Profit is the bottom line in any given business. When it comes to the retail accessory space, selling a product does not necessarily mean a healthy bottom line. Real profitability is a product of clever financial choices and no other place is this more apparent than in the economics of ordering bulk phone cases.
The buying decision to purchase bulk phone cases is essentially an economic one. It entails the evaluation of such variables as economies of scale, inventory turnover, and cash flow cycles. You can learn to organize your orders in a way that not only allows you to save money, but also to systematically get every dollar of profit out of the inventory you have by learning these concepts of finance.
Using Economies of Scale
This is the main economic aspect of bulk phone cases to make it so lucrative. Economies of scale can be described as a unit cost advantage that appears with increased production. It costs a manufacturer less per case to manufacture 10,000 units compared to 1,000 units and they transfer the cost to you.
Cutting Unit Fixed Costs
The fixed cost of an order (administrative time, transaction fees, and shipping) is apportioned across more units when you purchase lots of phone cases. The cost of shipping 100 cases that is divided by 100 cases equates to 1 dollar per case. The same fee per 1,000 cases contributes an extra only 0.10.
Limiting the effects of volatility
When you make a large order of bulk phone cases, you are assured of your material cost being locked in over a long time. This cushions you against price volatility caused by raw material dearth, production hiccups, or inflationary forces, enabling you to enjoy steady pricing and forecastable margins.
There are Tiered Pricing Benefits to Unlock
The suppliers usually have a tiered pricing structure. The 5,000 unit price may be much lower than the 1,000 unit price. Reaching these volume targets may open a new dimension of profitability not available to small players.
Optimization of the Inventory Financials
The economic advantages of bulk phone cases go beyond the cost of purchasing them into the way you handle your inventory and cash flow.
Increasing Inventory Turnover Ratio
Having a high inventory turnover ratio means that you are selling goods at a very fast rate. Popular phone models often have bulk phone cases that turn over at a very fast rate. You will maximize your overall ratio, a major indicator of operational effectiveness and healthy cash flow by ensuring that you maintain large inventories of these high-turnover items.
The Cash Flow Puzzle and the Solution to the Puzzle
A big quantity order of bulk phone cases involves a big cash outlay on start up. But this is a positive cycle: now you have a long cycle where sales generate income without requiring another cash outlay on inventory. This income can be invested or to finance the working costs, creating more stable and predictable financial management.
Conclusion
The purchasing economics of buying bulk phone cases are overwhelmingly good. Through economies of scale, companies are able to significantly reduce their COGS and maximize profits per-unit. More so, with proper management of inventory turnover and cash flow cycle, capital is used efficiently to guarantee maximum output.
