The battle of the inventory
Ecommerce and wholesale fight over the same stock in most brands. The allocation policy gets blamed. The buy is usually the problem.
- Topic
- S&OP
- Kind
- From the archive
- Reading time
- 3 minutes
- Written by
- Telemyr
Every multichannel brand knows this argument. Ecommerce wants stock protected for the site. Wholesale needs to fill confirmed orders. Retail wants depth in the doors. A key account reorders and somebody has to decide who loses.
The argument repeats every season, the policy gets rewritten every year, and the problem stays. That is usually a sign the problem is somewhere else.
01 / 04
The weekly fight
Allocation in most brands is a meeting. The channels bring their needs, the stock does not cover all of them, and somebody senior splits the difference.
Whoever shouts loudest, or whoever sits closest to the founder, does a little better than the others. Everyone learns to pad their requests, which makes the next round worse.
The decisions are not bad. The people making them are usually right about their own channel. The setup forces them to compete over something that should have been settled months earlier.
02 / 04
Single pool or segregated stock
The policy debate is whether to hold one shared pool of stock or ring fence quantities per channel.
One pool uses inventory better. Any unit can serve any demand, so you hold less in total and sell more of what you have. It needs real time visibility and clear rules for what happens when stock runs low, because without those, the fastest channel simply drains it.
Segregated stock protects commitments. Wholesale orders are confirmed, so putting their units aside is defensible. The cost shows up at the season's end, when one channel has sold out and the other is sitting on units it cannot move, and the same product gets discounted in one place while being unavailable in another.
Most brands should run closer to one pool than they think, with reservations only for genuinely confirmed commitments. But this choice matters less than what feeds it.
03 / 04
The fight is downstream of the buy
When allocation is a constant battle, the stock does not match the demand. That was decided when the buy was placed, months before the first argument.
The usual causes are consistent. The forecast was built top down, so the channel and product mix inside it was never really tested. Wholesale ordered after the buy was locked, and the order book was never reconciled against it. Ecommerce demand was projected from last year plus ambition. Nobody looked at the combined picture by product until the season started.
Policy cannot fix that. A perfect allocation rule applied to the wrong stock just distributes the shortage fairly.
04 / 04
What actually ends the argument
Build the forecast bottom up by channel and product, and reconcile it against the order book before the buy is committed. The wholesale order book is confirmed demand and it should shape the buy, not surprise it.
Then review allocation against sell through weekly, with numbers instead of requests. When a product runs ahead of plan on the site and behind in the doors, stock moves, and the rule for that was agreed in advance.
The meeting gets shorter because there is less to fight about. Most of the conflict was never about allocation. It was about a buy that could not cover the plans each channel had made separately.
When the planning is right, the allocation question gets boring. Stock roughly matches demand, the exceptions are visible early, and the rules for them were agreed when nobody was under pressure.
If your channels fight over inventory every season, the fix is rarely a better policy. Look at how the buy was built.