10 Steps To Managing Your E-commerce Inventory Like a Pro
The benefits of managing your e-commerce business's inventory include increased sales, increased profits, and more.
Have you ever heard the term "too much of a good thing?" Well, it turns out that applies to inventory management, too. If you have too much stock, you'll needlessly spend money.
Simultaneously, if you don't have enough stock, your customers will be frustrated by delays or backorders—and they may take their business elsewhere. So as an e-commerce business owner, how do you strike the right balance? By implementing efficient inventory management techniques and tools.
Invariably, inventory management is an art and a science: Part instinct for what people will buy, part mastering the details of storage capacity and turnover rates. However, with little tips and tricks from this substack—and maybe some help from inventory management software—you can find the right balance of having enough stock without overspending or wasting money on unused goods.
Use inventory management software.
If you want to keep track of your inventory, I suggest using inventory management software. You can also use it to track your sales trends, which will help you determine when to reorder stock to get the most out of your budget.
Track inventory replenishment.
How much money can you save by managing your e-commerce inventory effectively?
A lot!
According to Forbes, it costs a heavy machinery manufacturer $100 million to carry four weeks of inventory. They can shave that down to $65 million if they cut their excess inventory levels to three weeks. So when you consider all the unsold items, it's easy to see how too many purchases can really add up.
Start with the basics–prevent stockouts with these user-friendly e-commerce inventory management apps such as:
Cin7
Fishbowl
Netstock
Trunk inFlow
NetSuite ERP
These tools allow you to track your current inventory levels easily, calculate how much more product you need to order, and send the order to your vendors or manufacturers. They also provide analytics on how your sales have been going so that you can adjust accordingly if needed.
Some e-commerce inventory management apps allow for integration with other systems, such as Salesforce CRM or Sage X3, so that you can easily pull information from those applications into your system without manually entering anything into multiple places at once.
The benefits of e-commerce inventory management are endless.
- You know exactly what's in your warehouse.
- You can keep track of reorder points.
- You can prevent supply chain issues.
- You'll know when you need a restock!
Perform inventory ABC analysis
An excellent way to begin managing your inventory is by performing an ABC analysis. An ABC analysis helps you identify the most valuable items in your inventory, the most profitable items in your stock, and any other relevant information about them.
What is ABC analysis?
ABC stands for "analysis by category," and it's one of the most important tools in any effective inventory management strategy. It helps identify the products in your inventory that are the most popular with customers and gives you insights into what other products they might like. This helps you make smarter decisions about which products to stock and how much of each item to keep on hand, which will save you time and money down the line.
In terms of e-commerce inventory management, ABC stands for:
A (Amount) - The average quantity of the item that has been purchased per transaction.
B (Cost) - The average cost per unit of an item's purchase price.
C (Count) - How many times an item has been used across all transactions within a specific timeframe (e.g., days). This number is calculated by dividing the total number of units sold by the total number of transactions during this period.
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