The Importance of Inventory Management in Ecommerce

Inventory management is critical for any business that sells goods, but perhaps even more so for an ecommerce shop.

More products are being sold online than ever before, and the pandemic has pushed this increase even further. And given the lower entry costs associated with starting an online business when compared to selling your products from a physical location, it’s an attractive option for startups and seasoned small business owners alike.

Good inventory management is important for any business. Whether you’re a small shop or a large wholesale operation.  

Common Inventory Challenges

We don’t need to tell you that inventory mistakes could be catastrophic to your business. And while supply chain issues that are out of your control exist—as many businesses learned in 2020 and beyond—having an inventory management strategy can help you stay on top of what you can control.

To name of few, here are some common inventory challenges.

1. Inaccurate Data

This could include inventory that was never counted, or perhaps counted twice. Or inventory that doesn’t take into consideration backorders.

Whether your business is strictly online or via multiple channels, your customers, sales reps, and you need to know what’s in stock at all times. Growing your business and keeping your customers happy without fulfillment is impossible. And fulfillment is impossible without inventory.

Another aspect of inaccurate data could be outdated inventory. It’s there, it’s counted, but it can’t be sold. You need an inventory management system that can manage things like perishable items.

2. Inefficient Processes

For a very small business, whether your focus is B2B or B2C, having a low-tech/no-tech inventory management system may be sufficient. For example, you run your business from your home and your inventory might be on a shelving unit in the garage or basement. Managing that wouldn’t be a problem for most.

Are you building a business you hope to grow? What happens when your sales volumes increase, and your inventory has to expand in step with it? How responsive will you—and can you—be when it comes to changes in your order management processes?

3. Customer Demand

Demand is often cyclical and predictable. It could be driven by the season or by promotion. Customer demand plays a huge role in how quickly your inventory turns over. How well you manage your stock levels can help you meet customer expectations.

Of course, the unexpected can happen. Who would have ever expected a time when toilet paper became the hottest commodity on the planet? When healthy supply chains dried up overnight?

Perhaps we need to expect the unexpected and be prepared.

What is Your Inventory Management Solution?

As mentioned above, if your inventory is stored on a shelf in the basement or garage, low-tech or no-tech is probably sufficient.

But another challenge not mentioned above is inadequate software. And that applies to B2B startups with small business needs or major wholesalers with complex logistics needs.

There are multiple options in the order management software arena that include necessary inventory management options. One example would be Flowsmith, an app designed for QuickBooks Desktop.  

Having the right software means you and your sales representatives will have a portal that maximizes efficiency throughout the entire sales process.  From inventory management to order fulfillment.

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