Smart Ways to Manage Inventory for eCommerce Sellers

As an online retailer, especially dealing with online products, you might have got a lot of stuff. The overall success of your eCommerce business depends on the number of customers buying this stuff. And not just once, but over and over again.

However, there lies one problem. The way you manage your stuff or to be precise, the inventory – could potentially interfere with how much money your business makes. In a worst case scenario, it might result in you losing money.

As an online retailer, it should be your goal to remain profitable while keeping your customers happy through proper inventory management. And that is exactly why you are reading this.

Let us go over some amazing techniques to help you keep your inventory in order and dodge some of the most common merchandise mishaps that happen with online sellers.

Importance of Inventory Management

So let’s accept the fact that holding inventory takes money. If as an online retailer, you have items in stock and they aren’t sold, profits can be narrow. You end up with products sitting on your shelves collecting dust in a warehouse.

On the contrary, if you do not have products in stock at all, it may end up in you struggling to get merchandise from suppliers in time. And this could be the moment of confrontation which many retailers fondly like to avoid: having to place the dreaded “out of stock” label on your product pages. Not being able to deliver on demand can result in loss of sales, canceled orders, and unhappy customers.

If you look around, you will find innumerous horror stories from even the biggest corporations losing money due to poor inventory management; be it the example of how Barbie SUVs snarled traffic and put Target in a supply chain gridlock or a $100 million loss for Nike.

Avoid such expensive mistakes and get proactive with your inventory management; be prepared for any situation, come what may.

Challenges Faced by Online Retailers to have Proper Inventory Management

Undoubtedly, the basis of your business should be to quickly get your products to customers and turn a profit. Meaning, your products need to be ready-to-go as soon as the order comes in. Inventory management doesn’t come naturally to many business owners and it is a fact. There are times when one may feel like they are spending countless hours checking inventory and making sure the numbers add up. For someone who is not a fan of numbers, this may seem like a tedious, confusing effort.

Incorrect Numbers:- Has it even happened to you where you tried fulfilling orders thinking you have three products in stock when you had only one? Incorrect and poor track of inventory can force you to have to cancel orders, leading to your business having a poor reputation among unhappy customers. It can also make you question your inventory numbers across the board, leading to major accounting issues.

Overstocking and Under-stocking:- It is implied that you neither want overstocked inventory nor do you want understocked inventory. Overstocking and understocking alike can both cause unforeseen and unpleasant financial issues for your business.

Best Tips and Techniques to Smartly Manage Your Inventory

Take complete control of your online store and become the smart business owner with these smart tips to help you save money.

1. Set a minimum threshold for stock levels

This is also known as your “par levels”. Minimum Stock Level or MSL of your online store is the minimum amount of product you should have on hand at all times. This number helps you define that when your inventory falls below this number, it’s time to order more.

2. Prioritize your products with ABC Analysis

By prioritizing your products, you can keep costs low since it identifies which products need to be ordered most frequently. Consider carrying out the below mentioned ABC analysis:

A Items: These are the best-selling items which sell most regularly and hold the most value in your business.

B Items: These are the items that don’t sell as regularly but cost more to hold. This gives them average importance.

C Items: These are all the items which remain and make up the bulk of your inventory costs while also contributing the least to your bottom line.

3. Plan well in advance for demand

No, we are not telling you to read the future.But think about this, if you have been in business for a while now, assessing demand can be a lot easier than you think.

Make sure you review past sales and trends for a close estimate of how much inventory you should have in stock. Assuming that you do not have this history to look back on, things might be a tad bit difficult but certainly not impossible.

To do the least, try to look at data for the past year to establish a “base demand” level for each season. You can then use this information to forecast what future demand will be like

4. Keep your inventory management centralized

Not having a centralized inventory management system can be a major issue for eCommerce businesses. As a business owner in modern times, depending on pen, paper, and a filing cabinet to manage your inventory will not cut it in today’s digital marketplace.

In order to keep yourself on top of your game, you’ll need a cloud-based inventory management system. Such a system allows you to track, forecast, analyze, calculate, and control your stock in real-time, from anywhere in the world. And if you feel that such a system can be expensive for your business, think again.

If you have a standard operating eCommerce store on say Shopify or Magento, consider getting the work offshore, This can save a significant amount of cost while providing quality results. Outsourcing Magento development or any of your eCommerce development can help reduce investment costs marginally.

5. Carry out system audits

Do not overestimate your implied techniques. You may think your system runs with clockwork precision, but it has been observed that even the biggest and best businesses run into inventory issues with inventory.

Audit your systems periodically to make sure everything is in working order. Demands easily change with the trends and seasons, prices fluctuate drastically, and customers migrate to other brands. Along with your marketing efforts, your inventory management efforts also need to be up to the mark.


Make sure you do your best to avoid costly inventory mistakes. With these amazing techniques, you can quickly get your eCommerce inventory under control, save money, and keep your customers happy.

written by for eCommerce section(s).