improve ecommerce warehouse efficiencyEcommerce success takes more than just sales. The other side of the coin is managing your overhead — reducing internal costs wherever you can to make those sales dollars last even longer. And for most retailers, online or off, that means warehouse efficiency.

Streamlining your warehouse operations is a great way to pinch pennies and maximize profits. It’s one area of retail that can always be improved, although how might not always be self-evident. So we’ve collected the 5 best tips from other online retailers about how to optimize warehouse efficiency and your bottom line as a result.


1. Lightning-Quick Returns

This first tip is ideal for all aspects of ecommerce, not just inventory management. Process returns as quickly as possible.

For one thing, processing returns quickly keeps your data accurate. If your returns take weeks to process, it’ll corrupt your sales reports and analytics, making it hard to decipher your true best sellers and most profitable products. Knowing the true “cost” of your stored items informs which products your reorder, and by how much (explained below).

Moreover, this is great for customer service. Returns can be just as stressful for shoppers as they can for you — handling them quickly satisfies the customer and increases the likelihood of shopping with you again.


2. Improve Inventory Audits

The most important part of inventory management is knowing your inventory. Not only should you monitor which products sell quickly and which ones take up warehouse space, but you also need to keep an eye on how much profit each item brings in.

Your most profitable products aren’t always the ones that have more sales; you also have to consider storage fees, shipping fees, acquisition costs, and markups. When reviewing sales data, look at the Cost of Goods Sold (COGS), especially for individual items. This reveals the true cost of items and which products net you the most profits.

Additionally, you have to watch over your entire product range to see any changes or trends. Shopping behavior and product demand all fluctuate over time, so it’s best to do periodic “inventory audits” to see the state of your warehouse. This could be a quick check for irregularities in your sales data and budget or a thorough in-person inspection at your storage facility. To learn more, read our guide on the best practices for ecommerce inventory audits.


3. Automation & Inventory Management Software

The more resources dedicated to inventory management, the more efficient it is, right? But can you really justify hiring new workers to cut overhead costs? Rather, the perfect middle ground is using inventory management software to automate a portion of the process — it’s cheaper than a new employee, but handles more than its share of tasks.

Inventory management software like ecomdash consolidates all your storage data into one central dashboard, so you never have to waste time searching for specific items or shipments. But that’s just the beginning — with ecomdash, you can set up alerts for low stock so you can reorder in time, bulk edit your product pages to save you time, and review all the analytics you need to make informed business decisions in real-time.

It’s also worth mentioning that inventory management software reduces human error, specifically sending out the wrong products. This can effectively reduce returns attributed to your warehouses. If you’re on the fence, try ecomdash for 15 days free — no credit card needed.


4. Combat Theft and “Shrink”

One of the biggest vulnerabilities in retail warehouses is “shrink,” the not-so-mysterious phenomenon of products that seem to disappear in thin air. Often it’s attributed to either mismanagement or employee theft, but regardless, it has no place in an efficient warehouse.

Fighting product shrinkage first involves getting to the heart of the problem. You may want to improve your warehouse surveillance to see what your employees are up to. Otherwise, you’ll have to pour through the numbers to find any irregularities.

If you’re worried about missing inventory from your warehouse, check out our previous guide on fighting employee theft, with three actionable tips.


5. Improve Forecasting

The skill of inventory management involves having the perfect number of items in stock at any given time: enough to satisfy sales demand but not too much to weigh down storage costs. One of the best ways to streamline your warehouse operations is to optimize which products to restock and by how much.

Combining a product’s COGS (mentioned above) with its sales history — also found in the sales data — gives you a reliable estimate for how much to reorder when it’s time to stock up. Crunching the numbers here gives you the perfect amount of items to keep in your warehouse, reducing storage costs without risking stock outages.

But you also have to factor in time. Customers lose interest in certain products over time, for example, if a newer version is released. These shifts can be hard to predict, so it helps to conduct regular inventory audits to catch them early.

Moreover, the shopping behavior changes season-to-season — just look at how unique shopping habits are during the winter holidays. That’s why it’s crucial to look at your sales data of the same time from the previous year — this reveals seasonal trends and provides a good starting point when calculating how much upcoming stock you’ll need.

If predicting how much stock to order is confusing to you, don’t sweat it — you can read our complete beginner’s guide on inventory forecasting here to help you get started.


Running a Tight Ship

Ecommerce is competitive, and every advantage can make a difference. While your product range, pricing, and sales strategy depend on your business model and customers, there are always some uniform best practices that every retailer can use to reduce costs — just like the ones listed above.

Keep reading our blog for more tips on how to run a tight ship with your ecommerce brand. Those costs you cut now can lead to more fulfilling investments in the future. And if you’d like an extra helping hand with your inventory management, sign up for the ecomdash 15-day free trial now.


The Ultimate Guide To Inventory Management for Multichannel Retailers
The Ultimate Guide To Inventory Management for Multichannel Retailers

The ins and outs of managing inventory are overwhelming. That’s why we’ve put together the only guide that covers inventory management basics, accounting methods, pricing strategies, multichannel marketing strategies, and more.

You will receive an email with your download shortly!

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