sales, shortages of car audio products have become a nationwide problem.

Elettromedia reported over the weekend, it experienced its best May sales figures ever.

Pioneer is now air freighting product to keep up with unexpected demand. SounDigital is reporting strong demand on EVOX amplifiers but expects to catch up quickly. ADS is short on some products

For some dealers the shortages are cutting into sales, for others, it’s a minor issue but there is concern it will get worse.

Some dealers are over-ordering, and all are wondering how to approach the coming months.

Columbus Car Audio, OH has seen shortages across the board.  “It’s even smaller things that you wouldn’t expect; dash kits and installation accessories have been difficult to get at times,” said Owner Todd Hays.  The store, which re-opened its doors the third week in April has installs booked out for two weeks.  As for stockpiling for the future, Hays says. “No. Nope.” The Ohio Governor has taken a cautious approach to the pandemic.  “I’m scared if we have a relapse, he’s going to want to shut things down again.  …I’ve shared this with all my suppliers… I’m not going to order 20 when I need 4.”  He added that as a member of the Mobile Electronics Specialists of America (MESA) buying group, he is able to get products in a pinch from other dealers.

Harvey Wright of Ovation Car Toys in Indianapolis, IN. is seeing shortages but is not going to over-order in response. In fact, his strategy is cutting inventory by 30 percent and ordering more frequently with smaller orders. “I’m running a cleaner operation.”

A small chain in the southwest said, “We’re short on everything.  Our warehouse is probably at 20 percent of what it normally is and we don’t even know when we’ll be getting product from manufacturers. We’re running bare bones.”

The Elite Distributor Alliance of 11 distributors said the group made a decision to increase stock back in March, but is concerned about supply and demand in the coming months. It’s investing millions of dollars in “safety stock,” said EDA Director Jim Warren.

Beach Auto Sound, CA Tom Sweere,  said his product shortages at this point are minor; but shipping is a problem. Product that used to take 1 or 2 days to ship, now takes 3 to 5 days.  Sweere has been stockpiling product, picking up a few extra products with each order.  Given that many new products are just being released, he’s not concerned about being left with inventory. “We still have a full year in the product cycle. It’s cash flow and that’s the key to this business.”

“I’ll say it a million times, cash flow is most important. Not being afraid to be a little too inventory heavy in some circumstances.  The retail gurus teach you its all about inventory turns, but in a small store, its more important that you have the product and in some cases, it’s better to have a little extra…but it takes cash flow to do that,”said Sweere.

Mehdi Narimanian of 3-store Sound of Tri-State, DE, said, “We’ve seen some product shortages. Obviously there was a spike in the business from stimulus money and a lot of the vendors were not expecting this spike…The vendors are working really hard to get products and are doing everything they can.  Rockford is constantly in and out of inventory but they have it the next day so they are staying on top of it…,”

He and others are questioning the future.  “Disney World is opening up, is that going to impact our business?  There was a lot less businesses to share that [stimulus] with…Now that everyone’s opening up, we don’t know what to expect but we’re placing more orders than we need. If we sold 6 pieces we want to order 12.  We don’t know if the inventory will be there in July,” said Narimanian.

Some of Sound of Tri-State’s plus business is from small fleets, say a contractor with a number of trucks that benefited from the PPP loans and are now outfitting the trucks.

“Obviously it will come to a stop. We hope it will be gradual,” he added.

 

 

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2 Comments

  1. If you don’t have it to sell, you can’t make the sale. Analyze it any way you like.

  2. The best of us are able to move anything, because our clients are here for us, not any other brand. If a brand’s inventory runs your business, you probably don’t belong in business. …Water to a well…

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