According to Investopedia, inventory management refers to the process of ordering, storing, using, and selling a company's inventory. In eCommerce, inventory management means keeping a close eye on how you order, store, and use the products you sell online.

Effective inventory management is particularly critical for eCommerce businesses due to the nature of online sales. Unlike the stores where customers can physically see and select products, eCommerce relies on accurate inventory levels displayed online.

If inventory is mismanaged, it can result in out-of-stock, dissatisfied customers, lost sales, and damage to the business's reputation.  Therefore, maintaining optimal inventory levels is essential to meet customer demands, fulfill orders promptly, and ensure the smooth operation of an eCommerce business. 🚀

We've gathered some helpful tips to enhance your inventory management process for your eCommerce store.

6 Actionable Tips for Efficient eCommerce Inventory Management

1️⃣ Categorize Your Inventory! 🏷️

Categorizing your products provides an advantage for analyzing insights and simplifies decision-making. Knowing which products sell more and which ones contribute more value to your business helps you make more informed inventory decisions. ABC Analysis is a successful method for accomplishing this.

ABC Analysis

This method is based on the Pareto Principle, also known as the 80/20 rule, which suggests that roughly 80% of the effects come from 20% of the causes. ABC Analysis suggests that a small portion of products typically generates the majority of revenue. It categorizes items into three groups: A (high-value), B (medium-value), and C (low-value).

• 🌟 Item A: Top-selling items, generating 80% of revenue. Prioritize restocking them to prevent out of stock.
• 💼 Item B: Moderate sales and profits, constituting 15% of total revenue. Evaluate regularly for potential reclassification.
• ⏳ Item C: High inventory levels but low sales, contributing only 5% of revenue. Consider selling out before restocking.

When you categorize products this way, you can better make plan for your inventory and their stocks. You can now learn more about ABC Analysis for eCommerce Inventory.

2️⃣ Control Stock!

If you're not controlling your stock, you can't consider yourself to be managing inventory.

🔄 With an advanced inventory management tool, you can receive notifications about low stock levels and track your inventory in real-time. Moreover, it allows for automated reordering when stock levels reach specified limits, ensuring efficient restocking and reducing the chances of running out of inventory. You may prefer to manually control your inventory, but it's important to acknowledge that this approach is prone to errors and makes accessing real-time data more challenging.

🔄 You can also keep extra stock (safety stock) for unexpected demand increases to maintain customer satisfaction and avoid being out-of-stock. Learn how to calculate safety stock. Even though safety stock is a commonly used method, it is not the most optimized one. To effectively run inventory management, the goal is to keep the ideal level of stock and prevent being out of stock and overstock. To achieve this, you can benefit from a functional inventory management tool just like Fabrikatör.

3️⃣ Accept Backorders and Preorders!

Let’s say there is something unexpected happened and you’re out of stock. According to IHL Group, In 2023, US and Canadian retailers lost an estimated $350 billion in potential sales due to being out of stock. Remember that you can still manage your inventory efficiently by eliminating the challenges of out-of-stock and accepting backorders.

📦 Backorder is simply when a business owner takes orders for products that are currently not in stock. How does it work? Customers can order the products they desire when they need them smoothly and the store doesn’t lose profit. Backorders are a multifaceted feature with numerous benefits for eCommerce businesses. You can use it to build customer love, reduce out of stock and overstock issues, enhance demand predictability, and as a cash flow generator.

📦 On the other hand, preorder refers to the process of allowing customers to place orders for products that have not been released or made available to the public yet. 🛍️

Customers purchase in advance, and the product is shipped to them when it becomes officially released. You can utilize preorders as a strategy to forecast and predict which of your products will sell more or which products may have lower demand before they are even available, allowing for valuable forecasting insights.

📌 You can find more details on Backorder Management on Shopify & Best Practices and Ultimate Guide: Backorder & Preorders.

4️⃣ Automatize Replenishment!

According to a Harvard Business Review Study, 28% of out of stocks could be attributed to replenishment and planning problems in the supply chain. This statistic highlights the significance of efficient replenishment and planning in reducing out of stock issues and maintaining operational efficiency. You can streamline your inventory management effortlessly by automating replenishment.

⚙️ Automated replenishment is when an inventory system automatically restocks inventory without manual intervention. This is vital for your eCommerce store because manually managing such a complex process is not very easy, especially if you have a growing business. You can define key supply metrics like lead time, stock coverage, and supplier details to optimize your operations.

⚙️ By automating these processes, you'll free up valuable time to focus on strategic growth initiatives. With effective inventory management, you can improve customer satisfaction, reduce out of stock, and increase sales. 🚀

5️⃣ Predict Future Demand!

Wouldn't it be great to predict future demand in advance and adjust inventory accordingly? 🎩

It's possible by analyzing past sales data and market trends, you can predict future demand with accuracy. This allows you to make informed decisions about inventory management, purchasing, and marketing strategies. ✨

• Imagine being able to plan your stock levels and reorder timings with precision, reducing the risk of out of stock and overstock. With demand forecasting, you can ensure that you always have the right products available for your customers, boosting sales and customer satisfaction.
• Demand forecasting also helps you stay ahead of the competition. By anticipating market trends and customer preferences, you can innovate and introduce new products or promotions that align with demand.
• According to Forbes, there are an estimated 24 million eCommerce sites across the globe. In today's fast-paced eCommerce world, staying ahead of the curve is crucial for success. Demand forecasting empowers you to do just that, driving sustainable growth and profitability for your business. 📈

Of course, for this to happen, your inventory needs to be well-managed. 📦🔍

6️⃣ Leave Excel Behind!

Utilizing Excel for inventory management means using Microsoft Excel to monitor and control inventory. While Excel provides a structured system for tracking stock levels, sales data, and other metrics, it has limitations compared to specialized inventory management software like Fabrikatör. Excel is cost-effective and readily accessible, making it a popular choice, especially for startups. However, as businesses grow and their inventory management needs become more complex, Excel may no longer be enough.

🟡 Who Should Leave Excel Behind, Why?

• Growing eCommerce & DTC Stores: Online businesses demand real-time updates and automation for efficient order processing and inventory tracking. Excel might not be the best fit for the fast-paced world of online selling. It can struggle when it comes to keeping up with the quick changes and accuracy which is vital for efficient operations.
• Business with a Wide Range of Products: Businesses handling a wide range of products need a centralized system to efficiently track, organize, and optimize their inventory across various categories and SKUs.  Excel's limitations become apparent in handling such a complex process.
• Entrepreneurs Who Want to Save Time & Resources: Excel may not be the ideal choice for entrepreneurs looking to save time and resources because it lacks the advanced features and automation capabilities offered by functional inventory tools. Specialized inventory tools automate tasks, provide real-time updates, and offer predictive analytics, saving entrepreneurs time and resources compared to using Excel alone.

🟡 Why to Switch from Excel to an Inventory Management System?

Specialized inventory management software like Fabrikatör offers real-time tracking, low stock alerts, purchase order tracking, automated stock replenishment, advanced analytics, and customizable reports. Transitioning from Excel to specialized inventory management software may seem daunting but is essential for efficiency and growth but the process is manageable with thorough planning and training, leading to enhanced efficiency and growth.

While Excel may suffice for basic inventory tasks, businesses with complex inventory management needs should consider switching to specialized software like Fabrikatör to maximize efficiency and drive growth.

📌 By implementing these tips, you can streamline your inventory management process and improve the overall efficiency of your eCommerce store.🌟

What if we tell you there's an inventory management tool that makes all of these tips easy to handle? What if we tell you there's an inventory management tool that makes all of these tips easy to handle? A tool provides everything you need to organize, forecast, and track your inventory effectively. That way, you can streamline your inventory management process and save time and effort. That tool is Fabrikatör! 🥳

Right Inventory Management Software for Efficient eCommerce Inventory Management

Are you looking for a solution that you can apply all these tips quickly, effectively, and hassle-free? Then you are in the right place, with Fabrikatör, you can achieve all! 🚀

Fabrikatör, as your personal inventory assistant, presents you so many features supporting your inventory management process, especially if you have a growing eCommerce store. We know the struggle of managing a wide variety of products, but you don't have to do it alone. Fabrikatör is here!

Elevate your eCommerce business today. With Fabrikatör, you can:

📊 Categorize your inventory with Sales Performance Report,

🔄 Control & track stock in real-time,

🛍️ Accept backorders & preorders,

⚙️ Automatize replenishment,

📈 Forecast your future demand,

and leave Excel behind.

📆 Book a demo now to discover how these features and more can transform your inventory management!