More Is Not Better: How To Balance Freshness and Turnover for Small Tea Companies

This page highlights a business mistake that I see dozens of small tea businesses, mainly small tea shops and tea houses, making. This is carrying too many teas. But beyond just recommending small companies to carry fewer teas, I also want to provide deeper advice about how to effectively manage your stock of teas when you have a small turnover. This advice comes both from my experience as a tea shopper, my experience working with tea businesses through RateTea, and my past experience working in retail establishments -- many of these issues are the same for any business that sells perishable goods.

I will be the first to admit that I love a good selection. My favorite tea company, Upton Tea Imports, has a huge selection (currently over 480 teas), but selection is always less important than other factors, including quality and price.



Above is a picture I took this past October, in Cups and Chairs Tea Shop in Philadelphia, which I reviewed in that earlier post. This photo shows 61 teas, in glass jars. The actual tea that is used for brewing or for sale is stored in airtight, opaque tins, but these small samples are exposed to light in this bright storefront, leading them to degrade in color and aroma.

Given the relatively low traffic in this store, I can't help but wonder how much turnover in the teas this company has. I strongly suspect that this store may be incurring losses associated with carrying more teas than can be justified by its level of traffic, as I explain below.

You need a high turnover to justify a large catalog:

The main problem with a large catalog is freshness. Tea does not stay fresh indefinitely. A higher turnover can justify a larger catalog, because more of your company's teas will sell out, and you can keep them fresh by frequent restocking with fresh batches.

Offering a huge selection of teas for sale might initially excite people, but, once those initial batches of tea go stale, you will either be faced with a large loss from products you did not sell, or a dying business as you fail to impress people with your stale tea. Tea that is not fresh is not going to keep people coming back to your store, and it's not going to attract die-hard tea enthusiasts who are likely to do some free work for you, promoting your business. In order to retain customers, you need high-quality tea.

Balancing selection and freshness when you have low turnover:

If you run a small tea company and are struggling with low turnover, there are several things you can do to achieve an optimal balance between selection and freshness of your teas:

• Put more care in choosing which teas to sell, so that you can get the most mileage out of a smaller selection. I offer detailed advice on this topic in my recent post about choosing which teas to sell.
• Throw out stale tea rather than selling it. While this results in a short-term loss, it avoids the negative results of selling stale tea, which can turn customers away and result in permanent or long-term losses.
• Use sales and deep discounts to sell tea before it goes stale - If you find yourself stuck with a batch of something that is not selling, put a deep discount on it so that it sells out, and try to empty it out of your stock before it goes stale. This allows you to recover some of the loss, without disappointing a customer with stale tea. Discounting can sometimes also draw in new customers hunting for a bargain.
• Highlight teas that are not selling before you need to discount them - If it looks like you are going to end up with a batch of tea that you might be tempted to discount, try highlighting it in your store or catalogue. There was probably a reason you chose to carry it in the first place, so it is likely that if you draw attention to it so that your customers buy it, someone will enjoy it.
• Order smaller quantities of each tea, so that you can order more frequently even if your turnover is low. This also minimizes any losses from throwing out or discounting stale tea. Although smaller quantities tend to cost more, you will tend to save money if you manage to keep your orders close to the amount you actually sell. If your wholesaler doesn't sell in quantities small enough to work for your constraints, find a source that does; the smallest shops, and tea rooms, can even consider buying some tea from a company that focuses on retail, as these tend to offer smaller quantities. Keep in mind, you can sell teas from a variety of different sources.
• Rotate and vary selections rather than keeping your whole catalog in stock at all times. This allows you to provide greater variety to your customers, without incurring the greater costs of keeping more teas in stock. You will notice that even many companies with a large selection, like Upton, frequently vary their offerings.
• Be okay with selling out of less popular teas - If you are effective at managing your catalog, you can effectively avoid almost all waste. Throwing out tea, selling stale tea, or offering a deep discount, are all generally worse outcomes than temporarily selling out of a product. If a product is popular, you can keep it both fresh and continuously stocked. But if the product is not popular, people will be much less likely to miss it while you restock. Estimate the amount of tea that people are buying and then under-stock the more esoteric teas to avoid waste. Focus on keeping your popular teas stocked, and always having enough of a selection to keep your catalog interesting, and you'll be fine. In some cases, under-stocking teas could even impress customers because they may be more likely to perceive a tea as rare or difficult to obtain. And tea connoisseurs will understand and appreciate that you don't over-order because you value freshness and and want to keep your waste to a minimum.

I'd probably still discourage a small tea shop, tea room, or tea bar from selling as many as 61 varieties of tea, unless they had an exceptionally high turnover. The Ten Ren store in Chinatown in New York can get away with this. A small tea shop in a small town, or even a small tea shop in a peripheral part of a medium-sized city, probably cannot. But, if you are clever, you can find ways to achieve both selection and freshness. The same goes for small online companies: if you have little sales volume, don't carry hundreds of teas, because you won't be able to keep them both fresh and in stock.

If you want some inspiration, in the form of examples of companies stocking fewer teas, I'll point to Little Red Cup, Chan Teas, and Min River Tea Farm. These three companies have taken a more minimalist approach to their catalogue, probably in large part due to the constraints discussed in this post. Even having never tried any of their teas, I'd be more likely to guess that their teas are higher in quality than other similarly small companies with huge catalogs.

What do you think?

What are your experiences with tea shops and online tea companies? Are you often turned off by companies that display a huge selection but below-average quality or freshness? What do you think the optimal amount of selection is for a small brick-and-mortar store? And if you run a tea business, whether one with a storefront, or a strictly online or mail-order store, how do you deal with these issues? Do you find the advice offered here to be useful and the reasoning valid?