Inventory management is one of the most difficult elements of eCommerce. Accurate, real-time information across marketplaces and webstores is key to an omnichannel strategy, while an increasingly competitive environment means that there is constant pressure to lower costs, increase sales and drive revenues. Badly managed inventory has a direct effect on the bottom line.
One study found that overstock and out-of-stock products cost retailers $1.1 trillion globally. Poorly managed inventory can also damage customer relationships: a report from Stitch Labs shows that the primary factor in losing customers permanently was when a product was out of stock after the customer placed an order. Proper inventory management is fundamental to eCommerce success.
However, it is also a challenge, particularly for organizations that list products on multiple websites like Amazon, eBay, Etsy, and more. Although this strategy helps maximize your revenues, it adds to the complexity of inventory management as accurate product availability and pricing must be disseminated across a number of marketplaces, each with different data requirements.
To successfully fulfill omnichannel eCommerce, the best practices for managing inventory include:
1. Implement a centralized inventory management system
An inventory management system is a key component of an eCommerce retail strategy. Without it, real-time, accurate inventory data is impossible to manage across channels, and can result in lost revenue and damaged customer relationships.
However, with the right centralized inventory management system, a company can maintain accurate, real-time inventory updates with:
- Stock level updates, changing the number of items available immediately when an order is placed across platforms
- Out-of-stock notifications across channels, preventing sales of out-of-stock items
- Logistics updates, tracking items during shipping and providing retailer and customers with accurate, updated delivery information
2. Use the data in the centralized inventory management system to:
- Create accurate demand forecasts of inventory needs
- Optimize stock levels
- Calculate and automate product restocking orders, cutting down on costly last-minute orders
3. Audit regularly
It is important to conduct a regular audit of physical inventory, as digital inventory management systems cannot account for shrinkage: inventory lost due to theft, spoilage, damage, or obsolescence. A regular audit is important for inventory planning and management, as well as accurate counts that can affect accounting statements, sales, logistics, and forecasting.
4. Build relationships with primary backup suppliers
An excellent long-term relationship with primary suppliers can help in many ways, ensuring that your company gets the best pricing available, as well as priority waitlists for popular items. At the same time, creating a reorder plan that includes backup suppliers as a contingency, and mapping lead times for order and delivery of specific items will help your company meet customer needs, and gain repeat business.