A detailed case study of how a $2.4M DTC skincare brand freed $120K in working capital through smarter inventory management – without selling a single extra unit.
This is the story of a brand that freed $120k in working capital.
Not by selling more. Not by raising prices. Not by cutting headcount.
By fixing how they managed inventory.
A $2.4M DTC skincare brand. Growing 35% year over year. Profitable on paper. But always broke.
Their Cash Conversion Cycle was 94 days. That means from paying a supplier to collecting from a customer, nearly 100 days passed. At their volume, that translated to almost $650K trapped in inventory at any given time.
Revenue was growing. Cash was not.
This week, I am breaking down exactly what we did – four tactics that freed $120K without changing their product, pricing, or sales strategy.
TACTIC 1: SKU Rationalization – $38K Freed
The first thing we did was pull a complete SKU analysis.
They had 47 SKUs. For a skincare brand, that seemed reasonable.
But when we looked at the sales data from the last 90 days:
12 SKUs had not sold a single unit in 60+ days. 8 more were selling less than 5 units per month.
That is 20 SKUs – nearly half their catalog – barely contributing to revenue but definitely contributing to trapped cash.
The founder’s immediate response: “But what if someone wants it?”
My response: “How much is that what-if costing you?”
We calculated: $38K sitting in SKUs that might sell someday.
$38K that could be funding ads right now. $38K that could be stocking bestsellers that actually sell. $38K that could be sitting in the bank as a cash reserve.
The liquidation plan:
– Bundled slow movers with bestsellers (Complete Routine sets) – moved 60%
– Sold to B2B discount channels – moved 30%
– Converted smallest SKUs to samples and gift-with-purchase – moved remaining 10%
Within 6 weeks, all 12 dead SKUs were cleared. $38K freed.
TACTIC 2: Reorder Timing Fix – $42K Freed
Next, we audited their reorder behavior.
How had they been deciding when to reorder? Gut feel.
“Inventory looks low. Better order more.” “We stocked out on this once. Order extra.”
The result: They were consistently ordering 4-6 weeks early on every PO.
That is 4-6 weeks of extra inventory sitting in the warehouse, tying up cash.
We implemented the reorder point formula from Week 3:
Reorder Point = (Average Daily Sales x Lead Time) + Safety Stock
For their hero SKU: Daily sales 40 units, lead time 35 days, safety stock 400 units. Correct reorder point: 1,800 units.
They had been reordering at 3,000 units. That is 1,200 extra units sitting there constantly.
Across all SKUs, the early ordering was trapping $42K.
The fix took one afternoon: Calculate reorder points for every SKU. Set calendar reminders. Stop ordering until the math said to.
Same products. Same suppliers. Same sales volume. Just ordered at the right time.
Result: $42K freed.
TACTIC 3: Safety Stock Right-Sizing – $22K Freed
The safety stock conversation:
Me: “Why do you keep 8 weeks of safety stock?”
Founder: “Because we stocked out once two years ago and it was awful.”
Me: “What was your lead time variability in the last 12 months?”
Founder: “I do not know.”
This is trauma-based planning. One bad experience creates a policy that costs you forever.
We pulled the data. In 12 months:
– Worst delay: 9 days
– Average delay: 2 days
– Most orders: On time or early
They were holding 56 days of buffer (8 weeks) against a 9-day worst case.
That is 47 extra days of inventory. At their volume: $22K sitting there just in case.
We reduced safety stock to 3 weeks (21 days). Still conservative – more than double the worst-case delay. Still protected against realistic supply chain issues.
But $22K was now available for other things.
Safety stock should be based on data, not trauma.
TACTIC 4: Strategic Liquidation – $18K Freed
Finally, we addressed the aged inventory.
They had $30K in inventory over 120 days old. Product sitting for four months or more.
It was not going to sell at full price. Every day it sat, it cost more.
We deployed four liquidation strategies:
Strategy 1: Bundles – Paired slow movers with bestsellers in Complete Routine sets. Moved 340 units in 3 weeks.
Strategy 2: Flash Sales – 48-hour sale, email list only. No public codes. Moved $8K at 40% off. Brand-safe.
Strategy 3: B2B – Contacted discount retailers and subscription boxes. Sold $12K at 50 cents on the dollar.
Strategy 4: Samples/GWP – Converted smallest SKUs to samples and gift-with-purchase. Cleared while increasing AOV.
Total recovered: $18K from $30K of dead stock. 60 cents on the dollar.
Not ideal. But $18K in working capital beats $30K in depreciating inventory.
The Total Impact: $120K Freed
Four tactics. $120K freed.
– SKU Rationalization: $38K
– Reorder Timing: $42K
– Safety Stock: $22K
– Strategic Liquidation: $18K
Where did that $120K go?
$40K paid down supplier debt (improving payment terms and relationships).
$50K funded Q4 ad spend (previously they could not afford to scale).
$30K built a cash reserve (first time they had breathing room).
Same revenue. Same products. Same team. Different relationship with inventory.
Your Audit Checklist
Check 1: SKU Analysis – Pull sales by SKU for 90 days. Flag zero sellers (60+ days). Calculate total value.
Check 2: Reorder Timing – Review last 5 POs. Formula or feeling? Calculate what reorder points should be.
Check 3: Safety Stock – What are you holding vs what does data support?
Check 4: Aged Inventory – Flag everything over 90 days. Calculate value. What is the liquidation plan?
Add up all opportunities. That is your potential cash liberation number.
Most brands find $30-50K minimum. Some find much more.
Inventory Month Complete
Week 1: Inventory is a loan you took from yourself.
Week 2: Cash Conversion Cycle – how long your cash is trapped.
Week 3: The Reorder Timing System – formulas over gut feel.
Week 4: The proof. $120K freed.
The through-line: Your inventory is cash with a timer. Every day it sits, it costs you.
Coming next month: The Hidden Costs Killing Your Margins. Your cash is moving – but there are costs eating your profit that do not show up on any PO.
See you in April.
Until next time,
— Lara
Want to Go Deeper?
I break down the exact reorder point formula, walk through real numbers, and show you how to stop panic-ordering inventory that traps your cash for months. This is the 20-minute system that replaces gut feel with data.
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