Managing inventory is important when running an eCommerce business.
If you don't keep tabs on your inventory, it can prove frustrating for your customers when they find out the product they're looking for is out of stock.
On the other hand, having too much stock that isn't selling is also bad for business. You can rack up business losses if your products have expiry dates, or if you are paying for storage for these items.
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What's Inventory Management and Why Is It Important?
Simply put, inventory is the number of products that you have available for sale in your store or warehouse.
Knowing what's available and what isn't will help you evaluate which products are popular with your customers and whether your stock is running low.
The more detailed your stock records are, the easier it is for you to seamlessly fulfill orders and make business decisions based on what's selling.
Stock management will also help you to calculate your profits at the end of the fiscal year, which is very important for tax evaluation and payment.
How to Manage Your Inventory
Decades ago, managing inventory meant maintaining ledgers or logbooks.
Not anymore! The good news is that everything is done online and in cloud computing.
You can start by purchasing an online inventory system or you get one custom-made for your requirements, depending on your budget.
There are also some paid online inventory management systems that integrate with your point of sales system or your eCommerce store. The benefits are that the inventory is automatically updated when a purchase is made. This way, knowing and labeling a product that is out of stock is easier.
What to Look for in an Inventory Management System
A good inventory management system should offer the following:
- Inventory tracking. This tracks the levels of inventory available. Inventory levels refer to the minimum level of stock that is essential for a certain time. If it falls below that level, then it needs to be replenished.
- Ability to calculate inventory/stock costs.
- Inventory control. Determines the cost involved in storage, handling, and shipping.
- Storage location information. This feature makes it easy to locate products quickly, especially if you are using more than one storage space.
- Evaluate the past sales data. This will be used to calculate profits, losses, and predict upcoming demand. You can then decide which items should be restocked and which should no longer be included in inventory.
Tips for Managing Your Own Inventory
- Invest in an automated inventory management system that can integrate with what you already have. The best way to track inventory is to have a centralized system for your entire sales process.
- Figure out your ideal stock levels. Keeping tabs on your inventory will allow you to get enough data to be able to successfully forecast what inventory you'll need in the future. Overstocking or being out of stock is bad for business owners and customers, respectively.
- Be careful in handling returns. Always make sure to update your inventory accordingly, especially if you plan on replacing the item.
Do you have any tried and true tips for inventory management? Leave them in the comments below!