If you’re new to ecommerce, then you might be asking, what exactly is inventory? 

The simple answer is that inventory is your stock, and inventory management is how you source, store, and sell your stock. 

Understanding the balance of how much stock you have, the price you should sell it for, and where to store it is called inventory forecasting. While these terms are your baseline of inventory knowledge, there are several others that are crucial to understanding inventory management.  

We’re breaking down the important facts to help you better manage your inventory. 

Inventory terms and what you should know 

In order to best manage your stock, it’s important to get familiarised with the big keywords. Understanding the business and strategy of inventory management will make the process smooth and leave you sailing. 

The ins and outs of inventory management 

In order to build a sustainable and profitable ecommerce business, it’s important to properly manage your inventory. If you start out poorly managing your inventory, it can be a challenge to overcome later on, for a business of any size or scope.

The keys to success are understanding the following:

Overstocking and overselling 

Do your best to never run out of product. Calculating the right amount of product units (SKUs) needed at a given time is the most critical part of inventory management. If stock levels dip too low, it can cause a cascade of problems like losing out on potential sales, backordering, and customer service issues. On the flip side, there’s a downside to overstocking too. Imagine overstocking on a product that then is no longer popular or demanded by your customers. You’re stuck with what’s known as dead stock.   

Manual Inventory Management prevents scalability 

You’ll be tempted to manage inventory manually to save costs if you’re starting out. However, this prevents you from scaling in the long run. You’ll want to streamline these processes early on to avoid disorganization, and keep up with your customers’ ever-growing demands. 

You’ll want to avoid doing these manual inventory management traps:

Overcoming Challenges

Some challenges are unavoidable, but there are some tips and tricks that can help you to overcome them. Start by forecasting for the future. By tracking and managing your inventory storage levels and output flow, you will be better able to plan for demand. If you monitor your inventory trends on a monthly, quarterly, or even unit-to-unit basis, you’ll be better able to keep up with sales.

Forecast for the future

By tracking and managing your inventory storage levels and output flow, you will be better able to plan for demand. If you monitor your inventory trends on a monthly, quarterly, or unit-to-unit basis, you will likely be more able to keep up with sales. 

Plan for the unexpected 

Supply chain issues like delayed inventory from the manufacturer, unexpected sell out of a product, running out of storage space, and cash flow problems are unavoidable. Preparing for them by analyzing your inventory and creating a contingency plan can help prevent the adverse effects they can cause for your bottom line.  

The benefits of inventory management

When you’re managing your inventory and supply efficiently, it creates a more customer first approach in your ecommerce business strategy. It focuses on giving people the products they love and want, without having to wait.  

Having too much inventory could cost a lot in storage fees. That money could be better spent on branded materials, earning good will with your customers by replacing lost or damaged goods, and absorbing expedited shipping costs. Fees vary by fulfilment center, and depend on how many units you keep in stock. Preparing your inventory based on the forecasted needs and demands of your customer, can help you save money on storage fees which can allow you to put money towards other aspects of your business. The long and the short of it — it prevents waste, saves costs, and saves time. 

Amazon Prime Day 

Unless you’ve been hiding under a rock, you’ve probably heard that Prime Day has been officially announced for June 2021. With the big day around the corner, it’s time to decide if you’ll participate, and how to prepare if you do. Feeling stuck on where to start? Check out this blog post from Sellers Scoop on the pros and cons of Prime Day, and whether to participate. 

If you’re stuck on inventory cut-off deadlines, we have just the tool for you. Check out our exclusive calendar which has all of the important Amazon Prime Day inventory cut-off deadlines below.

If you still need funding, check out all of the financial services that SellersFunding can offer you!

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