The festive season vibes are setting the mood, and shoppers have started to plan their holiday shopping checklists already. For an E-commerce seller, this is an opportunity they await all year long, but the spike in demand during this period presents challenges of its own. Inventory management is one such hurdle. With each order placed, the pressure on inventory grows leaps and bounds. To be successful and walk away from this period with high profits, implementing a robust inventory management strategy is a must. To help you manage your inventory in the best possible way, best ways to manage your inventory, our ecommerce agency experts have recommended five crucial tips.
But first, let’s understand why good inventory management is essential, especially at this time of the year.
Importance of Inventory Management
Below stated are a few reasons why monitoring and controlling inventory levels is crucial:
- Increase Sales – If you run out of stock early, your potential consumers will move over to competitor listings to complete their desired purchase.
- Minimize Inventory Costs – While it is essential to maintain adequate stock levels but at the same time, going overboard often backfires. If you hold excessive inventory, you are bound to lose money on unsold goods and storage costs.
- Minimize Spoilage – If your business deals in perishable items, inventory management can help you move the products before their expiration dates to avoid losses and spoilage.
Now let’s take a lot at how you can go about managing your inventory strategically for your Ecommerce company
5 Inventory Management Tips You Must Consider
1. Make Use of Inventory Management Software
Manual inventory tracking via spreadsheets is a time-consuming task and may lead to fatal errors. To avoid this scenario, you can consider using an inventory management software to automate multiple inventory tasks. The tool will also help you track sales and inventory patterns and guide you in planning sales of each item on a daily, weekly, and monthly basis. The detailed trends and analysis will eventually help you plan and strategize your entire store’s sales over extended durations of time.
2. Understand and Analyze Inventory Turnover
Inventory turnover rate is an important metric that sellers need to understand. The rate at which you sell your inventory is known as the inventory turnover rate. To determine your inventory turnover rate, you must know, on average, how fast your products sell on online marketplaces. This information comes in handy when you forecast your future stock levels. With an accurate estimate, you can maintain sufficient levels of inventory, not more, not less.
To enhance the accuracy of your estimates, we suggest that you make use of a forecasting tool. If you sell on Amazon, you can use Amazon’s in-built forecasting tool, known as the “The Amazon Selling Coach.” The software keeps track of sales from your available inventory and recommends quantities to fill for a particular time frame.
3. Plan for Seasonal Fluctuations Early
The holiday season has a massive impact on the inventory levels because of a surge in consumer demand and extended supplier delays. Hence, it is crucial to know products that are fast-moving and others that are slow-moving. Ideally, you should forecast your inventory levels a few months before the seasonal sales begin. The main focus must be on increasing the ordered quantities of items that sell more during this period and reduce the ones with negligible demand.
Most importantly, communicate with your supplier regularly to avoid unforeseen delays and shipment issues.
4. Ensure Smooth Supply Chain Flow
The supply chain refers to inventory movement from its initial sourcing point at the suppliers’ manufacturing facility to your warehouse. To ensure that the supply chain of your Ecommerce company rains smoothly, keep a close watch on your suppliers’ delivery schedules, and have a contingency plan in place to deal with unexpected scenarios. This is especially vital if your suppliers are stationed overseas as shipping delays or other issues on the suppliers’ end can take weeks to resolve. We advise you to keep some stock in reserve to cover these delays if you source your products from overseas.
5. Dropship Items in Favour of Stocking
If you choose drop shipping, your product’s manufacturer or supplier maintains the inventory and ships items directly to your consumers on your behalf. It is also less risky as you don’t have to worry about purchasing stock in advance, which may or may not sell. Also, you don’t pay for storage space as well.
But, at the same time, partnering with the right dropshipping supplier is essential too.
Many of them charge an additional fee, which increases your products’ cost higher than a traditional e-retail markup. Also, if your Ecommerce company sells on Amazon, double-check on whether the dropshipping supplier is Amazon-compliant or not. They must keep you up to date on inventory levels as well so that you avoid selling items when they are not in stock.
The festive season is an opportunity you shouldn’t miss out on. Use the above tips and guidelines to streamline your inventory and end the year on a profitable note.
However, if you feel that you need further assistance to manage your Amazon Inventory for this period, get in touch with our ecommerce agency experts who will guide you through our Amazon outsourcing service portfolio.