By Bill Yeargin, CEO, Correct Craft
Our Correct Craft companies work with hundreds of marine dealers, giving us a unique view into what works and what doesn’t. By no means does that make me an expert on dealership management, but it has resulted in some interesting observations, particularly related to the management of inventory.
In June 2024, 74% of boat dealers thought their inventory was too high. This was down from 90% in May, but the consensus is clear: boat dealers believe they are overstocked. Our team understands this situation and wants our dealers to be healthy; without good dealers, we have no manufacturing business. I am confident you will never read an article about our companies forcing dealers to take products they don’t want.
However, is stopping new product orders the best way to reduce inventory? Probably not.
One thing that is certain to result in trouble for a dealership is not having stock on hand that customers want to see and buy. If there is one lesson I have learned over my career, it is that new products drive people to the showroom. Often, the best way to sell older inventory is to have people come in to see new products.
I spoke with a dealer about this exact problem a few years ago. He had some old, slow-moving inventory, but one of our boats companies — for which he was a dealer — introduced a new product that was getting a lot of attention. He had a couple of the new products delivered to his showroom, and people started coming to see them. The people who came to see the new product ended up buying the older product, which was perfectly suited for the customers’ boating needs and available at a better price. Sure, it took some work on their part to convert the prospects to the older inventory, but it ended up being a win for both the dealer who sold the older product and the customer, who still got a great boat.
So, what should dealers do?
First, make sure you have new products people are curious about available for prospects to view, and be prepared to sell them on the value they offer compared to the other products you have in inventory.
It is important to adjust inventory to the current market level, but it is a huge mistake to do that by not stocking new products.
I remember a case study in graduate school about an art gallery that went out of business, and basically, it was because they refused to keep fresh inventory in stock. The gallery quickly sold their popular art but didn’t want to acquire new art in stock until they had sold the slower-moving products. This put the gallery out of business because they stopped getting people who wanted to see new art through the door. This meant they lost all their prospects, including those who could have easily been shown older stock that they would love.
Don’t make this mistake. It is important to adjust inventory to the current market level, but it is a huge mistake to do that by not stocking new products. Sure, be careful how much you buy, but make sure you have items in your showroom that people want to see. Then, use your sales skills to create a win-win scenario for you and the boat buyer.
Having the right balance of old and new inventory is hard, but successful leaders do the hard things.
About the Author
Bill Yeargin is the CEO of Correct Craft and author of six books including the best seller, Education of a CEO.