
To efficiently track their inventory, many online businesses employ eCommerce Inventory Management Software as part of their technology stacks.
How Can eCommerce Stores Manage Inventory?
Modern inventory management software is a cloud-based service designed to unite people, warehouses and systems under one platform.
- Stock levels can be tracked in real-time using barcode scanners, and data entry is automated.
- Track inventory throughout its lifetime using serial or batch numbers to track inventory over its entire lifetime.
- Find Out Where Your Items Are in Multiple Warehouses and Shipping Carriers
- Keep track of every product's weight, dimensions, price and costs by maintaining an inventory list.
- Help You Forecast Demand.
- Our system notifies you when stock levels reach their maximum limit or items begin running low, giving you ample time to reorder them before they become an issue.
Excel-based inventory management can be time-consuming. And operate more than one online ecommerce store or warehouse. Real-time information may be essential to running businesses effectively.
Read More: Mastering the Art of Ecommerce Inventory Management: Proven Strategies for Success
Why Optimized Inventory Management Is Essential In eCommerce
An eCommerce store likely deals mainly in finished products, making inventory one of the most critical assets to your company and any losses there a waste. Furthermore, any delay in selling them means capital remains tied up until sold, so optimizing sales processes leads to increased profit and enhanced bottom lines.
Inventory management is essential in streamlining. Inventory tracking enables you to keep a better eye on what comes and goes from your warehouse so that you have complete visibility at all times of what's going on there.
- What something comes from
- What's the point?
- You can store it anywhere
- What is it worth?
- How long has it been in your warehouse?
- When can you expect to see sales of this product increase or decrease?
This principle holds for all products, but especially perishable foods or promotional products with short shelf lives can present particular difficulties. Over- or understocking these items is difficult to rectify - not to mention that any overages run the risk of spoilage!Online retailers rely on inventory management systems more and more to meet potential customer demands.
Inventory management for multichannel and Omnichannel Sellers
Inventory Management for Multichannel and Omnichannel Sellers Without proper automated inventory control software, running an omnichannel business model or multichannel eCommerce storefront can be challenging.
An Everyday Challenge Of Overselling Is Overselling.
Suppose your system can't manage itself effectively. In that case, it may lead to accidental double sales of identical items despite only having one thing available for purchase. One customer receives their product while the other leaves are unsatisfied.Your multichannel inventory management platform would have realized only one product was left.
It would have informed all channels publicly of this fact and informed customers who placed second about missing out; additionally, it may have offered them the option of signing up for notification when that item becomes back in stock.Inventory Management in eCommerce presents unique challenges.
High sales volumes, unpredictable supply chains and an ever-evolving market can define volatile industries.
Here Are Five Of The Biggest Challenges Faced By Ecommerce Inventory Managers:
- Stocks Are Misplaced When managing multiple warehouses but failing to track product locations accurately, essential items could end up in unexpected areas or regions of your country.
- Inadequate Stock: Sudden surges of demand can sometimes arise, requiring you to keep enough emergency stock on hand if you are not confident that these demands will arise. Without enough inventory in reserve, you risk running out of supplies before they come due.
- Too Many StocksThe opposite problem to that which was just described: too many stocks. Items with short shelf lives, like perishables or seasonal goods, will become waste products due to an excess supply.
- Have You Forgotten Stock: Have You Gone Back Through the Warehouse and Found Items that Were Unsold Years Ago? Dust collectors are an unnecessary expense that could be used to expand your business. Ignoring Stock is Wasteful
- Unable to Communicate With Clients: All this could lead to disgruntled customers. Customers may overlook stock delays and supply chain problems if a company is honest about them and communicates quickly; otherwise, you'll struggle with communicating as your inventory could get out of hand, and you won't know how best to explain the situation to customers.
Benefits Of eCommerce Inventory Management
With all these challenges come increasing needs for an advanced inventory management system.
Automated eCommerce inventory management offers numerous advantages.
- Gather Data By using software to manage your inventory, you can collect real-time information about its stock. This allows you to identify red flags and money pits and predict future demand more efficiently.
- Reduce waste. By keeping tabs on expiration dates and other factors, you can get an accurate picture of wasteful products, pushing those at high risk to the front. In addition, forecasting future demand allows you to purchase inventory that corresponds with reality - thus decreasing chances of stockpiling out or overbuying.
- Enhance inventory management processes. An effective inventory management practice can reduce product and time waste, freeing your staff to focus on more strategic tasks such as training or strategy rather than mundane picking, data entry or sorting activities.
- Share Information: Inventory management onboarding involves connecting all your processes into one system, enabling systems to communicate clearly between themselves, allowing you to spot trends across various business units; not just inventory but also sales, financials and marketing, as well as HR management, supply chain management and more.
- Increase customer satisfaction. With more effective control of inventory and an accurate forecast of future demand, your business will be in a much stronger position to fulfill customer experience orders faster and with reduced risk - even complex split shipments - more efficiently.
Customer satisfaction is one of the significant benefits associated with effective inventory management.
Methods And Strategies For Managing Ecommerce Inventory
Strategies and tactics for effectively managing eCommerce Inventory Can Be DifficultInventory management can be an arduous task.With an established budget and strategy in place, you can minimize challenges to keeping your stock updated regardless of the future.Be sure that you have enough cash on hand to cover your entire inventory.
How To Finance Your Online Inventory
Businesses often overlook the significance of inventory financing when creating an eCommerce inventory management plan, yet meeting customer demand becomes impossible without accessing funds to purchase stock.
Cash flow gaps should be carefully evaluated if your business is expanding rapidly without sufficient funding available for stock acquisition.
Before committing, take some time to explore these options:
- Equity financing
- AR financing
- WIP financing
- Crowdsourcing
- Merchant Cash Advances
Five Effective Strategies To Manage Ecommerce Inventory
Proper tools and strategies are crucial in effectively managing eCommerce inventory.
No single solution fits every business; what works for some may not necessarily apply to others.
Here Are Five Ecommerce Inventory Management Strategies And The Businesses They Suit; Pick Yours!
First in, first Out
First In, First Out (FIFO) is an inventory strategy in which the first product a seller purchases becomes the first product customers receive.Food and beverage industries and medical sectors both benefit from this technique, which helps avoid spoilage of stock by clearing away old inventory before it has the chance to expire.
Just-in-Time Inventory Control
JIT inventory control is an efficient means of inventory management that uses just enough stock to meet orders when they come in rather than maintaining an ample buffer of safety stock.Companies selling seasonal products will find this strategy particularly helpful, as it helps prevent having too much cash sitting idle at the end of each season.
Just-In-Case Inventory Control
JIC inventory is an approach to inventory management in which businesses prioritize keeping adequate stocks on hand to prevent running out if there is an unexpected increase in demand or supply chain disruptions.JIT became increasingly popular during the first 20th century as businesses learned more effective techniques for forecasting. Many companies switched over to JIT as forecasting capabilities improved.Over recent years, supply chain issues and uncertainty have created an increased need for emergency stockpiles; many businesses have reverted to using the JIC model.Selecting an effective eCommerce inventory management strategy will enable you to stay in control of stock levels and cash flow from day one.
Third-Party Logistics (3PL)
Third-party logistic companies (3PLs), often known as third-party fulfillment services, allow sellers to outsource inventory management and order fulfillment to a third-party service provider.Businesses focusing more on marketing and business expansion may find third-party logistics providers an advantageous solution; however, their impact can severely impact profit margins.Third-party fulfillment may not be worthwhile if your products have low margins and thin profit margins or if your stock is large and bulky. Third-party fulfillment services charge by order size and per item sold; additionally, they often charge storage fees.Before signing contracts, ask many questions and assess the return on investment (ROI).
Dropshipping
Dropshipping, commonly referred to as low-cost inventory management, involves products being sent directly from their source to your customer without anyone touching them.This method suits sellers with limited capital who don't require staff or warehouse facilities to fulfill orders. However, some drawbacks include quality control issues and poor customer service.Dropshipping is an increasingly popular method successful eCommerce businesses use to test out new products. Once demand is established, they switch to a sustainable inventory management system such as Just-in-Case for continued operations.
Formulas and metrics for eCommerce inventory management
Once your inventory management strategy is in place, it's essential to assess its efficacy regularly. Keep an eye on at least five critical eCommerce inventory KPI metrics.
Inventory Turnover Rate
ITR measures how often goods sold exceed total inventory costs and average inventory levels.
Inventory Turnover = Cost of Goods Sold / Average Inventory
What you will gain: Inventory Turnover Rate measures your stock levels and allows you to predict future inventory needs.
Stock Accuracy
Inventory Accuracy = Inventory Database Count / Physical Inventories
What you will learn: Inventory Accuracy can tell you whether the stock levels in your system reflect those at your facility, helping you assess whether any improvements should be made in picking, storing or receiving processes.
Inventory Shrinkage
Cost Of Recorded Inventory-Cost Of Physical Inventory/ Cost Of Recorded Inventory = Inventory Shrinkage
What you can learn: Inventory shrinkage refers to how much stock disappears permanently due to theft, damages or spoilage.
Inventory To Sales Ratio
End of month Inventory Balance Divided by Sales for the month
What You Will Learn: Inventory to Sales Ratio measures how much inventory exists relative to how many orders were filled during a specified period.
Customer Backorder Rate
Reducing The Stockout Ratio in Stores for Better Inventory Management
Backorder rate = the ratio between delays due to stockouts and total orders placed
What you will gain: Customer Backorder Rate measures the accuracy and efficiency of your inventory forecasting process.
Inventory Management Software Can Help You Streamline Your Business Processes
Inventory management software can assist your business processes in many ways. You can gain a critical efficiency boost by building an IT stack to track and control stock. Today, there are software programs designed specifically to handle this function.We will outline the components of a software stack explicitly designed to serve online sellers.Automation can streamline sales order processing, stock management and reordering processes for eCommerce inventories.We've designed this eCommerce inventory software stack to save you time by eliminating the need to read product reviews or compare features and prices individually.
Here's how you should organize your eCommerce inventory software:
- Shopify or Amazon can be an ideal platform for setting up an online shopping platform storefront where customers can purchase.
- ArionERP is a program that makes managing all your orders, inventory and purchasing data a simple task.
- Xero and QuickBooks are fantastic tools for tracking cash flow, loans, taxes and purchases.
- A2X is a tool that allows importing all your sales data from Xero or QuickBooks into A2X for processing.
- StockTrim is an easy-to-use software program that enables you to predict stock levels and make more informed ordering decisions.
- Prospect is an easy and efficient way to monitor sales and customer data.
What To Consider When Selecting An Ecommerce Inventory Management Software
A good inventory management software will allow you to speed up inventory processes, align business goals and increase product data accuracy.
You should look out for these five key features in an eCommerce inventory software program.
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Real-Time Data Analytics
Good data is critical to improving your business. Conduct a SWOT analysis based on it and use that information to make strategic decisions about what actions should be taken next, how expansion should occur, or which products to purchase.
Data should be delivered as quickly and reliably as possible; without real-time visibility into inventory and customer orders, errors in eCommerce, particularly omnichannel eCommerce, can leave customers unhappy and drive sales away from you.
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Barcode Scanning for Serial or Batch Tracking
To make data entry as straightforward as possible, barcode scanning provides a solution that makes data updates instantaneous, helping pickers and sorters operate more efficiently while making fewer mistakes in data input. By eliminating data entry requirements, barcodes allow pickers and sorters to update data systems instantly with minimal errors when picking or sorting orders.Your system will allow you to track products by serial number and batch number, providing an insight into their entire lifecycle, from production (if it isn't your company) through shipping and delivery. In case the products need maintenance later on or are ever returned or need replacing, all this historical information can help identify where they were sold from and when.
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Real-Time Inventory Value Tracking
While your warehouse manager might care more about where the goods are, accounts and management will want to know their value.
Keep track of the intricate financials of your business with an instant live view of inventory value and historical turnover data.To maximize your inventory process, look for features such as real-time data collection and tracking of inventory values.
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Supplier Management
Supplier management is essential to providing your customers with an exceptional experience. Understanding where products are being made, their cost, quality measures (sold versus returned goods), and who the top suppliers are will enable you to make informed decisions regarding who to purchase from and who not.
Inventory Management Software with Supplier Management also automates purchase orders, stores supplier information centrally, creates quantity discounts and records transaction histories - giving you more time for what matters most. These features allow you to focus on doing what makes you happy instead of managing paperwork.
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Adaptability
Inventory management demands adaptable solutions. Increased configurable functionality among SaaS offerings would undoubtedly be helpful for business. Flexibility will always be appreciated when searching for software to assist with inventory management, even if just slightly.Plug-ins must also be easily adaptable; inventory management software must work harmoniously with other systems like ERP, marketing databases, sales databases and eCommerce platforms.
Inventory Management Software: What To Consider Before Purchasing?
Before purchasing inventory management software, take the time to assess your organization's needs. Making the most of any new purchase must match up perfectly with your business, goals and organizational strategy.
As for yourself, the following question:
- How many users will need access to the platform at any one time?
- What is the software's scalability should our business grow or shrink?
- Do these programs integrate seamlessly with my current platforms - ERP or eCommerce systems? Or those I am considering?
- What will it cost me, and what is my budget for this project?
- Can your system be accessed remotely, or does it require on-premise hardware? Can it be accessed remotely using desktop and mobile phones?
- What resources and contacts does the provider possess?
Some small and midsize enterprises (SMEs) may struggle to justify investing in new software, mainly if they're used to taking care of everything themselves.
Every dollar counts, and saving can have an even more significant effect than investing.Cost comparison should also take place regarding manually performing all these processes.Consider how much time your staff - including sorters, pickers and the back office - spend manually entering data.If costs concern you, here is an easy exercise to look closely at.Consider who this advice applies most closely. This could be you or another employee in your company.
Now consider how many hours or minutes they devote to data management and entry per day (or week, as applicable). Consider the time sorters and pickers manually enter inventory data into your system; also, calculate how long it takes financial teams to search through Excel sheets of information until they find what they are searching for.Consider any money lost due to spoilage, clearance discount on unsold stocks or missed business due to stockouts every quarter.Losses can be easily calculated. But you could also be losing money from missed business opportunities, such as not anticipating trends, inefficiency in your supply chain or low customer satisfaction.How much could your company save if all data entry were immediate and inefficiencies decreased? Could that offset the ongoing expense of inventory control software?
Arionerp Simplifies Your Ecommerce Inventory Management
ArionERP is here to simplify eCommerce inventory management for you, making lives more straightforward. Our primary objective is to ease people's lives with inventory control solutions.ArionERP can perform all the tasks discussed here, covering everything an SME eCommerce company needs for daily inventory management - data analytics, inventory tracking, supplier management, and integration.
How Can I Select Inventory Management Software?
Selecting ecommerce inventory management software such as ArionERP software will enormously positively affect your operations and profitability. Consider these factors when assessing inventory solutions like ArionERP.
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Analyze Business Needs
To get the ball rolling, conduct an in-depth assessment of your company's needs. Consider factors like the quantity and complexity of items you sell, sales channels (e.g. online store or marketplaces), industry requirements and any unique stipulations about them when setting goals for success.
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Budget Considerations
It is essential that when budgeting for inventory management software, you consider not only upfront costs of licensing and implementation but also ongoing subscription costs or costs associated with growing your business.
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Scalability
Select a solution that will evolve with your business as it expands - this includes product lines, channels of sales, and volume of orders.
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Integration Capabilities
To ensure maximum compatibility between your software ecosystem and an inventory management system, ensure that all tools used include accounting software, CRM system, ecommerce platform, etc., when testing the compatibility of inventory management software against other devices.
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User-Friendly Interface
Search for solutions with intuitive, user-friendly user interfaces to facilitate faster learning and increase productivity for your team. A well-crafted user interface will assist them with more rapid growth.
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Real-Time Inventory Tracking
Prioritize real-time inventory tracking software to remain up-to-date with stock levels and prevent stock outs or overstocking situations.
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Multichannel Support
To ensure optimal online store inventory management software integration across your various sales channels and marketplaces (e.g. Amazon and eBay), make sure it can integrate smoothly.Consistency will ensure the availability and processing of orders.
Learn how Multichannel Inventory Management (MCIM) can increase your retail sales. Could you read our blog?
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Reporting And Analytics
A robust set of reporting and analytics capabilities is indispensable to effectively running any operation, providing insight into inventory performance while monitoring critical metrics like turnover or profit margins to maximize efficiency and optimize operations.
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Customization Options
Verify whether the inventory management software for online stores allows you to personalize fields, workflows and processes to meet the unique business requirements.Customizing software according to your unique requirements is essential for effective results.
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Supplier Management
Any online store inventory software must provide features for managing multiple suppliers if your store relies on numerous suppliers for supplies. Automating reordering according to inventory levels and tracking incoming shipments are all features you should expect as part of this feature set.
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Mobile Accessibilite
Check if the software offers mobile support through an app or a mobile-friendly interface.
Your inventory management capabilities can be easily managed anytime and from any location - an advantage, especially for businesses with ever-evolving inventory needs.
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Security And Compliance
Confirm that your software meets industry and regulatory data security standards for compliance. This is especially crucial if handling sensitive customer information, as data breaches can be costly and damage reputation.
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Customer Support And Training
Evaluate the customer support and training options available from vendors. Reliable support can help resolve issues quickly while realizing the full potential of software applications.
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Reviews And References
Read up on user experiences and ask similar businesses if their implementation of the software went smoothly.
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Trial Period
Hearing from other users about the strengths and weaknesses of software applications is invaluable.
Please take advantage of any free trials or demo periods offered by software vendors so you can test out their products before deciding to buy.
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Long-Term Viability
Evaluate a vendor's financial stability and long-term commitment to their product over time. You need a solution that receives timely updates and support to meet the evolving business requirements.
Conclusion
E-commerce success relies heavily on inventory management. By choosing ArionERP as your ecommerce software solution and ensuring it integrates smoothly with other tools, your ecommerce company can stay organized while remaining responsive to changes. Managing inventory effectively leads to success on every front.