Running an e-commerce business comes with a lot of moving parts. Your suppliers, administration, processes, team, and logistics have to run smoothly to provide a seamless customer experience. Your inventory system should organize your sourcing, storing, tracking, and shipping. It can be challenging to keep track of everything and anticipate what is coming in the future. However, there are ways to manage your e-commerce inventory efficiently.
Inventory management is vital to reducing waste along with saving money and time. It is at the center of any e-commerce retailing operation. No matter the type of product, price, or target market, there is an expectation of an efficient and low-cost product offering. The right system will enable you to stock the right products at the lowest prices and move them efficiently.
Find the Right System
A big challenge with inventory management is not able to scale your business due to inefficient processes. When you are starting an e-commerce business, it’s tempting to start on a manual system. A manual system is comforting because you use the skills you have, keep an eye on everything, and you don’t have to spend much money on it.
But as your business grows, you will find that a manual inventory system is limiting. For example, you will find that keeping track of sales through multiple channels (your website, e-commerce platforms, social media sales, and so on) gets confusing; you might even restrict your activity on some channels just so you don’t overload.
Some of the characteristics you will find in an inefficient inventory system include offline spreadsheets, an on-premise solution that can’t give real-time updates, a suite of separate tools that can’t integrate, or using pen and paper to track and fulfill orders.
Consider using an e-commerce fulfillment solution that can integrate all of your inventory needs into one platform for easy tracking. Every e-commerce business is different, so be sure to use a reliable and customizable platform with excellent customer support when you need it. Reliable e-commerce fulfillment solutions automate and streamline inventory levels, orders, sales, and shipments across channels and locations. It is a data-driven platform that provides real-time updates and can manage any management technique or method, saving you time and reducing human errors.
Prepare, Prepare, Prepare
This doesn’t just mean preparing for a giant inventory task or preparing to start your e-commerce business, which is also essential. It also means preparing for the future by tracking sales and forecasting what product you will need to have for future seasons. Preparation is also helpful in planning for what you will financially need to spend to have enough product without overstocking.
Inventory forecasting is essential in knowing what the future holds for your inventory needs. Inventory forecasting uses historical sales data and other macro-level trends to make smarter, more accurate predictions on which products will sell over a specific period. Using forecasting, you can reduce the expense of holding unnecessary stock, maintain sales stability by reducing out-of-stock items, and have an efficient production cycle.
Inventory can drain your finances, especially since you need to buy inventory before making a sale. If you don’t plan your inventory well, inventory miscalculations can wreck your finances. To have adequate stock to fulfill orders and potential fluctuations, you will need access to inventory financing. A relationship with a financier, like a bank, will only be beneficial if you can forecast and back any loan with sound inventory management.
The Actual Managing Aspect
Ideally, you want a system that allows you to know where, when, and for what cost you purchased or manufactured an item, when you sold it, when it was shipped, and when and whom you delivered to all in one place. Knowing where your inventory is at all times is essential. Many inventory management platforms work directly with freight companies, so it will help keep track of product when it leaves your facility.
Inventory tracking knows which stock-keeping unit (SKU) you have in stock, their locations, and the quantities available at each location. An inventory tracking system is important for real-time inventory updates and control. You should apply inventory tracking throughout your entire supply chain. It should include tracking supplier inventory, customer returns, and damaged goods. Inventory tracking ensures greater transparency and accuracy in your system.
Give Customer Updates
Tell a customer upfront about how long it will take for a product to get to them. You can share the inventory tracking information so that the customer can follow their order. You could also show off your detailed inventory skills by even alerting customers when an item only has a few units left in stock. Customers shop online for simplicity, so give them regular updates when an item has been purchased, shipped, and delivered.
Problems happen, like stock will get oversold, or customers overbuy too much of a particular SKU. When that happens, own up to the issues. Do your best to solve them or at least apologize for the inconvenience if necessary. Being transparent and keeping lines of communication open will put the customer at ease. If the problem is grave enough, consider giving the customer compensation (like money back, discount voucher, or free delivery) to incentivize the customer to come back.
No matter the case, use problems as a learning opportunity to revise and improve processes. That way, they won’t happen again or cost you any business.
Inventory issues happen when too many people are doing things too differently. Have strong training programs in place for employees to learn how you need them to manage inventory. Also, have strong communication between all the people who handle inventory to sync the whole process.
Inventory Management is Essential to Your Business
The pandemic swiftly changed customer behavior and business models around the world. The sudden change caught the supply chain unprepared. This resulted in constraints, delays, and increasing costs. So whether your business is an e-commerce veteran or newbie, it needs inventory management to be competitive.
- Mike Gingerich
- United States