In the fast-paced smartphone market, efficient inventory management is paramount to a company's success and realme, a prominent player in the smartphone industry, has managed to enhance its inventory situation through a series of well-thought-out strategies in the first half of 2023.
According to realme, it has transformed its inventory management by implementing a comprehensive approach that encompasses various phases of a product's life cycle, fostering collaboration with retailers, and ensuring optimal product sales and supply management.
The company said its inventory management strategy begins with a meticulous life cycle plan that is divided into three key phases: Hot Sales Period, Sustenance, and End of Life. Each phase is managed with a different focus to ensure efficient inventory handling.
In the 'Hot Sales Period' phase, realme capitalizes on the initial excitement surrounding a new product launch. Adequate inventory is allocated based on market demand predictions and historical data. Collaborating closely with its channel partners, realme gauges the pulse of the market, obtaining valuable insights that drive inventory planning.
After the initial excitement subsides, for the sustenance realme maintains a steady supply of products to meet sustained demand. Timely adjustments to inventory levels are made based on market feedback and sales trends. This phase involves optimizing the balance between maintaining inventory and preventing overstocking.
As a product nears the end of its life cycle, realme ensures a controlled reduction in inventory. This is achieved by aligning with retailers to execute targeted promotional campaigns and clearing out remaining stock. This phase reduces excess inventory, minimizing losses due to obsolescence.
realme's commitment to inventory management is evident through its strategy of providing ongoing support to products even after their launch.
The company offers regular software updates, bug fixes, and feature enhancements to keep products relevant and competitive.
This approach not only extends the product's life cycle but also prevents sudden dips in demand that could lead to inventory pile-ups.
To further mitigate the risk of inventory accumulation, realme adopts a well-timed product launch approach.
The company ensures that a reasonable gap exists between the release of one generation of phones and the next.
This measured approach minimizes the risk of overstocking due to successive releases, allowing inventory to align more closely with market demand.
realme recognizes the significance of a strong bond with its retail partners. Regular and transparent communication with retailers is a cornerstone of their inventory management strategy.
realme's collaborative approach involves sharing insights into upcoming product launches, sales projections, and market trends.
This open channel of communication empowers retailers to plan their inventory more effectively. They can adjust their stocks based on realme's product roadmap, thereby minimizing stockouts or excess inventory.
The company also collects feedback from retailers, which informs adjustments to production and inventory plans.
A key aspect of realme's inventory management strategy is the granular focus on product-specific sales and supply management.
Rather than adopting a blanket approach to inventory across all products, realme tailors its inventory levels to the individual performance of each product.
By continuously monitoring sales and customer preferences, realme adapts its inventory allocation to meet demand accurately. This approach prevents resources from being tied up in slow-moving products while ensuring sufficient inventory for high-demand items.
According to Shilpi Jain, Senior Research Analyst, Counterpoint Research, realme was able to reduce its inventory level from 10-12 weeks in Q1 2023 to 7-8 weeks in Q2 2023.
“Multiple sales across channels including online offline both along with aggressive marketing helped the brand in lowering inventory levels, ” said Jain.
realme's commitment to improving its inventory management has proven to be a pivotal factor in its continued success in the competitive smartphone market.
By embracing a phased life cycle plan, providing ongoing product support, establishing strong retailer relationships, and adopting a product-specific approach to inventory, realme has achieved an optimal balance between supply and demand.
This multifaceted strategy not only enhances profitability but also cements realme's reputation as a brand that listens to its customers and adapts to market dynamics. Due to the successful implementation of these impactful strategies, realme accomplished an impressive 51% quarter-on-quarter expansion during the second quarter of 2023, as stated by Counterpoint.
This extraordinary surge further solidifies realme’s standing within the Indian smartphone market, firmly establishing it as the third-ranked brand among the top 10 smartphone manufacturers based on IDC's Q2 2023 smartphone market analysis.