Inventory management is an essential component of any successful eCommerce business. When talking about eCommerce businesses, the main focus is usually on creating the perfect website and captivating social media ads. However, stock management and related operations are crucial to the success of your eCommerce venture.
As a business owner, inventory management is probably not one of your favorite responsibilities. eCommerce inventory management is often overlooked, especially by new entrepreneurs. Given that 43% of small businesses in the US don’t track inventory, it’s no surprise that most pitfalls related to eCommerce stock management could have been avoided.
Poor inventory management can create complex problems that even seasoned entrepreneurs find difficult to solve and can seriously disrupt your business.
If you have a problem with your inventory, this means that you won’t be able to deliver products on time. Or, your fulfillment rate may fall below the required level to meet demand. Whatever the issue, it will hurt your reputation and cause customers to leave and suppliers to disappear.
To avoid all this, in the article below, we share our best tips for managing and tracking inventory for your eCommerce business.
To propel your eCommerce business toward profitability and manage inventory properly, you should consider utilizing industry-specific software to meet your business’s distinct needs. Industry-specific software delivers customized features and functionalities that can streamline your business operations.
For instance, if you’re running a B2B apparel business, investing in B2B eCommerce software for the apparel industry can help you track and manage your inventory from purchase to sale, as well as manage customer orders and invoices. You can easily keep track of stock levels, set up automatic reordering of items when they run low, and quickly identify any discrepancies between actual inventory levels and what is recorded in the system.
Set Up Stock Control Methods
Stock control involves a collection of processes that are involved in maintaining an appropriate level of stock. It is important to keep the right amount in stock so that you can meet customer demand without shipping delays or excessive storage costs.
Although stock control may seem simple, factors such as economic instability or weather conditions can complicate the process. This is why it’s important to have inventory management methods in place. You can use a variety of methods to better predict future market demand and lead your business into a more profitable position.
The just-in-time (JIT) method has been adopted by many companies as it allows them to produce only what they need when they need it, which leads to less inventory and fewer delays in the delivery of products or services. Additionally, it can help companies become more agile and responsive to customer needs by quickly producing products or services on demand.
First-In, First-Out (FIFO)
The FIFO principle states that the first stock acquired will be the first sold. The FIFO method has many benefits, including simple calculations for determining the cost and value of inventory despite price changes. The oldest products are also picked up and sold first.
Economic Order Quantity (EOQ)
Maximizing warehouse space is a common goal for businesses that want to minimize costs and maximize stock. The EOQ method is used to determine optimal inventory. You can avoid stockouts by ordering appropriately and knowing your safety stock levels. You’ll need to know your annual demand, your order costs, and your holding costs to calculate your EOQ.
Vendor Managed Inventory
Vendor-managed inventories are a popular way to manage stock. It involves delegating the management of inventory to a third party. Vendor-managed inventories allow you to only pay for the stock once it has been sold. Because the vendor ships directly to customers, the business never holds physical stock. The vendor also assumes the risk of managing stock, which allows businesses to operate with less stress.
When a company needs to track each item, the batch control method can be very helpful. Each product is usually identified by an SKU code. Some codes have serial numbers and expiration dates, which is useful for companies that sell food or medical products with expiration dates.
Implement a Good Scanning System
You shouldn’t miss the chance to automate a process and eliminate the human element. Barcodes may not be expensive, but human errors can be very costly.
Inventory management calls for scanning products when they are moved, received, shipped, or altered. You are at risk of human errors, incorrect SKU numbers, and inaccurate data if you do not have a scanner. It is particularly dangerous if you have a large eCommerce company that has more than a few SKUs.
Forecast Demand by Digging Into Your Historical Data
After you choose an inventory management system that best suits your eCommerce business, it’s time for some predictive analytics to better understand the current demand. As a rule of thumb, a successful business in any industry reduces uncertainty about the future.
It’s important to stay agile and be able to react to changing market and industry dynamics as they occur. However, having an understanding of your sales cycles, demand history, and lead times will help you make better decisions about inventory management.
Running an eCommerce business in today’s market has become harder than ever. Online shops can make a difference by providing top-quality and unique products and also managing and tracking inventory more efficiently. By implementing the tips outlined above, online retailers can their processes more efficient and focus their time on other aspects of their businesses.