Did you know that the global cost of inventory distribution is almost $1.1 trillion, including overstock, shrinkage, stockouts, etc.? Shocked? Well, it’s obvious with such numbers on the table. As an e-commerce business, you would be familiar with the significance of Shopify inventory management in keeping the whole system flowing ceaselessly.
A minor error in the system can result in bizarre outcomes, and a loss of millions; thus setting a bad example for your brand.
Experts say consistency along with a standard pace of product storage and delivery are the heart of a profitable retail business. Once you master it, any loss will be a thing of the past.
But, what’s the right way to accomplish it all?
That’s what we are going to cover in this blog. Everything from scratch on how to master your online store inventory management.
Let’s get started.
What is Inventory Management?
Inventory management is the practice of efficiently ordering products, stockpiling, and selling them. It comprises pursuing an approach that:
- Minimizes the errors
- Simplifies the shipping & receiving process
- Lowers the spending
- And, optimizes the returns
You use the warehouse space efficiently and never run out of stock. Furthermore, challenges like overhead expenses aren’t a problem anymore.
The list of factors that contribute to the vitality of any business does not end here. There’s more to it.
Why is inventory management important?
We have spilled the beans on the few obvious perks of e-commerce inventory management above. However, some of the crucial parameters worth catching a glance at are listed below.
- Analyzing the optimum amount of stock
- Shortlisting products with high customer demand
- Storage of the right amount of raw materials
- Forecasting the time for placing orders of certain products
- Save money on the per-unit cost by buying in bulk
- Low inventory cost
- A healthier cash flow
- Higher profit
All these important factors highlight a thriving business backed by the right online store inventory management. It ensures a healthy and constant flow of goods and services, simultaneously keeping up with your sales, revenue, and, even brand reputation.
Stages of inventory
To ace e-commerce stock management, let’s get acquainted with the levels of inventory first.
Raw goods are the substances or materials that are used in the initial stages of product manufacturing. It involves metals, wood, plastics, fabrics, or other materials based on what is being manufactured. These are often acquired from one or more suppliers of the same.
These can be further categorized into two groups.
- Direct materials: These are the materials that are physically used in the final product. For example, Fabric is required to make shirts.
- Indirect materials: These are the materials that contribute to the production of the final product. For example, Oil is used to run a machine that manufactures the product.
Work in progress
The production of goods includes both direct and indirect materials. At this stage where the product is in a partially finished stage, it is called a work in progress.
The inventory of finished goods defines the number of final products available in stock for the customers to buy.
Maintenance, repair, and operations goods (MRO)
This inventory comprises the equipment and materials used in the manufacturing process. However, they are not a part of the resultant product. It consists of items like repair tools, lab equipment, tech equipment, clearing supplies, personal protective equipment, office supplies, and others.
These were the four types of inventory that you would need to manage. But how can you ensure their proper management is a hard nut to crack. Let’s discuss it in detail.
Tips, tricks, and hacks for Shopify inventory management
Inventory management works distinctly for each company. However, there are some tips & tricks that work wonders for all. I have listed the crucial ones here to get you started right away.
Adopt an inventory management system
Human errors are unavoidable. However, these can be resolved with a top-notch inventory management system by your side. By adopting one, you can get rid of manually tracking the inventory on paper. Commence from training your team for the software and the process will become faster and easier in no time.
Further, make sure you choose a Shopify inventory management system that syncs with your store SKUs. SKUs or stock-keeping units are the unique numerical identifiers for goods in a store. Further, it should offer you the flexibility to track the inventory between your online store and physical location. Such practice will help you run your online business seamlessly in the long term.
If you find it difficult to integrate and manage the inventory management app, we can help you with our Shopify Integration Services. Contact our experts to know more about our services.
Implement supply chain management
The supply chain is the next thing that you should be prioritizing in your Shopify inventory management. It is the practice of monitoring and optimizing your relations with the material providers, dropshipping/ shipping partners, or any third party that plays a vital role in your inventory life cycle.
Focus on the lead time between your order placement till the delivery is made. If you come across any hold-up, you should reach out to that partner to learn about its cause and fix it.
The more smooth and prompt your supply chain is, your inventory management system will be more streamlined.
Go with First In First Out (FIFO)
This is the most used principle while dealing with Shopify inventory management. It means that the products that are oldest in your stock need to be sold first instead of your newest stock. It works great for products that have high chances of spoilage.
You can also implement this principle for products with a longer life cycle. To keep the stock fresh in your warehouse in terms of design, features, and more, make sure that the oldest stock is sold first. This way you won’t get loaded with unsold stock in your warehouse.
Manage expirations and best before practices
Products with a short life cycle often cause trouble in online store inventory management. To eliminate any issues, you need to attentively place orders and save yourself from overstocking any such product. Keep an eye on the sales graph and store the products accordingly.
Many times you oversell your stock with a sudden rise in the sale of a particular product. Issues of cash flow shortfall, not enough room in the warehouse, and miscalculation in inventory can hit you without warning.
In such cases, if you are operating with the right inventory management approach, you can tackle it in the best way possible. You will not have to face any loss and your sales funnel will keep on flowing. Be it the seasonal escalation in sales or just a trend, you will be prepared for the worst-case scenario.
Advantages of Shopify inventory management
With efficient inventory management by your side, you can prevent your business from the losses caused due to misplaced items, spoilages, or any other stock mismanagement errors. It further improves customer satisfaction and service.
Further, the Shopify inventory management app offers you a brief insight into customer behaviors and preferences. It boosts profitability, opens doors to new opportunities for business, and enables you to implement new product ideas.
Let’s talk in detail about what is more to this list.
Bid goodbye to dead stock
At times, businesses fail to track their inventory accurately and end up with a lot of unsold stock. They can neither use it all together nor sell it all at once.
On the contrary, you can maintain an optimum stock with the right Shopify inventory management system. You can keep the shoppers happy in your store and can ensure a stellar customer experience.
Decreased storage cost
The warehousing cost differs with how much you have in storage. Many times with dead stock on your plate, your storage cost is bound to go up.
But with Shopify inventory tracking, you can save yourself from being prey to excessive storage costs. You will stay updated on which product is in high demand and what amount of it is required. In addition, it also helps you save a lot of money in warehousing.
Optimized order fulfillment
When your business is backed by good inventory management, you won’t have to stress over the order fulfillment part.
Utilize tactics like inventory distribution in which the customers are provided products from nearby centers of the online stores. It will help you save time and shipping costs along with a faster delivery to the customer.
An excellent Shopify inventory management helps you make more money in your business. It enhances your cash inflow by giving you an idea of which product is attracting more conversions and needs to be restocked.
You will never ever run out of stock and can cater to your customers without any interruption. It helps your business plan ahead and saves you from losing any loyal customers.
While handling an inventory of material with a short lifecycle, it becomes a necessity to consider the spoilage factor. For example: for food products, you need to be very critical of the amount of stock you require in your warehouse. There is a real chance that any overstocking will elevate your storage as well as other costs.
On the contrary, with top-notch inventory management, you can fetch a precise amount to order and stock. Thus, you limit the damage occurring in your warehouse.
When you handle your inventory manually, it gets complicated to determine the amount of stock to be ordered precisely. It becomes even more difficult when you are unaware of which products are fetching you more sales.
With the Shopify inventory management app, you get insights into customer behavior and preferences. You can accurately estimate the quantity of every product you need to stock so that the flow remains uninterrupted. Moreover, it helps your businesses lower the warehousing costs, deadstock losses, and more.
Challenges of Shopify inventory management
Challenges come uninvited. Thus, it’s important to prepare yourself for some of the universal issues that are experienced predominantly.
Functionalities on different channels
As a multichannel brand, one wishes to have a unified view of its inventory and its analytics. With an insight into the channel profitability, you can get an idea of how your product is performing on each channel. However, it stands as a hurdle when you learn that some of these functionalities are not innate within Shopify.
Automated inventory restocking
When the SKU library of your online store grows, it opens doors for stockouts, miss counts, or other inventory errors. The challenge that stands beforehand is to find a system that automatically generates purchase orders when the stock is low. It will help in streamlining the automated replenishment of inventory.
Poor product integration
There are multiple products that do not integrate into Shopify. It has a long list of restricted and prohibited items that invite the challenge of manually implementing multichannel e-commerce inventory management on more than one platform.
It means that you will have to operate Shopify and other channels separately instead of managing everything from one place. It is a time-consuming process and invites inconsistencies in inventory levels across various channels.
So, if you wish to shoot the stars with your business, this is it. The before-mentioned insider information will help you hit the jackpot.
However, if you find it difficult to give your time to this task, why don’t you take the professional’s assistance in it. I have an excellent recommendation for you.
It’s Mint Your Store!
Irrespective of your business size, professionals will help you achieve your goals. They are committed to quality and excellent service, which makes them the first choice of all. So, without any further adieu, get in touch with them now and take a sigh of relief that your Shopify inventory management is in good hands.