A Cautionary Tale on Inventory Shortages: Kendra Bracken-Ferguson Warns Retail Entrepreneurs, ‘Going Out of Stock Isn’t Cute’

The satisfaction in the first application of a fresh tube of lipstick, the joy when an off-the-rack dress fits like couture, the high that occurs, both literally and figuratively, when you spot the perfect pair of pumps to set it all off — these moments capture the essence of retail therapy. Shopping is about more than just acquiring stuff. It’s often a mood-enhancing, stress-reducing, and empowering release. It is a pampering transaction that extends beyond the point of purchase to the act of adorning oneself.

In the retail landscape, Black consumers are a formidable force, investing $8 billion in beauty products alone. In 2022, spending outpaced overall U.S. market growth. What stands out is the extent to which Black consumers champion Black-owned brands. We are willing to search harder, pay more, and order directly from makers of products created for and by us. The trend cultivates fertile ground for Black women entrepreneurs whose businesses overwhelmingly occupy the retail space.

For beauty, wellness, and retail business owners, Kendra Bracken-Ferguson is the go-to guru. The founder and CEO of BrainTrust Founders Studio is in the business of ensuring other entrepreneurs’ business success. Her proficiency in growing, scaling, and selling Black-owned companies has generated $100 million in revenue for over 200 brands. Business guidance from Bracken-Ferguson’s is worth its weight in gold. 

Before an audience of 100 Black women founders at the Amazon Black Business Accelerator and Boss Women Media Founders’ Breakfast in Dallas, Bracken-Ferguson shared a cautionary message. When moderator Jade “Lady Jade” Burrowes asked what factors indicate a business’s capacity for significant success, Bracken-Ferguson pinpointed profitability, sustainability, and inventory as primary. On the last point, regarding business inventory, she expounded. “We have so many companies that benefited from the growth of the 2020 uptick,” she remarked, referencing the early-pandemic “racial awakening” that reached its zenith with the tragic murder of George Floyd. As America confronted its history of racism and the ways it perpetuates structural barriers to building Black wealth, a significant surge of support for Black-owned businesses emerged. “The growth has been amazing. But we’re also finding companies that are going into retail, can’t stay in retail, and shouldn’t have been in retail yet,” she added. 

Put simply: Consumers can’t purchase what’s not on the shelves. It’s a double-edged dilemma when demand surpasses production capacity. Bracken-Ferguson has observed the downside when profitable businesses receive blessings without room enough to to embrace them. Emphasizing the dire repercussions of inventory shortages, she posed a rhetorical question: “‘What happens when that order gets refilled, and it’s 1.5 million? What are you going to do [if you don’t have the inventory]?’”

The cautionary tale underscores the pitfalls when growth outpaces business capabilities. Bracken-Ferguson emphasized: “Going out of stock is not cute. It may be a fun marketing ploy to say you’re “sold out,” but from an investor’s standpoint, if we don’t see products moving [it’s an issue].” The challenge lies in avoiding overstocking to prevent waste, swiftly adjusting inventory levels to meet potential increased demand, and accurately forecasting seasonal trends. 

In small-scale entrepreneurship, where individuals manage everything from fulfilling t-shirt orders to crafting beauty products at home, inventory management is largely reactive. Drawing from common challenges here are four recommendations to help early-stage entrepreneurs proactively prevent the shortfalls Bracken-Ferguson warns against: 

From Hand-Shipped to Hands-Free: Managing Inventory with Direct-to-Consumer Shipping

Entrepreneurs pour passion into every aspect of their business, crafting, bagging, packaging, and personally mailing each product by hand. It’s a labor of love and commitment to quality. But, as businesses flourish, fulfilling each order from home by hand can become overwhelming, leading to potential inventory challenges as the company grows. It may be worthwhile to consider direct-to-consumer (DTC) shipping.

Here’s how it works: Let’s say your t-shirt business is set up using dropshipping or print-on-demand; in this scenario, you design the t-shirts and upload them electronically to a vendor. When a customer orders, the vendor prints the design on the shirt, handles the packaging, and ships directly to the customer: no order, print, or shipment. 

Building Buzz and Maximizing Demand With Pre-Orders

One way to generate excitement for your product while accurately measuring demand is through pre-order systems, especially for exclusive, limited-edition items. This approach allows you to produce based on confirmed orders and minimize excess inventory. It also provides an opportunity to highlight the exclusivity of special releases, fostering a direct connection with customers.

Small Batch Production: Controlling Inventory, Minimizing Waste

For creators crafting handmade products, procuring materials involves physically going to stores and predicting needed quantities, which are challenging due to fluctuating demand. Expiration of ingredients before use leads to financial losses. Adopting small-batch production minimizes the risk of overproduction and potential waste. It also helps ensure quality control.

Strategic Sourcing: Ensuring Sustainable Success  

Anything can happen to anyone at any time, and reliance on a singular source for any given component puts the company in a vulnerable position. You need a contingency plan. To mitigate risks, broadening your sources before an emergency is essential. Identify 2-3 alternate suppliers for each material and component necessary for production. 

Kendra Bracken-Ferguson skillfully underscores the adverse effects of inventory shortages on retail entrepreneurs, emphasizing the significance of adaptability and resilience. As a three-time entrepreneur, she draws from experience, having successfully secured over $1 million in investment for her inaugural business and selling two companies of her own. Bracken-Ferguson’s insights highlight the importance of business owners cultivating solid inventory hygiene and good entrepreneurial habits from the start.