Ecommerce is one of the largest and most successful online businesses today, turning in massive profits daily. However, the amount of data tracking and management strategy that goes into its daily routine can be a bit overwhelming. The inventory management process is one of the most challenging aspects of running an eCommerce business. This is obviously due to a large number of products and commodities being constantly tracked, an oversight is always a possibility and this is why one must have well-structured inventory management solutions to scale availability of products, scarcity, up-sales and other parameters of the business.
What exactly is inventory management and what does it entail for eCommerce retail business?
Inventory management as the name implies is a means by which demand and supply are regulated through effective real-time strategies and product tracking system. It is especially expedient for e-commerce businesses as it enables proper streamlining of inventory tracking processes and schedules that enable businesses to function effectually. The right inventory management system features aid these processes:
- Help in making accurate sales forecast
- Prevent losses through product shortage
- Improve inventory tracking
- Create scheduled prompts on activities such as sales
- Comprehensive, concise and easily accessible from any location
Fundamentally, effective management of inventory is a design deployed to ensure that businesses do not run short of their best selling products while ensuring the balance between investments on other low-selling products and the high sellers. Here are 7 top inventory management tips that may be useful for your eCommerce retail business.
Identify and categorize products by sales dynamics
Every product sells differently and it would be wise to identify and categorize products according to their sales dynamics. Some products are seasonal and do not sell so well on certain periods of the year while some others are basic needs and are in high demand all year round. Various techniques can be used for categorizing these products. A simple one is:
- A – Products that have high consumption values and are therefore frequently monitored
- B – Products that are very cheap and because of that, have a high probability of selling out quick
- C – Seasonal products which are only high on sales at a certain period of the year
- D – Product that is perishable or may become obsolete with time
There are so many ways to categorize products, simply create innovative checklists that best suits your specific business type.
Work with a sales forecast
Market trends often shift periodically depending on the popularity of a product, promotions, and other factors. Working with a reliable sales forecast will enable you to predict future growth in sales figures. This can be made easy by monitoring your sales dashboard and studying recurring patterns.
Implement quality control measures
Every product delivered should carry the company seal and should be in good working condition. Many times customers ask for refunds when the products delivered do not meet the expected quality. This is usually a loss for the company unless there is a way to salvage or upsell to make up for returned products. This is why quality control measures must be adopted. Quality control may be initiated by conducting regular checks and reports of the current product state, conduct testing where necessary and give feedback on the quality of the products before they are sealed for distribution.
Conduct periodic auditing
Auditing is the most efficient way to keep track of sales using a ledger. All financial statements can be tracked before and after-sales to determine how much profit is being made, in that period, and from which product sales. Periodic auditing simply validates all financial records as it corresponds with the current inventory checklist.
Adopt cloud-based software for inventory management
Many ecommerce retail businesses are big on technology for management. There are quite several sales and inventory management software used in today’s business to automate various processes. This software provides stock alerts, email reports, and financial statements to ensure that the business owner is always up to date on records. These periodic data is saved in the cloud for reference.
Reduce risks with drop shipping
Drop shipping is a modern-day convenience that many eCommerce businesses are using to improve sales and to reduce the risk of controlling inventory. Drop shipping is an outsource service that controls inventory, handles the packaging and distribution of products when a customer makes purchases from your store, hence, they bear a significant amount of business risk.
Track inventory and sales daily
Tracking daily sales and inventory can be done with either software or manually. Most businesses use tracking software as they are quite efficient and a lot more accurate than human efforts. Some great inventory management tools are Asset Panda, AssetExplorer, InvGate, Network Inventory Advisor, and Snipe-IT.
There are many other ways to manage your logistics inventory effectively however if you fully implement the above standards you are certain to break boundaries in your ecommerce retail business.