Inventory management has become a popular word in the last few years, but do you know what it means? According to some definitions, inventory management is a type of management focused on planning and organizing of all the products that are part of some business. So, this activity includes management of finished products as well as raw materials. A good eCommerce inventory management system provides a few key features for the simplification or doing business. eCommerce companies find it very important to use multiple sales channels for all or some of their products and this is why practicing an effective inventory management strategy is a must. With the help of eCommerce inventory management systems, owners can cut operational costs and lower wastage.
If you want to manage inventory for your eCommerce business, you must know learn a few things. We will use this article to explain these things. We suggest using Shopify as a point of sales system as it is one of the best options you have.
1. Delivering safety stock
- Although good eCommerce inventory management software can help you make a balance of demand and supply of all products, there is still a need to keep a buffer stock of crucial items for your business operations. This safety stock/buffer stock usually consists of your company’s essential, bestselling and/or finished products. It can also include some raw materials needed for your business.
- Providing supply-demand balance – In case you are not handling your inventory in the best way, you will probably witness the emergence of excess stock. This also means that your cash will be stuck in stock. If you want to witness steady growth of your eCommerce business or to grow your new small business, you must evaluate the expenses associated with the inventory. Once again, you should know that reliable inventory management software can help you with this process. .
- Providing local specialization – Thanks to inventory management, your business can reap the benefits from specific local activities. A specific location may offer a more acceptable cost of labor and other places may have inexpensive raw material. As you are probably aware, the cost of goods is different in different locations. A well-developed eCommerce inventory management system can cut the costs.
The emergence of online shopping and the introduction of innovations in this sector have made inventory management more important than ever. If this process is not automated, the risk of mistakes is great. However, by implementing a good management system, situations like this can be avoided.
In any case, eCommerce business owners must learn more about inventory management. They must understand that continuous monitoring of this aspect of the business is a must. Next, they must implement a working tracking system in the process. Finally, with the help of proper inventory management, they can avoid stockpiling.
- Improving inventory predictions- A sound eCommerce inventory system can help business owners get precise predictions at least when it comes to supply and demand. This forecasting will tell you what your customer base may need and want when they will need these products and in what number/quantity. Analyzing demand patterns and thorough market research can definitely help you in this case.
- Dividing products into non-essential and essential groups – Every business, regardless of the industry, has specific core/essential products that they sell all the time regardless of the season. Of course, most of them have so-called non-essential products in their offer too. These items are sold from time to time. For example, if you are selling home decorations, you know that Christmas decorations are usually sold in December. By implementing a well-thought-out inventory management strategy, you will avoid a shortage of essential and non-essential items.
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