Did you know that 78% of eCommerce companies plan to invest in inventory management automation by the end of 2025?

Despite this growing trend, many businesses still face significant challenges when it comes to managing their inventory effectively, even with the latest tools and technologies.

In this article, you’ll discover the 15 inventory management challenges in eCommerce and the solutions that will help you streamline operations, reduce costs, and boost customer satisfaction.

Let’s dive in!

15 eCommerce inventory management challenges & solutions

1️⃣ Poor demand forecasting

Poor demand forecasting leads to both overstocking and understocking, disrupting inventory flow and customer satisfaction.

Without accurate predictions, businesses struggle to keep up with fluctuating demand.

📌 Why it matters: Better forecasting helps you anticipate future trends and minimize the risk of shortages or excess stock.

🛠️ How to improve forecasting:

• Leverage AI-driven analytics to anticipate demand based on historical trends and market data.
• Integrate demand forecasting tools that can dynamically adjust predictions based on real-time sales data and seasonal patterns.
• Regularly review and adjust forecasts based on evolving market conditions.

Pro tip

Fabrikatör's demand forecasting leverages advanced AI algorithms to help you accurately predict future demand, taking into account past sales data, seasonal trends, and marketing activities.

It continuously analyzes this data to generate dynamic demand models, adjusting inventory levels and purchase orders in real-time to match changing conditions and reduce the risk of both overstocking and stockouts.

2️⃣ Inaccurate data and analysis

Inaccurate data can lead to mistakes in stock levels, order fulfillment, and reporting.

Without reliable data, decisions are made based on assumptions, not facts, and affect overall performance.

For example, a retail business can rely on outdated or manually entered inventory data and mistakenly believe it has 50 units of a best-selling product in stock. 

However, due to unrecorded sales and returns, only 10 units are actually available. 

As a result, customer orders exceed the available stock, leading to delayed shipments, cancellations, and negative customer reviews. 

This not only impacts revenue but also damages brand reputation.

📌 How it helps: Accurate data helps to reduce costly errors in inventory management, ensuring that business decisions are based on facts, not guesswork.

🛠️ Best practices for data accuracy:

• Implement automated systems that capture real-time data.
• Integrate systems that provide consistent, synchronized data across sales, stock, and supply chain processes.

Pro tip

With real-time insights into inventory levels, logistics, and supplier performance, Fabrikatör allows you to proactively manage risks, seize opportunities, and streamline your processes.

By continuously analyzing key metrics, Fabrikatör ensures that your inventory management remains efficient, cost-effective, and adaptable to changing market conditions.

3️⃣ Manual processes & documentation

Manual processes, such as relying on spreadsheets, handwritten records, and paper-based systems, increase the likelihood of errors, delays, and inefficiencies, especially in inventory management.

These outdated methods create bottlenecks, hinder workflow, and negatively affect the accuracy and speed of your operations.

📌 Why it matters: Automating both processes and documentation reduces errors, minimizes administrative burdens, and speeds up inventory management tasks.

🛠️ How to automate documentation:

• Use inventory management software to track and document inventory movements automatically.
• Set up digital invoicing and purchase order systems to replace paper-based processes.
• Implement automated reporting tools to generate real-time stock reports.

Pro tip

Fabrikatör eliminates the need for spreadsheets by automating inventory tracking and data management in real-time, reducing manual input and the risk of human error.

With our integrated platform, all inventory, sales, and supply chain data is seamlessly updated and accessible, ensuring accuracy and efficiency without relying on outdated spreadsheet methods.

4️⃣ Replenishment delays

Replenishment delays occur when stock levels aren’t monitored closely enough, leading to product shortages and fulfillment delays.

For example, a popular online electronics store sells out of a high-demand smartphone model faster than expected. 

However, due to a lack of automated stock monitoring, the purchasing team doesn’t realize the inventory has hit a critical low until customers complain about unavailable stock. 

Because the supplier requires a two-week lead time, the store faces extended delays, losing potential sales to competitors.

This can harm customer trust and impact sales.

📌 How it improves operations: Timely replenishment ensures that inventory stays at optimal levels, preventing stockouts and maintaining smooth operations.

🛠️ How to prevent delays:

• Use real-time inventory monitoring systems to trigger replenishment alerts automatically when stock levels reach a preset threshold.
• Integrate supplier lead times into your reorder system to anticipate delays and adjust ordering accordingly.
• Set up automatic replenishment rules based on demand patterns.

Pro tip

Fabrikatör’s replenishment feature helps optimize stock levels by using AI-powered algorithms to analyze demand patterns, lead times, and stock coverage metrics.

You can set up customized replenishment rules based on your supply chain needs, including ideal reorder points and quantities.

Once configured, the tool automates the restocking process, ensuring timely replenishment and reducing the risks of stockouts or overstocking.

5️⃣ Poor visibility into inventory

Limited visibility into inventory across different channels can lead to stock imbalances, missed sales opportunities, and delayed fulfillment.

📌 Why it’s critical: Improved visibility ensures that you know exactly where your stock is, which helps optimize your supply chain and minimize stock discrepancies.

🛠️ How to improve visibility:

• Implement centralized inventory systems that provide real-time updates across all sales channels.
• Use RFID or barcode scanning to track products throughout the supply chain.
• Set up alerts for low stock, product movements, and out-of-stock issues to stay informed.

Pro tip

Fabrikatör’s barcode scanner feature simplifies the receiving process by allowing you to scan items and automatically update inventory levels quickly.

By ensuring that barcode information is set up for each product on your purchase order, you can easily receive and verify items, adjust quantities, and track their status—all while maintaining accuracy and efficiency.

6️⃣ Inventory defects and waste

Defective inventory and waste can be a significant challenge in industries like clothing, footwear, or electronics, where damaged or out-of-season products lead to financial losses and unsatisfied customers.

These issues not only impact profit margins but also harm a business’s reputation and overall sales.

📌 Why it’s important: Reducing waste and defects improves profitability, reduces environmental impact, and enhances customer satisfaction.

🛠️ How to address defects and waste:

• Implement regular product inspections to identify defects early and prevent returns or unsellable stock.
• Adopt FIFO (First In, First Out) systems to ensure older products are used or sold first, reducing waste from expiration.
• Use software to monitor stock conditions and set alerts for items that may need to be discounted or removed due to changes in style, condition, or seasonality.

7️⃣ Overstocking and understocking

Overstocking ties up capital in unsold goods, while understocking results in missed sales opportunities and stockouts.

Both situations are costly for businesses because overstocking increases storage costs while understocking causes lost revenue from unmet demand.

📌 Why it matters: Maintaining optimal stock levels balances cash flow and ensures that customer demand is met without unnecessary costs.

🛠️ How to balance stock levels:

• Implement automated inventory tracking that adjusts stock levels in real-time, considering sales trends.
• Use forecasting tools to anticipate demand and set appropriate reorder points to avoid overstocking or understocking.
• Apply inventory strategies such as ABC analysis to prioritize high-value items for efficient stocking.

Pro tip

Fabrikatör enhances ABC analysis by automatically categorizing your products into A (fantastic), B (moderate), C (poor), and an additional fourth category, D (idle - items not sold in the last 30 days), based on their sales performance.

Additionally, Fabrikatör allows you to set the ABC conditions individually.

This classification helps you to quickly identify best-selling products, optimize inventory levels, and improve profitability by prioritizing resources where they are most needed.

8️⃣ Overlooking seasonal changes

Ignoring seasonal fluctuations can lead to product shortages during peak times or excess stock during off-seasons, which affects overall sales.

📌 Why it’s critical: Preparing for seasonal changes ensures that you meet customer demand at the right time, increasing sales and customer satisfaction.

🛠️ How to adapt to seasonal changes:

• Set up seasonal alerts to track inventory levels and adjust reordering strategies as the season approaches.
• Work with suppliers who can accommodate peak season demand through flexible contracts.

9️⃣ Lack of supplier collaboration

When there is poor communication or a lack of collaboration with suppliers, inventory management becomes difficult.

This can lead to delays, incorrect orders, and stockouts.

📌 How it streamlines operations: Collaborative supplier relationships help ensure timely and accurate deliveries, reducing the risk of disruptions.

🛠️ How to improve supplier collaboration:

• Establish clear communication channels with suppliers to ensure timely updates on order status.
• Use integrated supply chain systems that allow real-time tracking and forecasting across the supplier network.

Pro tip

Fabrikatör simplifies PO sharing and supplier communication by allowing you to instantly send accurate purchase orders with customized messages and attachments, ensuring clear and timely communication with suppliers.

1️⃣0️⃣ Poor integration with other software and systems or inadequate software

Lack of integration between inventory systems and other software can cause data silos, leading to inefficiencies and errors.

📌 Why it’s important: Integration between systems ensures seamless data flow, minimizing the risk of errors and delays.

🛠️ How to optimize integration:

• Use inventory management software that integrates with your sales, ERP, and shipping systems.
• Implement APIs that connect different software to streamline inventory processes.
• Regularly review software systems to ensure they meet evolving business needs and can scale effectively.

Pro tip

Fabrikatör integrates seamlessly with leading eCommerce platforms like Shopify, Shopify Plus, and WooCommerce, as well as financial and operational tools such as QuickBooks, Xero, and ShipHero.

Additionally, it enhances insights and workflows by connecting with tools like Klaviyo for tailored communication and automation.

1️⃣1️⃣ Managing inventory across multiple locations

Managing inventory across multiple warehouses or locations can be overwhelming, leading to stock imbalances and fulfillment delays.

📌 Why it’s critical: Centralized visibility and management across all locations prevent overstocking and ensure quick order fulfillment.

🛠️ How to manage across locations:

• Use centralized inventory management software that synchronizes stock levels across all warehouses.
• Implement real-time data tracking so stock levels are updated immediately when items move between locations.
• Set up automated order routing to fulfill orders from the nearest warehouse to reduce shipping delays.

1️⃣2️⃣ Lack of transportation capacity

Limited transportation capacity can delay deliveries and reduce fulfillment efficiency, impacting customer satisfaction.

📌 How it affects operations: Ensuring sufficient transportation capacity helps meet delivery deadlines and reduces backlogs in fulfillment.

🛠️ How to optimize transportation capacity:

• Work with multiple logistics providers to ensure backup options are available when capacity is limited.
• Use transportation management systems to optimize shipping routes and minimize delays.
• Plan shipments in advance and adjust based on upcoming sales cycles or promotional periods.

Pro tip

Fabrikatör’s freight planner helps you make data-driven decisions by optimizing freight distribution between air and ocean shipping, balancing speed, cost, and stockout risks for purchase orders.

1️⃣3️⃣ Lack of warehouse space

Insufficient warehouse space creates disorganization and can delay stock retrieval, resulting in slower fulfillment and order processing times.

📌 Why it matters: Maximizing warehouse space improves inventory efficiency and reduces delays in order fulfillment.

🛠️ How to optimize warehouse space:

• Implement better storage systems such as shelving and racking that maximize vertical space.
• Regularly audit your inventory to remove obsolete or slow-moving products and free up space.
• Use warehouse management systems (WMS) to organize and track stock more efficiently.

Pro tip

Fabrikatör integrates with the WMS platform ShipHero to optimize warehouse and fulfillment operations.

This integration allows businesses to manage inventory seamlessly, forecast demand accurately, and synchronize their operations, ensuring efficient planning and fulfillment across the entire supply chain.

1️⃣4️⃣ Lack of attention to fast-moving items

Fast-moving items are products that sell quickly, often due to high customer demand or seasonal trends.

Not focusing on these items can lead to stockouts and missed revenue opportunities.

📌 Why it matters: Prioritizing fast-moving items ensures that you don’t miss key sales opportunities, improving overall revenue.

🛠️ How to address this:

• Use real-time analytics to identify fast-moving items and adjust inventory levels accordingly.
• Set higher reorder points for fast-selling products to ensure you never run out of stock.
• Integrate your system with sales and stock data to dynamically adjust for fast-moving product demand.

1️⃣5️⃣ Lack of required packaging

Not having the right packaging materials can delay the shipping process, damage products, and reduce the customer experience.

📌 How it affects fulfillment: Proper packaging ensures that products are delivered safely and on time, improving customer satisfaction.

🛠️ How to address packaging issues:

• Automate packaging inventory management to track packaging materials and avoid shortages.
• Work with packaging suppliers to ensure timely deliveries of necessary materials.
• Integrate packaging needs into your inventory system for better control.

Manage your inventory with Fabrikatör!

Fabrikatör is an advanced platform that helps Shopify users optimize inventory management and streamline their supply chain operations.

With our features, you can streamline everything from stock management to forecasting, helping you maintain optimal stock levels, prevent stockouts, and reduce operational inefficiencies.

Furthermore, by automating key processes, we empower you to make data-driven decisions, eliminate manual errors, and enhance your overall workflow.

What Fabrikatör provides you with:

🔹 Automated replenishment: Automatically generates precise restocking recommendations based on custom rules for lead times, stock coverage, and supplier details.

🔹 Seamless ordering: Convert restocking suggestions into purchase orders with just one click, simplifying the procurement process.

🔹 Backorder automation: Keep selling out-of-stock items while they’re in transit, recovering lost sales and maintaining customer satisfaction.

🔹 Advanced forecasting: Leverage AI-powered demand predictions based on past sales, seasonal trends, and marketing events to optimize stock planning.

🔹 Real-time analytics: Track 100+ inventory and sales metrics to gain actionable insights and improve decision-making.

🔹 Optimized freight planning: Compare freight options and balance cost vs. speed to maximize efficiency in shipping.

🔹 eCommerce platform integrations: Sync seamlessly with Shopify and Shopify Plus for smooth inventory management across multiple channels.

🔹 Financial & operational integrations: Connect with QuickBooks, Xero, and ShipHero for streamlined financial processes and logistics.

🔹 Analytics & workflow integrations: Improve insights and automation by integrating with Klaviyo and other business tools.

📢 Ready to transform your inventory management? Try Fabrikatör today or book a demo to see how automated and intelligent workflows can boost your business efficiency. 🚀

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