most common mistakes ecommerce retailers are makingBeing a successful ecommerce merchant requires more than just finding the right products, price, and target audience. If you aren’t dropshipping products straight to your customers, your business will depend on a smoothly operated in-house inventory system. This means minimizing both the time it takes to ship out orders, and the time products are waiting to be sold. Neglecting this part of your business can increase your Cost of Goods Sold and eat away at your profit margins. Here are some of the most common inventory mistakes ecommerce retailers make and what you can do to avoid them.


Lack of Forecasting

Many ecommerce retailers make the mistake of trusting their gut when making purchasing decisions. In reality, the ecommerce market is much more unpredictable than we think, so relying on a gut feeling for inventory decisions can lead to overstocking or understocking. Both are detrimental to your bottom line. If you sell out of a product without replenishing your inventory, customers will turn to your competitors to meet their needs. If you undersell and your inventory starts to pile up, you miss out on revenue and have to deal with higher storage costs.

Information is the key to success in the ecommerce world, so make sure you have a full understanding of the niche markets you intend to disrupt before setting out!

Introducing forecasting techniques into your business model will help you identify market trends, relevant regulations, and competitors to look out for. For those that don’t know, a sales forecast is basically an estimate of how to manage your revenue and expenses during a future time period. Forecasting for ecommerce involves 2 basic elements: market research and advertising.


Market Research:

After picking the products you want to sell, do as much market research as possible on the customers you’re trying to reach. Keep the following questions in mind:

  • Who are they?
    • What are their wants and needs?
    • What other products do they tend to look for?
    • What times of day are they online?
    • How much do they spend on average when buying?
  • Who are your competitors?
    • What is their pricing like?
    • Where are they advertising?
    • What kind of sales promotions and discounts do they offer?

These are all questions that should be answered before you set up a general marketing strategy to ensure you’re targeting the right customers in the right way. Know these details will also help you determine your the size of market you can take a chunk of.



After earmarking funds for online ads, you need to know where to spend this money. Not knowing when and how to use your marketing dollars can hurt your sales and lead to stale inventory, waste, and needlessly high storage costs.

Analyzing market data to figure out the high demand periods for your products lets you know the best times to spend money on ads for specific marketing channels. It also allows you to better forecast how many products you need.


Not Leveraging Stale Inventory in Online Sales

Like every other ecommerce seller, you’ll have some products that sell really well and others that end up getting dusty in your stock rooms. If you pick the wrong products to sell, your inventory and its costs can pile up fast. Products that aren’t being sold turn into what we call stale inventory. This sort of inventory increases your storage costs.

Creating kits or “bundles” is a great way to offload items that aren’t selling very well. Bundling involves making package deals of products that are slow-moving with more popular items that are flying off the shelves. The more related the products in your bundles are, the higher their chances of selling together.


Not Having a Contingency Plan

Misplaced products, registration mistakes, employee theft, or even overselling can cause you to lose track of your inventory. Unfortunately, many ecommerce merchants don’t prepare a contingency plan to deal with these issues.

So what does a good contingency plan look like? Here are three key points to remember:

  • Inventory data should be backed up as often as possible using external hard drives, cloud storage, and inventory management software.
  • Physical inventory checks and the use of surveillance are also helpful to make sure your inventory is organized and easy to find.
  • To be on the safe side, have additional stock of the products you sell the most, especially during shopping seasons like Christmas, Black Friday or Cyber Monday.


Poor Inventory Tracking

Selling online and scaling your growth as an ecommerce merchant requires a mastery of inventory management, along with the technology and best practices that help you track it. An inventory tracking system plays a key role here, but many online sellers don’t use it enough or at all. If your inventory is out of sync, you might oversell, undersell, miss delivery deadlines or lose credibility. All of this spells big trouble! By getting this side of your business handled, you’ll stay a step ahead of many competitors.

Here are 3 key components of inventory tracking you should consider to solve or avoid any inventory issues :

  • External Tracking using Unique Product Identifiers: Product identifiers like the GTIN (Global Trade Identification Number) are standardized and universal numbers that are unique to each product type. There are many products out there that may even look the same but are slightly different. A product identifier makes it easy for both buyer and seller to know that they’re dealing with the right product. These numbers are required if you want to list products through online marketplaces, but they have a lot of other benefits too. These include increased conversions of up to 20%, 40% more add visibility, and higher organic (unpaid) search engine rankings through SEO.
  • Internal Tracking using Stock Keeping Units (SKU’s): SKU’s tend to be confused with UPI’s because they’re also found on product barcodes. The difference is that UPI’s identify your product to the outside world using a numeric value that is represented by a barcode or QR code. SKU’s are alphanumeric codes (not barcodes) associated to each product that help a company track its inventory internally. A lot of ecommerce sellers find it convenient to use their suppliers’ SKU, but this can lead to confusion if you end up buying from multiple suppliers, so we recommend that you create your own!
  • Inventory Management Software: As your inventory grows, so will your tracking headaches; that is if you don’t have the right tools! Inventory management software makes it easy to integrate your sales platforms and track your orders across multiple channels. There are many benefits to inventory management software such as automatic notifications when you’re low on stock or have stale inventory. This helps you gather reliable data on what time of the day, week, month or year orders are placed for specific products. It’s also a great way to prevent overselling.


Takeaway: Avoid These Common Inventory Mistakes

The hardest truth of having an ecommerce business is that a poor inventory management system can be a big threat to your results. Even if you do everything else right, losing control of your inventory can lead to spiraling cost increases and destroy your profit margins. By taking advantage of the tools and best practices available to you, and avoiding the kind of common inventory mistakes listed above, you’ll be on your way to keeping your ecommerce business thriving and ahead of the competition.


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