Successful inventory management in an increasingly digital market is becoming more essential, so understanding its basics could make the difference between a profitable business and one fraught with operational issues. Inventory management that is outdated or ineffective can lead to lost opportunities, dissatisfied customers, and reduced profits.
This comprehensive blog presents effective methods and practices for managing e-commerce inventories. This post will examine:
- What are the differences between best practices and techniques?
- What are the potential ramifications and drawbacks?
- Inventory control is critical to online store success.
- Technology can aid warehouse operations.
Your inventory management for e-commerce platforms will become much more robust with these tips! Let's dive in:
Best Practices And Techniques For E-commerce Inventory Management Are Here
Just-In-Time Inventory Management
This method for stockpiling products relies on the notion that businesses that utilize JIT inventory management will stock a particular item each time a client orders from them until their inventory volume equals the total orders they receive. Toyota pioneered JIT production, offering significant capital savings while simultaneously being highly risky.
Just-in-time (JIT) inventory management can be derailed by external disruptions like natural disasters or labor strikes; suppliers could fail to deliver due to unreliability. JIT can be adversely affected by issues related to poor quality control, overreliance on technologies, and geopolitical shifts that raise additional costs or compromise quality. JIT Inventory Management has long been recognized as an efficient approach to inventory control.
While its potential drawbacks exist, its main strengths lie in cost-cutting (it can reduce expenses by up to 50 %), increasing cash flow, and reducing wasteful processes in operations. Strengthen supplier relationships. Regular stock turnover will guarantee the quality and relevancy of products for customer satisfaction purposes.
Benefits
- Eliminate revenue loss caused by stock sitting idle.
- Inventory tracking in your warehouse makes management and control simpler.
- Small warehouses tend to offer lower storage costs.
Disadvantages
- Stockouts may occur as a result of overly relying on consumer buying trends.
- Rapid growth, multiple warehouses, or an expanding product list make for challenging operations management tasks.
Inventory Management According To First-In, First-Out (FIFO)
FIFO stands for First In, First Out; it implies that products arriving at your warehouse should also be sent out directly. Foodservice and supply businesses dealing with perishable goods will likely adopt this inventory management strategy as their preferred approach to inventory control.
FIFO can be an efficient storage method for companies that only need their products for a short time. Suppose materials or products purchased are subject to price fluctuation. In that case, FIFO may become inadvisable, leading to discrepancies between bought and sold prices.
Benefits
- Reducing waste when handling perishable products is of prime importance when handling perishables,
- Optimized warehouse rotation - No product stored longer than necessary in the warehouse.
Disadvantages
- Profits may increase if production costs fluctuate significantly; this could skew profits inflatedly and reduce profitability significantly.
Dropshipping
Dropshipping can be an efficient inventory management method. In essence, dropshipping provides you with a business model whereby products never touch you personally as the owner of your company.
Dropshipping involves fulfilling orders directly from manufacturers to your potential customers without going through an intermediary - thus cutting out unnecessary intermediary charges.
Dropshipping offers an excellent solution for entrepreneurs who wish to enter e-commerce but need help to justify the costs associated with opening an expensive warehouse. We created this blog post with some dropshipping ideas to help your venture and get things moving in this area.
Everything comes at a cost, and all shortcuts come at their price tag. Businesses that purchase and store large volumes of products are frequently given discounts from manufacturers or are eligible for bonuses when the goods arrive at a warehouse, which becomes part of their responsibility to sell to consumers.
Dropshipping eliminates this incentive, and the fulfillment costs are almost always higher; many business owners feel compelled to engage with online e-commerce stores; some business owners may even accept higher prices as the entry to online presence increases.
Dropshipping presents another challenge: the need for more control over customer experience. Without physical control over delivery processes, manufacturers become entirely responsible for how products reach their customer base.
Benefits
- Small businesses no longer need to buy warehouse space
- A simple introduction to the world of open-source e-commerce platforms.
- Introduction to eCommerce (e-commerce).
Disadvantages
- Lack of quality and visibility are disadvantages.
- Cost of Fulfillment
3PL Fulfillment
Third-party logistics (3PL), also referred to as eCommerce logistics, allows businesses to handle the logistic needs of other firms on behalf of others. 3PLs offer basic logistics management services like excess inventory and warehouse storage management at a set fee. Third-party logistics (TPL) providers vary significantly in their expertise and abilities to manage more intricate supply chains.
3PL services appeal to entrepreneurs who see themselves more as visionaries rather than detail-oriented and are willing to pay more to free up time for themselves and focus on growing their businesses. Discover if warehouse fulfillment logistics could help your online shopping cart business. Take a deep dive into this topic now.
Benefits
- Save up to 50 Percent On Shipping, Warehouse Space, Employee Payroll And Materials (SPF & MSM).
- Access to extensive storage facilities, which opens new client bases
- Leaders can now focus on more sophisticated activities.
Disadvantages
- From an outsourcing viewpoint, distance reduces control of the quality and branding of the product.
- Your eligibility may not qualify you to purchase products that require complex assembly or kitting processes.
- Some 3PL providers require an initial investment for services they provide, typically as part of an upfront agreement.
Analyzing Historical Data To Predict Future Demand
After selecting and implementing your inventory management strategy and reviewing current product demand, predictive analytics should be the next step in inventory planning and control. An effective business mitigates future uncertainty through planning.
Inventory forecasting provides the perfect solution to manual processes that fail. SkuVault's IMS platform gives instantaneous access to historical purchasing information. SkuVault allows you to quickly delve deeper into historical data for specific channels, giving you the power to stock intelligently for holidays or seasonal trends by channel.
Installing A Scanner System
Barcodes can save your company money, while human errors are costly. Inventory management is an established best practice that requires scanning all items when moving, receiving, changing their location or shipping, or altering any aspect.
Unfortunately, this makes human errors creep in, resulting in incorrect SKUs and inaccurate inventory information. As your business expands beyond selling just a few digital products in a small store, its risks become more dangerous.
Establish Minimum Viable Stock Levels
Par levels (minimum viable stock levels) provide online retailers with an effective method for constantly maintaining an adequate stock level. All e-commerce businesses should keep a minimal viable inventory (assuming that their business doesn't deal in perishable items like food). Par levels depend on two key considerations for any product or service: demand and production timelines.
Some social media platforms alert administrators automatically if certain product SKUs fall below specified levels, taking various factors into consideration. Time, stock level, and demand all play an essential part. SkuVault recommends when to order new products to maximize stock levels and revenue, then automatically generates an order form for you.
SkuVault's Replenishment report provides a convenient tool that considers all supply, demand, and inventory factors to save you time manually sorting each product par level.
Consider this example. You sell one unit each day on average, taking 30 days for production and warehouse fulfillment of that unit. Therefore, your minimum inventory level should be 30 units to avoid stockouts.
It is straightforward that purchasing trends don't follow an ideal trajectory and are subject to significant variations throughout the year, meaning your supply must keep evolving in response to market demand.
All these considerations apply only to one product at a time; to store smartly, each product must be assessed separately. An IMS platform with access to past purchasing patterns, especially one capable of automating inventory management tasks efficiently, is essential in automating its tedious operations.
ABC Analysis: Prioritize Products
Once your inventory management strategy, demand forecast, and par levels have all been developed by data, now is the time to prioritize products within that strategy. An ABC Analysis can increase revenue by customizing fulfillment strategies to specific product description lines or categories.
Category A might include products with high value but limited quantities; Category B comprises goods of medium value but moderate quantities; while C includes low cost but large volumes of merchandise. Companies that carry several product recommendation categories can utilize SEO strategies to devise tailored plans for replenishing each category.
Implement Inventory Management Software
This point has been addressed sporadically throughout this article, but let us clarify: Every business system reaches a point where manual processes no longer make a practical difference in operations.
Previously, your inventory management tool needs may have been fulfilled through Excel sheets or paper inventories. Still, now that your business needs expansion and growth in any capacity, Inventory Management Software could be necessary.
Do busy owners of e-commerce inventory management businesses genuinely wish to devote the necessary time and energy to building Excel reports manually while digging through old files in search of historical data? An IMS can automate all of this vital yet time-consuming work.
Platforms such as SkuVault go beyond simply real-time inventory tracking numbers or performing basic counts; their integrations and APIs enable you to turn an IMS solution into an ERP-like system.
Evaluate Your Supply Chain Regularly
E-commerce businesses with assembly or kitting operations typically order components from multiple manufacturers or suppliers. Examples include handcrafted jewelry, formulae, or electronic components. Even if your supply chain consists of only two vendors, this exercise will still prove worthwhile.
Set an annual reminder to take an inventory of all supply chains connected with your company and examine their contributions - this could include everything from logistics providers and suppliers through production facilities and warehouses and upstream suppliers like production.
- Compare lead time against competitors.
- Cost comparisons among competitors
- Keep a record of any negative trends (customer feedback returns or defective product issues) that might require action to change them.
You might not have caused an issue in your online business but rather due to an interruption in its supply chain.
Conduct Cycle Count In Your Warehouse
Audits that require complete shutdown need to be updated, safe and effective, and highly unpopular among employees. Cycle counting audits offer the solution - saving both money and time!
Cycle counting is also at the core of what we stand for - an integral element in maintaining quality control processes in all industry sectors. Inventory counting duties can be shared among employees on different days and shifts.
Prioritize your highest-value products (those belonging to A category if ABC is already being conducted). Next, have several employees (or you personally, if operating independently) spend part of each shift counting these products.
Once again, depending on how conservatively you handle inventory issues, inventory counts will ultimately dictate their frequency.
Integrate All Technologies Into One "Single Source Of Truth"
As your e-commerce business expands, so will its monthly software bills, passwords/logins list, and browser tabs open for business. Consider that most successful online business owners use multiple platforms:
- Robust Inventory Management System
- Accountancy
- Email marketing
- Billing
- Website
- Point-of-sale systems
That needs to take into account your numerous channels of sales! You must monitor sales via Amazon, eBay, Etsy, and brick-and-mortar online portals.
Are You Feeling Overwhelmed with Inventory Solutions Like SkuVault? Today's inventory solutions, such as SkuVault, allow for integration across a number of platforms for seamless inventory management solutions.
SkuVault can integrate seamlessly with all major business platforms - QuickBooks or Shopify as a point of sale (POS), CRM Salesforce for customer relationship management (CRM), etc. By using one central repository for data that aggregates all essential business metrics and communicates these to relevant platforms.
Implement An Intelligent Picking Strategy
Time is measured not in minutes but in seconds - picking products faster and with greater accuracy can often be the answer to increasing profits. Implement a more strategic picking plan instead of printing out and handing off sheets of paper haphazardly to warehouse employees, walking aimlessly throughout your warehouse space, and printing more sheets as you go along.
The picking data-informed content strategy involves planning orders for each day and grouping them according to specific criteria before releasing batches simultaneously as "waves", with all workers working concurrently on them until completion.
Hyper Picking. We have devised an improved solution: Hyper Picking, the digital equivalent of wave-picking, works similarly. Hyper Picking uses intelligent location and filtering data from wave-picking sessions to find the optimal route to pick.
Hyper Picking's manager-controlled picking session automates itself by filtering orders with high priority. Furthermore, physical bins may allow Hyper Picking's picking capabilities to adapt depending on bin capacity.
Filters can be invaluable during hyperpicking as they speed up fulfillment times. Managers can assign filters directly to employees so that instant pick lists are automatically created rather than having to compile one manually.
Establish A Quality Control Checkpoint In Your Shipping Workflow
Customer satisfaction drives more sales. So, create an effective quality control process in your shipping workflow today to guarantee customer happiness! Quality control is the final safeguard in protecting user experience and will ultimately determine customer satisfaction.
However, as humans, we do make mistakes; products will sometimes not be picked or packed correctly, and damaged items could get misplaced or go astray. A 10% reduction could make all the difference between customer loyalty, unhappiness, and detractors. SkuVault key features tools for quality assurance that enable users to take extra measures to prevent mispicking or defective product delivery.
Physically Arrange Your Warehouse To Acknowledge Demand
After performing ABC analysis, it may be a shock that some of your high-value and most in-demand products are located farthest away from processing facilities. To remedy this situation, physically arrange your warehouse accordingly.
What time could be saved by restructuring your warehouse so that its best-sellers are within easy access to areas for processing and shipping? If customers tend to buy certain SKUs together (like DSLR cameras and SD Cards), consider setting up your warehouse so these products can remain close together.
What Is Ecommerce Inventory Management (EMIM)?
E-commerce inventory management refers to overseeing, controlling, and measuring goods your business holds inventory on. This could involve factors like inventory location and variety as well as price. Inventory management encompasses so much more.
Here, we just scratched the surface.
- Coordinate between supply and demand by speaking directly with end users and suppliers.
- Visibility of products that are out-of-stock, overstocked, or scarce supplies
- Estimating per-pallet revenue potential
- Visualize and assess purchasing patterns, seasonal factors, customer demands, and other relevant variables to make informed business data-driven decisions.
To thrive, the modern digital age requires intelligent inventory management skills such as lead generation or content marketing. Proper inventory control carries advantages that permeate all business areas, from reduced revenue losses to risks that spread further across your enterprise. But this essential area often falls by the wayside, leading to revenue leakage and possible spillover into other aspects of operation.
Why Should You Care About E-commerce Inventory Management?
Maintaining strong inventory controls is integral to success as an eCommerce store owner or manager; doing so ensures current customer relations remain positive by eliminating frustrations such as out-of-stock items, incorrect shipping expectations, or having the wrong product sent out.
Any online business's success relies on the cost of customer acquisition advocacy and repeat purchases. Inventory control is also paramount for expanding businesses. Management of multiple warehouses and employees can be complex without proper organization.
SkuVault, an innovative eCommerce system for inventory management that supports rapid expansion while organizing information about existing stock, is an efficient solution to streamline this process.
Inventory management can increase revenue. Unfortunately, eCommerce businesses tend to overlook it in favor of other methods for driving revenue generation. Still, inventory management can be used effectively to cut costs, increase efficiency, and decrease errors.
Why Implement Inventory Management Software?
Many readers might need clarification and help with the inventory management process for online shopping platforms. With IMS e-commerce software, you can simplify this time-consuming task and reduce inventory management concerns considerably.
Each platform should only attempt to manage a side hustle e-commerce venture by providing support and resources for this effort. SkuVault can bring many distinct advantages to any organization. We will explore some of them here.
Inventory Management Software to Enable Rapid Scaling SkuVault provides an invaluable solution for inventory and product scaling needs, providing efficient management and rapid scaling opportunities. Inventory workflows remain consistent even as warehouses expand or product lines expand.
SkuVault unifies warehouse data, purchasing analytics, and channel information into one convenient system to streamline inventory management and replenishment for businesses of any size. With SkuVault, you can easily manage inventory no matter its scale of operations!
Get Real-Time Access To All Of Your Channels
Can I quickly receive figures regarding the top-selling products compared to brick-and-mortar stores, or how quickly could your website sell per pallet of inventory? SkuVault makes this possible quickly and accurately; inventory can be allocated directly into channels instead of being randomly replenished over time.
Reduce Lead Times Through Intelligent Picklists And Pick Routes
Viewing YouTube clips about Amazon's Warehouse will provide insight into inventory management as measured in minutes rather than seconds. Time is of the utmost importance. SkuVault makes time management much more straightforward by offering intelligent lists of picks and routes.
SkuVault sends customers detailed instructions when they place orders with us, including picklists that provide details such as quantity and location of products and how best to collect them based on where their warehouse inventory resides.
Warehouse staff can easily print or download picklists to facilitate faster order processing. An integral part of making the warehouse more effective and customers satisfied is increasing warehouse efficiency and improving overall performance.
Tracking And Analyzing Data
Data analysis may seem tedious at times, but what if that same information can directly impact your finances? Now it has become exciting! SkuVault and other IMS platforms provide access to comprehensive analytics immediately visible on any mobile device.
Demand forecasting, demand vs. inventory curves and replenishment plans can all be accomplished easily with just a click or two of your mouse. SkuVault reports not only provide valuable relief and direction for future actions to save you time and effort but can help clear away unnecessary confusion and save countless hours.
Intelligent Replenishment Insights
SkuVault's Replenishment Report extends the concept of minimum viable stock by automating replenishment based on unique business requirements. This report considers your desired par level and customer buying patterns and forecasts, creating customized purchase orders for specific products or quantities. The App also can generate purchase orders.
SkuVault makes optimizing each pallet easy. Step Two of Inventory Management E-commerce inventory management can be an arduous task. SkuVault is the ultimate inventory software, taking on most of its challenges for you! By focusing on higher-level activities like growth and strategy, you can prioritize higher-order endeavors like them.
Five Essential Inventory Management Methods For E-commerce
It is essential that when using inventory management, you keep specific points in mind. Hence, your inventory lasts as long as possible and is profitable, ensuring both customer loyalty and increased profit potential for you! Here are five essential inventory management methods to keep eCommerce stores moving confidently.
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Keep An Inventory Of Safety Stock
You never know when an unexpected event might arise, making an emergency supply list essential. Your inventory could be handy for various reasons, panic-buying being just one example. Be prepared for unexpected events by keeping one.
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Balance Inventory
Finding the appropriate inventory balance requires just this much: stock only a little and strive to strike an equilibrium between too much or insufficient inventory. Inventory levels that exceed what's reasonable require liquidation.
It would help if you didn't keep such limited inventory that customers must inform you they cannot find what they're searching for and potentially lose business due to being informed you don't have what they need, driving away customer journey with bad customer reviews and clearance sales resulting from this ineptitude. Avoiding this problem requires using appropriate software and managing inventory correctly.
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Kitting Is An Excellent Technique To Use
Kitting, or stock aggregation for sale as part of a package sale offer such as Buy Two Get One Free (BOGOF), can help get rid of overstocks quickly at an incredible value while simultaneously increasing order values while simultaneously showing customers they are receiving great values.
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Predict Future Stocks By Looking At Previous Purchases
Reviewing past purchases allows for creating an efficient feedback system. Determining whether inventory needs to increase or decrease can become apparent by understanding which stocks work. Also, keep track of sales of specific items to assess annual trends.
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Smart Storage
It's essential when stockpiling items for sale to consider how these will be stored - in an extra room or warehouse, for instance - ensuring that everything can be easily reached and accessible when making up stockpiles for sales.
Keep them in a location that makes packing up and shipping easier; customers will likely receive their product more promptly. The location should reflect trends and sales; move things as necessary so as to remain up-to-date and provide excellent customer service.
Conclusion
An Inventory Management System can make life much more straightforward. Applying proper techniques and e-commerce software solutions will assist with keeping track of stock levels for increased profits as well as happier customers more likely to return.
