My friend’s father owns a retail store offering general goods. I often went there and help them manage their product inventory. We used to count the stock by hand, check the low stock products, new products, pricing, products sold, products ordered, and all the aspects that come under the inventory management. This scenario would take you back in the days when product inventory was a tedious and manual task.
With the eCommerce industry, it has been evolved but a bit challenging at the same time. Your inventory gets constantly updated whenever there’s a new order, shipment, product return, or canceled order. By the time, when your business grows, it becomes a challenge to handle the entire process with ease. Otherwise, it might risk you low stock, complex management, which may increase your costs.
But the good thing is that you can easily avoid it. This detailed guide will explain some advanced inventory methods for your eCommerce store.
Before we dig in the methods, first it’s important to understand that…
Why Inventory Management is so Important?
1) Helps you Manage your Stock
The stock management varies with different buying seasons. For example, you need to stock more of Christmas products, rather than the normal buying options. Because nobody would buy a normal or an outdated stock during the holidays. They love to buy holiday stuff. Therefore, it is wise to stock the right kind of inventory to eliminate the risk of ‘dead stock’. You should keep a razor-sharp view on the inventory so that it doesn’t get saturated with unwanted products.
2) Helps you Understand Customers
It is important to track your inventory. It gives you deep insights into the performance of your products. Based on that, you will be able to figure out customer needs in a better way. You can track your most sold, famous, not-so-famous products at the same time. Inventory management also helps you measure the success of your previous marketing campaigns.
3) Save Money
You need to be picky about the choice of your products. Because the cost of storing the inventory is dependent on how much space it would require. When there is an excessive number of products than the actual requirement, it might increase your investment cost. The best way to escape this is to observe your product inventory to figure out the market needs. Based on that you can store the limited stock.
4) Keeps you Prepared
When you have an e-store, it is possible to get orders of products which usually aren’t performing well, miscalculations of storage needs, space shortage, delayed product deliveries and so on. With the Inventory Management, you can get rid of this chaos. If you monitor your inventory regularly and keep the track of it, you can prepare future plans to handle such unexpected orders with ease.
5) Prepare for the Future
Inventory management is a vital part which helps you to prepare your future marketing & selling plans. When you have real-time numbers on your hand, you can manage and stock products according to the market trends. It will streamline the management of your marketing promotions and new product launches as well.
Let’s go through the effective inventory management methods you need to practice.
1) Keep Notes About Reorder Points
Reorder point is the least number of products from your stock. Whenever your reorder point drops, order new products from your manufacturer to avoid product shortage.
Tips to Calculate Reorder Points:
- Manufacturer’s maximum time in days of inventory delivery to a fulfillment center
- Fulfillment provider’s receiving time in days
- ‘Safety stock’ of at least 14 days in case of unexpected demand
- You need to multiply the above number of days with the average units sold per day
- And the final number is your reorder point
Setting reorder points help you streamline the inventory stock. It is advisable to check the reorder points periodically and update the reorder points as per the demands. Especially, during the peak seasons, you will need to stock more inventory.
2) Try to Sell Old Inventory First
This applies when you sell products with expiration dates or which are perishable. Even with the shelf-stable products, the ‘First come, first out’ can be a good strategy. As the brand, product features and packaging changes over a particular time of period. That’s why it is important to change the inventory and don’t end up with the outdated stock.
If you store inventory in-house and, you can manage this manually. Otherwise, if you have an e-store based on Magento, you can leverage Magneto Inventory Manager that would help you implement a FIFO approach for your store.
3) Examine your Inventory
I cannot agree more with the fact that managing inventory is a tedious task. But if your magneto 2 store has Magento 2 Inventory manager, you can check the actual inventory levels against the amount listed into your panel. The vital part is to make sure that the system’s numbers match up with the actual stock numbers.
Vendors with large product catalogs can make a practice of spot checking. It’s a good way to keep inventory audits under control. To get more idea about that, you need to choose a specific product, check the number of stocks available on hand, compare it to the number of units listed in the system. Inventory management helps you simplify this process with a spot check. Where the system marks the product stock as zero.
4) Communicate with Suppliers
Communication with your supplier is a foremost important thing. In the supply chain industry, the working schedule tends to be pre-decided. That’s why communicating in advance with your supplier saves you from any type of quality or quantity issues. It becomes easier for them to adjust.
Maintaining a good relationship with your supplier helps you to run the entire process smoothly.
5) Leverage Inventory management Software
Inventory Software is a modern way of managing your inventory. You can automate many of your manual tasks. You can even track the unsold products, report on inventory levels, in stock products, low stock products and more. With inventory management software you can check to manage your supply chain, customer details, product configurations, and at your fingertips.
Read on to know the advantages of the inventory management software:
Real-time Inventory Counts:
When you manage the inventory manually, there are high chances of mistakes. With the inventory management software, you can track your orders, check the order status, re-order points, overall storage, and all other aspects you will have to examine to manage the inventory.
It will help you create clarity about your available stock, per day sales, and storage capacity. It provides the real-time impact of your marketing promotions and product launches as well. By utilizing historical data, the inventory management software helps you decide when you should stock more products to prevent stockouts. You can even get alerts of reordering notification points at the time of restocking.
Reporting on Product Trends
Inventory management tool helps you to forecast product demands and sales. For instance, you can monitor the products which are purchased frequently. It helps you track the customer’s shopping behavior. This way you can divide your products into groups and plan for future offers of products and promotions. With the eCommerce industry, there’s a buying pattern of each and every product. You can also find how one product drives sales for another one.
Monitor Reorder Notifications
When you automate your inventory management with a tool, it helps you project the period of time to order more inventory. For example, with Magento 2 inventory management software, you can set reorder notification points. They will also send you alerts to restock your products.
Manage Inventory from Multiple Places
If you manage your inventory at different places, it becomes critical to manage. If you integrate inventory management system, it allows you to track inventory from various locations. In case, your inventory warehouse is operated in a different country, you can manage all your sales channels and currencies from a single dashboard.
Measure Success with Inventory Turn Over
Inventory turnover rate measures how quickly your company sells inventory. With the help of it, you can make a comparison to measure the strength of your company’s sales revenue and product performance. It provides a deep insight into how your company manages sales, costs, and inventory.
Inventory management is a crucial aspect for any business. Whether you own a retail store or an e-store, inventory management remains an important task. And if not done properly, it may affect your business operations. When you choose the right inventory management system, it helps you reduce your costs, fulfill customer demands, gradually grow your business in the market. So, have you implemented inventory management software to your store? Do let us know in the comment bar below.