As an online ecommerce store, the last thing you need to be doing as keep track of your stock by hand.
Most will find themselves spending the bulk of their time and attention on getting their brand recognized enough to break through the clutter of the internet. It’s easy to overlook the importance of inventory management: getting the right products at the right place at the right time.
If you have manual inventory management operations in your company, you need to get rid of it immediately.
To build and run a sustainable and successful ecommerce business, managing your inventory in the most efficient way possible is key. The problems you face can become difficult to solve without doing the right due diligence, regardless if you are a startup company or an enterprise that has been established for many years.
In this article I'll cover:
- A few problems that will arise without an effective inventory management process
- [SOLUTION] How to improving operations of your store
Overstocking and overselling
If you cannot control the levels of stock compared to how your customers shop then you can find yourself in a sticky situation. You may not be able to satisfy the demand for a product or you may have incorrectly calculated the amount of product you need to have available.
Sure, having a large amount of stock available during the busier periods of the year is beneficial as you can keep on top of orders. However, this also comes with its own problems.
Overstocking inventory is a problem for manual management operations. You end up sacrificing a lot of time in keeping track of useful and dead stock.
Inventory that cannot be moved on or sold is known as dead stock. Without an efficient inventory management system, it’s likely that your dead stock will remain in the warehouse and left unused, taking up valuable space for new stock. You cannot recoup the money from dead stock which will lose your business money.
On the other hand, not having a grasp on your levels of inventory could result in overselling products. This is when you continue to sell an item that is actually out of stock. By overselling, you lose credibility and your reputation as seller is affected. You are making promises to the customer that you cannot keep. Once this happens, it becomes very difficult for you to earn back their trust and get them to return to your store. If you sell on marketplaces, like, Amazon or eBay, then overselling negatively affects your seller metric, which in the end at the end decrease your sales.
Again, overselling is a headache for manual stock management. Imagine having to keep track of every order that you aren’t able to fulfill due to poor planning and mistakes that have been made.
Human error is one of the major reasons why you need to replace manual systems with automated processes. Eliminating mistakes saves you both time and money!
Manual work doesn’t scale
As an ecommerce business owner, you are going want to make your business grow as you start making more and more money. In order to scale, the operations you have in place need to match your plans. It’s straightforward to track what’s going on at the beginning. However, when your number of customers increase, demands for a framework for your operations becomes more and more necessary.
The fact is, manual inventory keeping cannot scale. If you are in a position where your store employs people to manage your stock, contacting them all by hand is certainly not scalable. And as you expand, the more sales you get, the more you need fulfill and keep track of.
Eventually, these systems will not be able to keep up with the increased load and will fail. It will not be a question of ‘if’ but ‘when’ it happens.
How many of you are using the following methods in your ecommerce business?
- Writing down orders on loose pieces of paper or in a notebook of some kind.
- Keeping track of inventory using offline spreadsheets.
- Making the use of computer programs that cannot work and communicate with each other.
If any of you can relate to these in one way or another, in order to scale your business, you should be looking to move to an automated system.
You may argue that you are saving money by not spending on these electronic automated systems but in truth you are actually losing both time and money!
You will be able to improve the speed it takes to do all the above tasks and more. You will be able to make smarter key business decisions. Valuable time that would be spent on counting up your inventory can be saved and used to look into other aspects of the business, such as exploring new markets and introducing new products to your store.
Lack of visibility across multiple channels
This is another main problem that online sellers face during inventory management difficulties.
It becomes difficult to keep track of all your orders and levels of inventory, especially when selling across multiple channels such as Amazon and eBay. Each platform comes with its own sales channel and manually keeping track of which order is coming what marketplace can become difficult.
Expanding into different marketplaces will mean an increase in stock levels meaning an increase in storage space needed. This could lead to a lack of visibility across the different storage warehouses. Without a satisfactory management system, it again comes down to not being able to track all incomings and outgoings.
Without a full view of your entire system, you will find it hard to make the best business decisions to keep on top of everything.
So with all this being said here are some ways that you optimise your inventory management systems.
Improving operations of your store
First of all, stop using your manual process straight away. They are costing you both time and money, none of which are easy to obtain and impossible to get back once lost.
The number one tip I can give you is to invest in inventory management software. It’s value cannot be underestimated. As we’ve discussed, manual systems cannot scale, they cannot cope well with overstocking and overselling problems and provide no help to seeing the whole picture.
The benefits of implementing a software that can do all this and more.
An inventory management software makes these business operations a lot more efficient. Stock levels can be replenished at a much faster rate meaning that customers will continue to be satisfied. The software will be able to process and optimise shipment requests which means better customer service.
Software can help you track when levels of stock are getting too low and is able to automatically reorder. This counters the overselling problem we described earlier in the post as you will never run out of stock. Additionally, you can adjust these points at the same time as predicting demand forecasts. This then solves the overstocking problem.
Inventory management software will not only manage your level of inventory in your warehouses but can also calculate how much you will be able to hold in the future. This is even more advantageous to the stores that operate across multiple sales channels. Software can also provide logistic solutions by discovering storage locations near to your core customer base.
Above all, the main benefit is that there is software that can do all of the above at the same time. Because it’s all automated, once it’s set up, it runs by itself without needing to do regular checks.
Hopefully all the reasons above have convinced you now that you need to leave behind the outdated manual systems and upgrade to more efficient automated processes. Accurate records are the difference between businesses that stunt their growth and those that flourish and expand successfully.
Good inventory management systems will help you calculate exactly how much inventory you currently have. Warehouses can be organised properly, order fulfillment speed will increase and stock shortages will be avoided, all of which will keep customers happy.
The best systems will increase your credibility in marketplaces hence you will see that customers will come more and more. Repeated business requires you to be able to keep with with ever growing demands. Inventory management software will enable you to satisfy the demand by giving you all the necessary tools.