Running a business is a task and it needs a set of rules and a working method to handle every aspect of the business. Here is our guide today, we will mainly focus on the inventory aspect of e-commerce. A retail business inventory management could be easier compared to e-commerce as the main difference between the two is the physical location. So let us get right into it.
What is E-Commerce Inventory Management?
The words “Inventory” and “Inventory Management” have a vast difference between them. Inventory management is not just storing products effectively to sell to your customers. It is also about creating a system that effectively sees you sourcing the inventory, storing the inventory, and then shipping the inventory. A strong inventory management system will help you reduce your operational cost and turnaround time.
How To Establish E-Commerce Inventory
Establishing a management system for your inventory requires you to keep various factors in mind and also count on the unexpected. Let us understand what requires your attention to create effective e-commerce inventory management.
1. Understand The Demand For Your Product
To start with, the most important aspect of inventory management is to understand the demand for the products you offer. Remember, this is not predicting the demand, but rather understanding the demand. If you are a new business, you can do this effectively with Google trends and understand the data of previous years to see the fluctuations. Once your business is running, for your future demands then the latest data can also be used to interpret your product’s demand using Google analytics.
2. Set Minimal Stock Levels
Your goal for inventory management is to keep the stock at such a level that you can meet your demand and provide the best turnaround time possible. This will require a good understanding of your product demand and how quickly are you able to re-stock the items.
3. Be Ready For Festive & Seasonal Change
Understanding seasonal and festive changes are important. You will see that the demand for a few products increases and others decrease during holidays, summers, or winters. So with such a change, you must predict the demand and manage your inventory accordingly. Understanding when to place an order with your suppliers is also part of this process. Ultimately, you must aim to effectively manage your inventory to keep your operational cost low.
For example, if the chirstmas season is near, people will demand more products based on a christmas party theme, so you can stock chirstmas products such as chirstmas party koozies, chirstmas wedding koozies (if there is weeding in christmas season), custom printed balloons, custom t-shirts, Customise Bulk Popsocket and many more things to make their event memorable with your products.
4. Prioritize Your Products
This basically is to create a system where you understand which products need to be stocked and how much. You might not need much inventory of heavy ticket products, for example, refrigerators, compared to low-value products like clothing. A good way to achieve this is to apply the ABC analysis.
- Products with a high value and a low sales frequency.
- Moderately frequent sales of moderate-value products.
- High frequency of sales for low-value products.
Distribute your products in these categories and you will be able to manage your inventory much more effectively.
5. Use Inventory Management Software
It can prove to be very helpful when you are using inventory management software. Many aspects of inventory management can be tracked with software that will allow you to work with precision and manage more effectively. This will reduce your manual work and can be very useful for established e-commerce. This will also ensure you do not overstock and boost your sales while keeping track of it.
6. Do an Inventory Audit
Doing an audit for your inventory will help you to track the inventory available and needed and also the financial side of it. It helps the business to understand the inventory being used and the whole process more clearly in a given period of time. This will give you an idea about where you can improve.
Challenges While Managing Inventory
Let us discuss what kind of challenges you might face while establishing an inventory management system. This will give you a heads-up on how to handle these challenges and not let them affect your growth.
- Overstocking and overselling can be a frequent challenge if you are not able to understand the demand and supply for the product.
- Finding the right time to scale could be a challenge and could backfire if the timing is wrong which also affects your management system.
- Lack of product visibility across multiple platforms, as it gets difficult to track you might not effectively use all the platforms to make your product visible at all times.
- Adapting the inventory management software proves to be a challenge that enables you to understand data and grow your business.
Manage Your Inventory Effectively!
These are the best insight you may want to get before starting your e-commerce brand or even if you have already started it is never late to adapt to change. As you do it, you will get the hang of it and will be able to manage the inventory more effectively.
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