Failing to manage inventory is a disaster waiting to happen. You may have capital tied up in your inventory that could be better spent elsewhere and your lack of tracking could lead to poor customer experiences, negative ratings and reviews, and ultimately to you losing sales. Managing your inventory needs to be a top priority for all online sellers. But it doesn’t have to be as tedious and time-consuming as you think. Follow these 8 tips to manage your ecommerce inventory effectively.
#1 – Get Fast Inventory Updates
This is a must for ecommerce businesses. Better ecommerce inventory management begins with having accurate, up-to-date inventory numbers. That means that when you sell an item, your inventory should show the reduction in quantity right away. If that doesn’t happen, you run the risk of overselling products and creating dissatisfied customers.
The easiest way to make sure that your inventory is always accurate is to invest in an ecommerce inventory management software like ecomdash. That way you never have to wonder how many of each product you have – even when you sell across multiple channels.
#2 – Use Hybrid Warehousing
This is a combination of self-warehousing and using third-party warehouses for your inventory. Not only can this help you with inventory control, it can also help you with holding costs. For example, small and light inventory like electronic gadgets or jewelry can be kept by you, while bulkier and heavier items can be shipped directly from your supplier. This leads us to the next strategy – dropshipping.
#3 – Consider Dropshipping
If you don’t already utilize dropshipping, it is definitely worth trying it. With dropshipping you don’t have to keep inventory on hand. You instead establish a relationship with a supplier who will hold, manage, and ship your inventory to your customers. The dropshipper is invisible to your customers and you save valuable time. If you use dropshipping automation software, the entire process becomes hands-off.
#4 – First-In First-Out
This inventory principle is important. It means that your oldest stock is sold first. While this is especially important for any stock that is perishable or has expiration dates, it’s also important for other products. Sometimes packaging becomes old and worn looking, or it becomes obsolete. When that happens, you’re stuck with an unsellable product. If you use a third-party warehouse it’s likely that they already use this process, but check to be sure.
#5 – Audit Regularly
While inventory management makes things much easier, you still need to physically audit your inventory at regular intervals to make sure your reports are accurate. You will have to decide how often you want to reconcile your inventory based on the amount of business you do and how your inventory is stored. But keep in mind, the longer you wait between audits, the harder it will be to find discrepancies.
#6 – Forecast Accurately
In order to have a good handle on your inventory, you have to be able to accurately forecast what the demand for it will be. This isn’t easy to master because there are many factors involved. It is made much easier if you use a software solution for your inventory that allows you to pull ecommerce reports with relevant data for forecasting.
Factors to consider include your previous year’s sales, market trends, any sales that are guaranteed by contracts or subscriptions, the economic environment, and planned promotions. These will all affect your forecasting.
#7 – Plan for the Unexpected
Consider things that could happen to throw off your inventory and come up with contingency plans to deal with them. It’s better to have a plan and never need it than to be caught off guard and at a loss about what to do. What will you do if your manufacturer discontinues your product unexpectedly? Or your sales increase suddenly and you oversell a product? Carefully considering these and other potential issues will prepare you for dealing with them if they happen.
#8 – Nurture Your Relationships
You know that you need to have great relationships with your customers, but you also need to establish and nurture your relationships with your suppliers. Developing a good relationship will ensure that when (not if – it will happen) you have a problem with your inventory, they will be much more likely to help you solve it.
Achieving Effective Inventory Management
Inventory management is essential to the success of your online business. Whether you stock your own inventory, use dropshipping, or fulfillment services like Fulfillment By Amazon (FBA), or multiple warehouses, determining the best inventory management procedure for your business is likely inventory management software. It will help you with all the above strategies. By using these ecommerce inventory tips, you will be on the right track to becoming a business success.