Inventory management is always the foundation of every business. Especially for an eCommerce business, it is an essential tool for streamlining operations, automating inventory tracking, boosting revenue, enhancing customer satisfaction, and generally making it a lot easier to run the business. If you are among online business owners, the top 8 practices for eCommerce inventory management listed below should be one of your key references to achieve a successful online business.
Implement inventory management software
If you are using Magento eCommerce, Magento inventory management software is the perfect inventory system for you. It contains all the functionality a Magento business needs to manage stock and is simple to install into your system because this stock control software was created specifically for Magento eCommerce. Across all sales channels and locations, it helps with
keeping track of your stock flow. Make sure the appropriate supply is available at the appropriate price and location at all times. Magestore, Veeqo, and SKUlabs are just a few of the excellent Magento inventory management tools available on the market. Each piece of software has distinct advantages and standout features.
Forecast future demand by studying historical data
Making the future a little less uncertain is a key component of a successful corporation. Forecasting future demands, particularly seasonal demand, is another wise move to manage your stocks effectively. Luckily, accessing historical purchase data instantly and visually is possible with eCommerce inventory management.
In order to determine when interest and demand were at their highest, it is simple to review prior sales. Next, prepare for rising demand by looking ahead to identify key selling windows throughout the year, such as holidays and festivals. Finally, order and maintain inventory correctly to avoid any items running out of stock during periods of high demand.
Implement a scanning system
Scanning objects anytime you receive, move, ship, or otherwise modify them is a best practice for inventory management. That leaves you vulnerable to a great deal of human error, incorrect SKU numbers, and inaccurate inventory data. This starts to be particularly harmful as your
eCommerce firm expands beyond just a few SKUs in a tiny warehouse.
Set stock par level
To satisfy client needs, an eCommerce business must maintain an acceptable stock level. If you don’t have enough of an item in stock when a consumer places an order, you risk losing them. Although achieving the ideal stock level is challenging, it is still feasible to reach the minimum stock level. Establish a minimum stock level for each item so you may place an order for more before you run out. Based on sales data and the time it takes to buy more stock, determine your minimum stock level.
For instance, if your supplier produces and delivers a new quantity of an item in seven weeks and you sell one unit of that item per week, you should order when you have seven (or eight) on hand to ensure that the new stock comes before you run out. Additionally, some eCommerce platforms such as Magento offers par-level notification. As a result, it will automatically alert the managers whenever an SKU drops below the selected par level. This level must be set up according to all necessary criteria, and you must act when notified.
Apply ABC classification
It’s time to separate your product line once you’ve built a solid foundation of an inventory management philosophy, precise demand forecasts, and data-backed par levels. By adjusting your fulfillment strategy to certain product lines or categories, performing an ABC analysis helps you maximize your revenue.
Products that are high in value but low in quantity, for instance, might fall under Category A. Products in Category B are of modest value and quantity. And Category C includes low-quality yet plentiful products.
Businesses that sell a variety of product lines might develop specialized restocking plans for each product category by bucketing their inventory in this way.
Regularly conduct cycle counting in the warehouse
Inventory counts must be done physically since automated systems cannot track every movement of goods, including lost or destroyed items. Cycle counting is a technique used by eCommerce businesses to physically count their inventory. It distributes the task of inventory counting among various people and days.
Starting with the highest-value items—those in the A category if you’re performing an ABC analysis. You next go on to items in categories B and C, which you don’t often count because they have a smaller impact on your bottom line. Depending on how cautious you wish to be when resolving, the frequency of your cycle counts will change.
Use dropshipping
You can sell online via drop shipping without having to keep a storage facility. As soon as the buyer places a purchase order, the suppliers will update their inventory and delivery the
requested goods. Buyers will believe that the goods are being delivered from your eCommerce store while the suppliers are kept a secret. Maintaining an inventory management system is essential for the success of drop-shipping because it will allow you and the supplier to instantly share information about orders, invoicing, real-time inventory counts, etc.
Apply just-in-time inventory management
Another option is using the JIT inventory management technique. You may boost productivity and cut waste by using this inventory management technique. You only keep products in stock when they are required for the production or sales process.
In this method, you avoid paying for the storage of the merchandise and have free cash flow. The company’s capacity to foresee and predict future sales and demand for a certain product, as well as its capacity to anticipate the period of fluctuation, are the two key factors that determine the effectiveness of the JIT
technique. You can utilize inventory management techniques to get real-time information on demand and order information to ensure everything is running smoothly.
In short, there are numerous techniques and strategies available for managing your eCommerce inventory. The eight techniques listed above are simply a few of the best recommendations used by successful online businesses. The best option for your business will depend on the specifics of your scenario.