Your Unsold Inventory Is Costing You More Than You Think

**Anmar Abdul Jawad** (0:00)
What we're talking about here and what we've seen be successful is we kind of want to have an all out effort on this inventory and so part of it is database marketing, which is free for the most part, where we're talking about email and SMS sends here that go out to an existing list. But then part of it is a CAC associated with pushing those things on meta, pushing those things on Google potentially and other channels as well. So the idea would be, okay, we're going to try to move them in a free way as much as we can here on the email and SMS side, and beyond that we want to be able to scale through paid and push those units as well. But what does that CAC ought to be?
How much of a loss are we willing to take? Do we need to get to break even? Are we willing to take a loss at all?

**Richard Gaffin** (0:39)
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Hey folks, welcome to the Ecommerce Playbook Podcast. I'm your host, Richard Gaffin, Director of Digital Product Strategy here at Common Thread Collective. And I'm joined today by a very special guest. I don't believe, have you been on the podcast before, Anmar?

**Anmar Abdul Jawad** (1:41)
No, not quite yet.

**Richard Gaffin** (1:43)
No, not quite yet. Well, here we are. It's happening now. Anmar Abdul Jawad, who's our Director of Profit Engineering here at Common Thread Collective, joining us today to talk a little bit more on a tactical level about the Cashmas in July event that we're running right now. So those who listen to the podcast will know I talked to Randall relatively recently. I'm not sure when this one is coming out, but either a few days ago or a week ago, I talked to him about kind of the specifics of why we're doing this and why it's important. So we're going to reiterate some of that stuff, but then Anmar is going to kind of dig a little bit more into how exactly you execute it and then kind of get a little bit into maybe fleshing the reasons that it's really, really important. So just kind of the quick overview for those who have forgotten or didn't listen to the first one, is that what we're doing is the Cash Pist in July event, the whole purpose of it is to create a scenario where you're realizing more cash, have more cash on hand in Q3 so that it's available to deploy in Q4. Now, that's definitely a simplistic way of thinking about it. But what we've seen across the board is that brands who are able to liquidate inventory in Q3 are then able to deploy that money in Q4 in such a way that they actually see like huge growth relative to brands that don't do that. So the brands that are sitting on inventory are just sort of letting the Q3 doldrums take them.
When Q3 comes or Q4 comes rather, they see marginal growth or they're flat or they even shrink a little bit as well. So there's clearly this is an incredibly important time, even though a lot of the time it becomes this sort of part of the ecommerce calendar is overlooked and sort of treated as this kind of like holding pattern before the Q4 madness starts. So what I want to start is talking a little bit like from your perspective Anmar, what are the reasons beyond just or maybe you can flesh out a little bit more the reasons why liquidating inventory in Q3 having cash on hand is so important?

**Anmar Abdul Jawad** (3:40)
Yeah absolutely and we'll get to that part. I think to tee it up, there's a bunch of brands that are in a couple of different spots right now as it relates to inventory, especially among this subsection that just has an inventory problem or what they would describe as too much inventory on hand. Broadly speaking, there could be this group that is, they're sitting in a situation where they know that the product is going to move, they just haven't gotten around to really fleshing out the assets it would take to really move the product. So it's an executional piece. Then there's this other subsection of brand where they don't know, it's sitting there at full price, they've tried a couple of things, maybe they've tried pushing it more aggressively on meta or through database marketing on email, and it's not really moving to the degree that they wanted to. And they're in a situation where they would like a lot more strategy and understanding of, okay, if I do push it on meta, what should my targets be? How should I think about the profitability of this unit of cohorts relative to the rest of my business? And so because they're in these two camps, what we wanted to have is in offering those equal parts execution for those folks who are like, I know it's going to move, I'm just stuck in the evergreen hum of my business and I can't really afford to dedicate a bunch of resources to actually getting this done. And so we wanted to have it be equal parts execution for those folks and equal parts strategy as well for the folks who are like in this position where it's not just about execution, but it's also about what do I do? How do I turn this into an operating plan, including the forecast for the rest of my team to hold ourselves against for the month of July, month of August and onwards as it relates to our P&L and our actual marketing dashboard, not just kind of the balance sheet, which we're aiming to attack. I'd say that's how we first came about, the way that we want to put this offering together. Then to your point about a couple of things related to, let's say, the downsides of having the inventory on hand. Yeah, absolutely. There's two right away major components, which is the direct cost. Sometimes there's storage fees on the inventory level here at 3PLs. The other part is also just opportunity cost. What else could you be doing with the money?