We have already talked about the basic steps to create an online store, this time we bring you another article with tips on how to manage the inventory of an ecommerce store.
With this guide we will move from the general to the specifics to give you some tips to optimise your inventory management. In addition, as a 3PL partner we will also give you several options to store all your stock.
What is inventory and why is it important for ecommerce?
As you may have guessed, the inventory is the product that you have stored and that is available to be purchased.
But why is inventory management so important? Because if you don't have the product, you don't sell, that's for sure. In addition, another requirement that customers demand is fast delivery. Due to Amazon's competition, they look for products to be delivered between 24 and 48 hours after ordering them.
Imagine that you have a stockout that you were not aware of, but the buyers keep coming. Here you have two options: either face them and say that the item is out of stock and they will have to wait to get it, or let a considerable amount of time pass until they receive the item.
In both cases it is likely that these customers will never buy from your online store again, as their confidence in your business will hit rock bottom.
Here are the different challenges you may encounter and a series of basic steps to control the inventory of your ecommerce.
Challenges in ecommerce inventory management
To keep a good inventory control, we need to prevent the following situations from occurring:
- Overstocking or overselling
These two scenarios occur when we know neither our market nor the consumption habits of our potential customers. On the one hand, if we have an excess of stock, we will also have to face the problem of storage and the extra cost that this implies. Similarly, if there is more stock than demand, depending on the product you sell, it may deteriorate over time. On the other hand, if we have an excess of sales, but not enough product, this will damage the brand image and cause customer service problems.
- Lack of scalability
Scalability is the ability of a company to adapt to an existing moment or possibility. For example, depending on what your product is, it is likely to sell more in seasons such as summer, during Black Friday or Christmas. At these times you will have to have a higher level of stock, and perhaps during the rest of the year you will have to lower it.
However, there are many companies that are not able to scale their business and the best option for them is to rely on a logistics operator.
- Lack of visibility
In this part we refer to ecommerce stores that sell on various platforms and channels such as Amazon, Ebay or Etsy and have problems managing their total inventory.
Many times this situation derives from a problem of lack of systems integration between the online store and the trading partner. This is a problem you will never have with Lógicos 3PL because we integrate our system with yours so that you have total visibility of the inventory and the rest of the logistics process.
👉 Here you can find how we take care of ecommerce fulfillment.
Steps to take into account to manage the inventory of an ecommerce
Working with reliable suppliers
This is one of the basic points for your logistics to work properly. Knowing in advance the delivery policy of a supplier, as well as their minimum delivery times will be vital for your customers to be satisfied.
If you work closely with your suppliers, you will be able to make a much more effective calculation of the stock you need at any given moment. In this respect, it will also be very important to set the minimum quantity of product that you can order from them so that deliveries are not made more expensive.
Forecast future demand
At this point it is very important that you keep a record of the sales you make year after year. This will be very useful when it comes to increase or decrease the stock, especially in times of peak sales such as Black Friday or Christmas.
Also keep in mind that in these forecasts you will have to include the trends of the new year and if you have included any other activity or something has happened that may cause your sales to vary.
Set initial minimum viable stock
Taking into account the demand and the speed and professionalism of your suppliers, you can make a fairly accurate estimate of the product you need to have in stock to meet the demand of your customers.
It is true that this minimum quantity will vary greatly depending on the type of product you sell or the growth of your online store.
If you are in the process of creating an online store, this point may not concern you too much until you have enough orders to need a specific storage space.
However, if you are already in that moment of need, surely you have already seen that having your own warehouse is one of the main expenses of any entrepreneur.
If you are going to have your own warehouse, you will have to take into account that:
- If you stock more product than you need, this can cause costs to skyrocket or older product to spoil.
- If you have stock breakage, this will have an impact on the image of your store in the eyes of the end customer.
What can you do to have an optimised warehouse?
- To work under the first-in-first-out premise, which means that the first products to enter the warehouse are also the first to leave. This will be very important especially in perishable products.
- To work under a stock management model such as ABC in which you will classify your products in order of importance. Other models are Wilson or just in time.
- To have delimited areas for the reception and storage of products as well as for their packaging and dispatch.
- To have a team specialised in stock management, both human and computerised.
Other storage options
If you do not want the control of the warehouse to get out of hand, and at the same time you want to save on costs, a good option is to hire the services of a 3PL provider.
Lógicos 3PL's mission is to simplify logistics:
- We have an optimised warehouse with which we reduce costs for you.
- We take care of picking and packing. In addition, if you only have one order a month, you will pay the pick & pack rate for that order. Scalability is vital for us.
- We take care of shipping your product anywhere in the world.
- In addition, we also take care of reverse logistics and customer service as if it were our own.
👉 Here's how we take care of ecommerce fulfillment.
We are confident that we can become your logistics operator; please do not hesitate to contact us if you have any questions.