Inventory Planning And Management For E-commerce
Key Areas Of Your E-commerce Inventory Management
Good inventory management is the backbone of any well-functioning retail business. Yet, it can also be the biggest day-to-day challenge for many shops. While e-commerce creates the opportunity for retail business owners to widen their client base, managing stock for an online shop can introduce further complications to the process. With proper inventory management, however, every other aspect of an online business can fall into place seamlessly.
When implemented correctly, e-commerce inventory management creates space for online businesses to grow, scale upwards and gain a competitive edge. This process gives shop owners control over their stock – they’ll know where their inventory is, where it’s going to next, and how much of it is being moved around, at all times. On the other hand, poor inventory management is the usual culprit preventing an online business from flourishing, leading to excessive costs, the much-dreaded ‘out-of-stock’ label, and a string of unhappy clients.
So, how can you improve your e-commerce inventory planning to ensure that it contributes to your growth, rather than restricting it? We’ve highlighted the main areas to help take into consideration when planning your inventory for e-commerce business.
Finding The Best Stock Management Solution To Suit Your Business
Inventory management software is a type of program used to keep track of your inventory levels, sales, orders and deliveries. Small businesses might start out tracking their stock levels manually, but using spreadsheets or the old pen-and-paper method leaves room for human errors, which can create unnecessary disruptions to your business. Although these methods can suit new shops when their sales levels are still low, they are almost guaranteed to hinder the shop’s potential for growth down the line.
Luckily, there are many inventory management software tools available to help businesses run smoothly and encourage growth. These tools can help you identify the points at which you need to re-order stock, identify which items are running low, and optimise the stock levels for each item based on your sales history. Choosing the best tools to match your business needs, budgets and goals is the first step to take to start managing your e-commerce inventory properly.
Setting Up Systems For Planning And Ordering E-commerce Inventory
Once you’ve found the best inventory management software tool to suit your business, you will need to implement the necessary infrastructure to plan and order your stock. This can be done in different ways, such as through using an electronic database or cloud software. Some factors to take into consideration when setting up a system for stock planning an ordering are:
- Real-time data: Having automatically updated data allows company executives to access information about their inventory across multiple devices. In this way, everyone can make well–informed business decisions, from wherever they are.
- Data Security: You can choose who has access to your company data, and set different user rights for managers and employees. For example, employees can view stock levels, orders and deliveries, but only managers have the authority to make purchase decisions through the same system.
- Trend Reports: Keeping an electronic record for your stock management means that it will be easier to identify trends. By analysing the data collected by the inventory management software, company managers can understand consumer behaviour, make better stock purchasing decisions, and reduce costs associated with holding stock.
Establishing SOPs For E-commerce Inventory Management
A company’s Standard Operating Procedures (SOPs) is a document outlining the day-to-day activities of a retail store, to create a consistent and streamlined experience for both customers and staff. This document should also have a section dedicated to inventory planning and management. By establishing these specific guidelines, you will be able to reduce costs associated with inventory shrinkage.
Your SOPs should outline every link in the inventory planning chain, from the moment your products are ordered from your suppliers, to when they arrive at your customers’ doorsteps. Many issues can arise along the way – from damaged stock to products passing their use-by–date – but having detailed SOPs will save you time and costs when it comes to problem-solving.
Automating Mark-up Sheets To Help Your E-commerce Pricing Strategy
From a client’s perspective, pricing is one of the main factors that influences whether they want to buy your product or not. It goes without saying, therefore, that e-commerce business owners need to put in a lot of thought to make sure they are not overpricing, or underpricing, their products.
Determining an e-commerce pricing strategy will make it easier to conduct business, but how do you decide which strategy works for you? Whether your prices are based on value, competition, or cost, automating your mark-up sheets will help you plan your e-commerce inventory and forecast sales more accurately.
Researching Product Demand And Competitor Analysis
Knowing what your customers want is key to gaining an advantage over competitors in the e-commerce world. While some products may be in demand for only a fraction of the year, other products can be a stable source of income all-year-round.
Understanding product demands requires market research which can be extracted from endless sources, such as search engine data, social listening data and sales data. It’s also important to look into the products your competitors are offering, and use this data to make well-informed decisions when introducing a new product to the market. Sometimes, retailers don’t stock certain products for good reason!
Analysing Current And Historical Sales Data
Your sales data is the most powerful tool in your artillery, enabling you to dive deep into exploring your own customers’ behaviour through their past activity. If you’ve been keeping track of your sales data, this can be analysed to help optimise your inventory planning based on factual and relevant information from your own business! Understanding your customer’s trends will not only help you plan your inventory to meet the demand, but also allow you to pinpoint areas where you can cut down costs.
Setting Up Reports For Customer Analysis
If you want to make the most out of your customer data, your reports should be set up with purpose. Otherwise, you may end up drowning in data, with no idea on how to interpret it. When setting up your customer reports and analysis, you should keep in mind the Key Points of Interest (KPIs) which matter most for your store. Keeping track of your best-selling items, for example, can help you identify the correct levels of stock you need to order to meet client demands.
These KPIs are likely to change over time, especially for growing businesses. So, it’s important to maintain flexibility and open-mindedness when analysing your customer data and setting up reports.
Researching E-commerce Restrictions And Regulations
A final point which can’t go unmentioned is the importance of researching e-commerce regulations. This is an essential factor in the e-commerce inventory planning process, which can result in major losses if neglected. Depending on where your company is registered and based, the laws surrounding the products you are selling can vary drastically. There may be limits to how long your products can be stored, rules on the conditions they must be stored in, as well as restrictions on what products can be sold in the first place. Furthermore, certain regions can have rules related to shipments, or age restrictions for clients allowed to purchase certain items.
As you can see, it’s essential to carry out all the necessary research before setting up your inventory management system to make sure that you’re not breaching any regulations. It’s also important to carry out ongoing research, as some laws may be updated or added in the future!
Do You Need Help With Managing Your E-commerce Inventory?
Setting up an effective plan for your e-commerce inventory management takes time. But having a good basis will help you to kick your business off on the right foot.
Whether you’re taking your business online, or starting up digitally from the outset, it’s important to be able to track the timeline of your products, from when they arrive to when they leave your store. Even though offline stores may already have an inventory management system in place, translating that system to fit your online store is not always as straightforward as you would think.
If you need help in forming an effective planning and management strategy for your e-commerce inventory, get in touch with a member of our team. We can guide you through each step of the process, to help set you up for success!
Could you use a helping hand in examining any of the areas listed above?
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