Easy Guide to Inventory Management for Ecommerce
We have already discussed the basic steps to create an online store. This time, we bring you a comprehensive guide on managing the inventory of an ecommerce store. In this guide, we will move from general concepts to specific tips to help you optimize your inventory management. Additionally, as a 3PL partner, we will provide options for storing all your stock.
What is Inventory and Why is it Important for Ecommerce?
Inventory refers to the products you have stored and available for purchase. But why is inventory management so crucial? Simply put, if you don't have the product, you can't make sales. Moreover, customers today demand fast delivery, often expecting products within 24 to 48 hours due to the competition from platforms like Amazon.
Imagine facing a stockout you were unaware of, yet buyers keep coming. You have two options: inform them the item is out of stock and they must wait, or delay delivery significantly. Either scenario can erode customer confidence, potentially losing their future business. Below, we outline challenges you may encounter and basic steps to control your ecommerce inventory.
Inventory Management for Ecommerce
Challenges in Ecommerce Inventory Management
To maintain effective inventory control, avoid the following situations:
- Overstocking or Overselling: These occur when you lack understanding of your market or customer consumption habits. Excess stock leads to storage problems and additional costs, while insufficient stock damages brand image and causes customer service issues.
- Lack of Scalability: Scalability is the ability to adapt to different circumstances, like increased sales during peak seasons such as summer, Black Friday, or Christmas. Many companies struggle with scalability and may benefit from partnering with a logistics operator.
- Lack of Visibility: This issue arises for stores selling on multiple platforms, such as Amazon, eBay, or Etsy, without integrated systems. Lógicos 3PL integrates with your systems, ensuring total inventory visibility and seamless logistics processes.
Steps to Manage Ecommerce Inventory
- Work with Reliable Suppliers: Ensure your logistics operate smoothly by understanding a supplier's delivery policies and minimum delivery times. Collaborate closely with suppliers to effectively calculate necessary stock levels and set minimum order quantities to avoid costly deliveries.
- Forecast Future Demand: Keep records of yearly sales to adjust stock levels, especially during peak sales periods like Black Friday or Christmas. Include trends and any potential market changes that could impact sales.
- Set Initial Minimum Viable Stock: Estimate the necessary stock to meet customer demand, considering supplier efficiency. This minimum quantity will vary based on your product type and store growth.
- Warehouse Management: If you're starting an online store, this may not be immediate, but eventually, you may need specific storage space. Owning a warehouse incurs significant expenses. Consider:
- Stocking appropriately to avoid excess costs or product spoilage.
- Avoiding stock breakage to maintain your store's image.
Tips for Optimizing Warehouse Management
- First-In-First-Out (FIFO): Ensure the first products entering the warehouse are the first to leave, especially for perishable goods.
- ABC Stock Management Model: Classify products by importance. Other models include Wilson or Just-In-Time.
- Designate areas for product reception, storage, packaging, and dispatch.
- Employ both human and computerized stock management teams.
Other Storage Options
To prevent warehouse management from becoming overwhelming and to reduce costs, consider hiring a 3PL provider. Lógicos 3PL aims to simplify logistics:
- Optimized Warehouse: We reduce costs for you.
- We handle picking and packing; you pay only per order.
- We manage product shipping worldwide.
- Reverse Logistics and Customer Service: We treat them as our own.
We are confident in our ability to serve as your logistics operator. Please do not hesitate to contact us if you have any questions.
