What is e-commerce inventory management? Plus 5 best practices
If you’re not using e-commerce inventory management yet, you’re missing a trick. Think about it, almost everything in our lives has been digitised — including the way we shop.
In fact, it’s expected that nearly 60 million internet users in the UK alone will make an e-commerce purchase in 2022.
To keep up — and to keep growing your business — you need to digitise too. This means finding the right tech solutions for your company, solutions like e-commerce inventory management.
What is e-commerce inventory management?
E-commerce inventory management is an automated approach to sourcing, storing, and selling your e-commerce products. It’s about utilising technology so you can quickly and easily see:
- How much stock you have
- The price you should sell stock for
- Where to keep stock
- How long to keep stock for
This involves creating a new digital system that makes it easy for you to collect and view all of the relevant inventory info.
Let’s be honest. Overhauling your inventory management system requires a significant upfront cost. However, that cost is quickly offset by a massive reduction in the time and resources you spend managing your e-commerce inventory.
Why use an e-commerce inventory management system?
When it comes to inventory management, we often hear the old adage, ‘If it isn’t broken, don’t fix it’. And sure, some companies are more than happy sticking with manual inventory management practices.
But…the notion that traditional practices aren’t broken just simply isn’t true. When you look at the enormous benefits available to those using a modern e-commerce inventory management system, you realise just how much you’re missing out on.
So what kind of benefits can your company expect if it makes the switch?
Better stock management
Knowing what products you have in stock at any one time is crucial for e-commerce. There’s no way of knowing when someone is going to make an online purchase, so there’s no room for inaccuracy.
It’s estimated that out-of-stocks cost retailers almost $1 trillion in sales. Nine per cent of customers simply won’t buy the product if it’s out of stock, while 26% will head to a competitor’s store to buy it. It’s a real and pressing issue, especially for new businesses trying to establish a solid customer base.
E-commerce inventory management helps businesses prevent out-of-stocks. You can see real-time inventory stock levels and even get automated alerts when fast-moving items run low. This means you get to take action before low stock becomes a problem.
With automated inventory management, there are no mistakes and no human errors, just data-driven decision-making that gives you an edge over your competitors.
Access to data
We don’t think we’re overstating the case when we say that data gives us the power to improve everything we do. It helps us identify process inefficiencies, so we can consistently improve the way we work.
For example, imagine there’s a bottleneck in your order fulfilment. With the help of the data you collect through your e-commerce inventory management system, you can easily locate points of friction and work to address the issue.
Of course, retailers benefit even more from a steady data stream. One example? You no longer have to rely on sales data to identify fast-moving products. Data gives context to every purchase, which means you can make better stocking decisions, improve forecasting and manage your staff better.
Looking to slim down your product mix? You can use your e-commerce inventory management data to identify poor-performing products and remove them from sale, potentially saving on storage costs in the process.
5 best practices for using an e-commerce inventory management system
Want to get the most out of a new e-commerce inventory management system? Then check out these best practice tips.
Keep an inventory of safety stock
As we touched on earlier, it’s difficult to predict when someone will make an online purchase.
With bricks and mortar stores, there are opening hours, weekends, seasonal periods, etc. You can say with certainty that some opening hours will be quieter than others and then plan your staff and inventory around that.
With online stores, you’re open 24/7. If someone wakes up in the middle of the night and decides they need to buy a blender, they can reach for their smartphone and order in seconds.
So with that in mind, online retailers need to ensure they have enough inventory available at all times to prevent out-of-stocks.
The world and technology are constantly changing. Consumer habits are evolving at a rapid pace, as is the way we manage a business.
As time goes on, you need to regularly audit your e-commerce inventory management system to ensure it can keep up with new demands.
Inventory management systems for e-commerce businesses can uncover a huge range of insights. Data is collected with every purchase, every inventory reorder, and every return.
Allocate time to make use of this data. The insights you gain will help you make better decisions about stocking, promotions, reordering and warehouse space optimisation.
Be smart with storage
Real estate costs are one of the biggest outgoings for any business. You can start managing your warehouse space better using a smart e-commerce inventory management platform.
Poor-performing items can be reduced to clear space, allowing you to scale back your warehouse space or make way for faster-selling products.
Use a software platform like Workhorse
The sheer amount of data that e-commerce inventory management tools offer can leave you feeling like a kid in a sweet shop.
There’s so much data available. But how are you actually supposed to make sense of it, locating the insights that really matter?
A smart software platform like Workhorse helps you to manage data better. With our easy-to-understand interface, Workhorse provides real-time insights into your inventory and order management.
In a highly competitive area like e-commerce, knowing your inventory inside and out is crucial. Choose Workhorse and start making inventory management easier.