I’ve sat in both seats this note covers. I ran purchasing on the brand side as Director of Purchasing at New World Natural Brands, and I bought for the ecommerce and store business of a large outdoor retailer. Most of what goes wrong in a young brand’s buying shows up in its first two seasons, and most of it can be prevented with a few written rules.
What a buying process is, for a startup
A buying process is the set of decisions that turns a sales plan into purchase orders. It answers four questions on a schedule: what are we buying, how much, when does it need to land, and how will we know it worked. In most startups those answers live in a founder’s head and one spreadsheet. That holds until the second season, when cash is tied up in the wrong inventory and nobody can say why an order was the size it was.
The goal is a repeatable loop that one person can run in a few hours a week, written down well enough that a new hire can pick it up without a handoff meeting. A buying department can come later.
Start with open-to-buy, not with the product
Open-to-buy is the budget for what you can afford to bring in during a period. It is planned sales, plus the inventory you want to end the period with, minus what you start with and what is already on order. It is the most useful tool a startup can adopt, and the one most often skipped.
Set it monthly, not by season. A seasonal number feels generous in month one and leaves nothing for the reorder a hit item needs in month three. Buyers hold back a reserve for chase buys for exactly this reason. It is how a winner gets funded without breaking the budget.
Build an assortment plan before the first order
An assortment plan is a short list of what you will carry, grouped by the job each item does. Most startup lines need three groups: core items that sell every month and should stay in stock, newness that gives customers a reason to come back, and a small number of tests. Give each group its own share of the open-to-buy.
Founders tend to buy the whole line in even depth because they believe in all of it. Buyers put depth behind the few items with proof and keep tests shallow. Even depth across a line is the most common reason a young brand ends a season sold out of its best seller and sitting on its slowest one.
Set reorder rules for core items
Every core item needs a written reorder point, the inventory level that triggers a new order. It comes from weekly sales and supplier lead time, plus a buffer for delays. Keep the minimum order quantity and lead time for each supplier next to it, so the person placing the order does not have to look anything up.
Lead time is the number that bites. Online demand can move in a week, while a factory reorder can take months. If your best seller’s lead time is longer than the stock you have on hand, you are already late. The fix is a standing reorder or safety stock agreed with the supplier before you need it.
What to review every week
A buying process runs on one short weekly review. Five numbers cover it:
- Sell-through by item. The share of what you received that has sold, which tells you where to chase and where to stop.
- Weeks of supply. Inventory on hand compared with weekly sales, so a stockout or an overbuy shows up early.
- Open orders and landing dates. What is coming and when, so a late shipment is caught before it becomes an empty listing.
- Margin at full price. Discounting can hide a buying mistake for a while. Full-price margin shows it.
- Open-to-buy remaining. What is left to spend this month and next, after this week’s orders.
Common buying mistakes startups make
Buying to the supplier’s minimum instead of the plan. Minimum order quantities feel fixed. They are negotiable more often than founders expect, especially on a second order or when you commit to a schedule.
No one owns the decision. When buying is shared between the founder, operations and marketing, every order becomes a debate. One owner, working from the written plan, ends that.
Planning on markdowns to clear the mistakes. A process that counts on discounting to fix overbuys trains customers to wait for the sale. Full price is a strategy, not a hope, and it starts at the buy.
When to bring in help
Most brands formalize buying when inventory becomes the biggest use of cash, when a retailer or marketplace starts asking for forecasts and replenishment commitments, or when the founder is still placing every purchase order. Help can be a part-time buyer, a fractional buying lead, or a consultant who builds the process and hands it to your team. Here is what a retail buying consultant does, if you are weighing the options.