Online retailers understand the challenges of inventory management. You must keep track of all items in stock and ensure products are priced correctly in the right locations and at the right times. Challenges compound as you add new sales channels.
Luckily, even the slightest improvement in inventory management strategies can improve inventory efficiency and make a massive difference. Explore five ways to save time and resources on inventory management.
What are inventory management strategies?
Inventory management strategies are how ecommerce and brick-and-mortar business owners track and maintain the goods available for sale. When business owners maintain inventory management strategies, they ensure they have enough inventory to meet demand and can fill every order in a timely manner.
Inventory management strategy No. 1: Start forecasting inventory
The lag inherent in retail inventory management makes informed forecasting extremely important, especially when it comes to seasonal fluctuations. Inventory forecasting (or “demand planning”) is an inventory management strategy that uses past performance to predict future outcomes of a given period.
While you can’t predict every market factor, you can know with confidence that demand for particular products will spike — and stop overselling or underselling. Overall, two inventory forecasting models that can improve inventory efficiency: quantitative and qualitative.
Quantitative forecasting is an inventory management strategy that uses past sales data to predict future demand. The more data you have for a steady customer base, the more accurate your predictions. For instance, let’s say your data shows customers have bought more of a particular item during one month for each of the last three years. You can confidently predict the pattern will continue.
Qualitative forecasting is an inventory management strategy that predicts demand based on market research, customer feedback, instinct, and other factors. This type of forecasting requires a more advanced understanding of the market.
Understanding the two forecasting models can help you make the best decision for your business. For example, qualitative forecasting may be the more appropriate option if you’re entering the market or introducing new products.
If you’ve been in business for several years, you may find more success with quantitative forecasting. But remember that accurate data across your sales channels will be crucial for inventory efficiency.
Inventory management strategy No. 2: Sync inventory across channels automatically
Even if you run a small company, relying on a manual inventory management strategy (i.e., you’re counting things yourself) isn’t advisable. Even the most diligent employees can produce errors that lead to unhappy customers, bad reviews, and fewer sales.
A multichannel inventory sync solution can take care of this task with greater precision and efficiency. The right solution can help you track and sync orders, inventory quantities, and prices across your stores, marketplaces, big-box trading partners, and accounting software.
Syncing inventory automatically means you can save time and resources on adding new products and updating stock after you process a refund or return. Plus, syncing inventory across channels and your accounting software keeps data accurate and takes the guesswork out of forecasting.
Inventory management strategy No. 3: Renegotiate your supply chain agreements
Inventory management strategies aren’t just about what you have and need. It also involves how you get it and how much you pay. It’s possible to have a solid and sensible inventory management strategy that produces less-than-desirable results because your supplier rates aren’t viable.
Keep an eye out for opportunities to secure better rates or new arrangements to improve your profit margins. If your business has grown but you haven’t renegotiated your agreements, it may be time to reopen the conversation and collaborate with your suppliers.
If your suppliers can’t offer you better deals, consider exploring new options. New suppliers may be able to offer you the same products at lower costs.
Inventory management strategy No. 4: Dropship strategically
Believe it or not, you don’t need to stock all the items you sell. In some cases, there’s very little point to it, thanks to dropshipping. Dropshipping is an order fulfillment model in which a retailer offers an item for sale, accepts an order, and then passes the order to their dropship supplier for fulfillment.
Even if your business doesn’t dropship exclusively, you may be able to incorporate the model strategically and reduce the burden of manual inventory management strategies. For example, items you don’t sell as often may be more readily available through dropshipping suppliers. As long as the product quality is comparable, your customers won’t know the difference. And you can save time and money on the back end.
Inventory management strategy No. 5: Invest in inventory management training
Training will be critical if you follow any of the previous four inventory management strategies. Making sure everyone on your team understands your strategies will be the key to implementing them effectively.
Help your team understand your new strategies and how to implement them. If you’ve just implemented a new software solution, reach out to your vendor’s customer service department for teamwide training and onboarding. Part of being the boss is delegating, so make sure you’re not the only person who knows how systems work for the best results.
Ecommerce automation simplifies inventory strategies
Webgility’s QuickBooks integration is a multichannel ecommerce automation solution that connects your ecommerce stores with your QuickBooks account. Connecting QuickBooks with stores and business apps can help you maintain and scale your inventory management strategies.
For example, 37% of online sellers who manage inventory in-house say stocking issues — overselling items, restocking popular items, overstocking, and supply chain issues — are their biggest inventory challenges.
23% say accounting issues — forecasting inventory, tracking sales across stores, and understanding profit and loss — are their biggest challenges. 13% attribute their biggest challenges to back-office tasks like keeping prices, counts, and SKUs consistent, according to new inventory management statistics.
Ecommerce automation can alleviate those issues by automatically syncing data across stores and platforms. It can even alert you when an item is almost out of stock or sync one less item than you have to prevent overstocking and overselling.
Meanwhile, business analytics capabilities can reveal profitability and sales trends over time. And the longer you use automation, the more accurate your forecasting inventory becomes. From high-level trends to detailed metrics by channel, store, and product, automation gives you the data to make better decisions about launching new products and expanding operations to new channels.