Shopify Inventory Management Guide

Shopify inventory management is managing your inventory on Shopify's platform. With its built-in features, Shopify's inventory management view helps ecommerce business owners track, manage, and organise inventory.  

Inventory management aims to accurately predict your inventory levels so you don't have too much inventory but just enough to fulfill your orders and never run out of stock. Shopify sellers should track inventory levels, from organising incoming stock to setting up low-stock alerts to help avoid back-ordered products.  

Sellers can manage Shopify inventory using different tools and platforms. Depending on your business size and product catalog offering, you may use one, two, or a combination of multiple tools.  

Shopify has a built-in inventory management system that offers tools for managing inventory levels, tracking inventory, sending low-stock alerts, and bulk import settings.  

Sellers also use third-party inventory software that offer more sophisticated solutions for complex businesses needing additional inventory visibility, such as multiple locations, high order volumes across different locations, and deep automation. Most third-party software integrates easily with Shopify.  

Another way sellers manage their Shopify inventory is through their 3PL (Third-Party Logistics) provider, which helps manage inventory outside of Shopify but works with your business operations. This is ideal for businesses with a packing and shipping warehouse, an inventory and storage warehouse, and a shipping warehouse.  

If you choose to use Shopify’s inventory management system, it can be key to the business because it will help many aspects of your business operations. Your Shopify inventory management should include building a strong report to gather quality data across your inventory, sales reports, and product performances.  

Whether you operate a physical retail space, are only ecommerce, or sell on third-party marketplaces and use 3PLs, you need a tool that can accurately predict demand for your inventory. The right tool will build reports to help you analyse trends, build your restock strategy, and identify top-performing products.  

Streamlines your business operations

The main benefit of managing your Shopify inventory is streamlining your business operations. By managing your Shopify inventory well, you have the data to help you plan further business strategies, such as planning ahead with purchasing from your suppliers and providing the best customer experience.  

By building a strategy based on predictive data from your inventory management tool, you can ensure you have just enough stock to avoid needing additional storage space and money tied to excess inventory. This will help you manage your cash flow and avoid over-purchasing with months of waiting to sell your inventory.  

Having a streamlined process will help you plan your demand. 

Minimises human error with automated tools

Human error is bound to happen if you manage inventory without a software tool. The best inventory management tools synch up with all the tools across your business.  

Your inventory management tool should automate your inventory tracking and stock count. This automation should help minimise human errors, such as miscounts, failure in updating quantities, and errors in stocking returns.   

Prevents stockout and overstocking

The main goal of implementing a Shopify inventory policy across your business is to prevent stockouts and overstocking, which can impact every aspect of your business, from your finances to customer satisfaction.   

If your product is out of stock, customers will abandon their carts, which will result in a revenue loss and disappointed customers.  

On the other hand, overstocking can lead to inventory you can't sell, which is cash, tied up. Overstocking should be prevented, especially if your business has CPGs and perishable products.  

Your customers are more satisfied

Shopify inventory management is important because all these benefits impact customer satisfaction, which is the heart of ecommerce. You can build customer expectations regarding your in-stock products with your inventory data.   

Inventory visibility

One of the challenges of managing your Shopify inventory is not having enough visibility and access to your inventory management tools. This can be limiting if you have multiple sales channels under one business, making maintaining real-time visibility of your stock levels challenging.  

You need proper synchronisation to ensure there are no discrepancies or inventory errors. For example, overselling on one channel while another channel is left without products.  

This can get complicated if you manage stock across multiple warehouses or retail stores where one location needs a replenishment cycle, or you need to hold off inventory in one place.  

Stockouts and overstocks

Nothing is more disheartening and damaging than running out of stock. One of the challenges in managing your inventory is the need to predict your product demand to avoid these stockouts.  

And on the opposite end, as we’ve said, overstocking can result in money and excess costs being stored, which can lead to businesses having to offer heavy discounts just to get rid of old inventory.  

Data inaccuracy

Manual errors and data inaccuracy are major issues in inventory management. Data inaccuracy can lead to incorrect stock counts, duplicate inventory orders, and business disruptions.  

If not properly maintained, you can have bad-quality data, which makes demand forecasting a bigger challenge.  

Lack of historical sales data, inaccuracy and errors, and poorly maintained data can make inventory planning difficult and lead to errors in your business.  

Reporting and tracking

Tracking and reporting tools are an important aspect of inventory management. Insufficient insights into your reporting and tracking will make it challenging to make business decisions.  

Reports should track stock movements, reconcile discrepancies, and provide data to handle business operations. They should also track inventory shrinkage, resulting from theft, product damage, and misplacement. Monitoring this is an overlooked but important area in reporting and tracking.  

Scaling Challenges

One major challenge business owners encounter is scaling challenges. As your business grows, so does your need for a more complex inventory management tool that grows and scales with you as your business grows. 

As you scale, your product catalogue grows, leading to more sales channels, locations, and order volumes, all of which require better systems to avoid the challenges listed here.  

Set up inventory tracking

Setting up inventory tracking across your products benefits you and the customers. Customers can place orders on in-stock items, and it helps you manage and organise product inventory levels, including viewing product history.  

1. From your Shopify admin, go to Products.
2. Click the name of the product that you want to track.
3. If the product has variants, click the variant you want to track.
4. Next, select the Inventory section under Products and check Track Quantity.
5. In the Quantity section, enter the quantity information for each location.
6. Click Save. 

Allow customers to place orders when out of stock

Based on your settings, you can allow customers to purchase the item when it's out of stock. By selecting Continue selling when out of stock - you can allow customers to continue placing orders. This can only be applied if “Track quantity” is active in the product.  

Managing your stock levels

Once you have enabled inventory tracking across your products, Shopify automatically adjusts your stock levels every time an order is placed.  

View Inventory: 

1. Go to Products and select Inventory. 
2. This will display all your products and their current stock levels, SKUs, and variants.
3. You can filter, search, or sort products by stock levels, name, or SKU. 

Adjust Inventory: 

1. If you need to update your stock levels manually, click on the product you want to update and scroll down to the Inventory section.
2. Click Adjust quantity to add or subtract from the current inventory. 
3. Save the changes. 

For large ecommerce stores, you can update inventory by importing and exporting inventory information in bulk using CSV files. 

1. Go to Products
2. Select Inventory 
3. Select Export
4. Select the CSV format, and export your inventory data. 
5. You can edit the quantities in an Excel or Google Sheets and re-upload the file here. 

While Shopify inventory tracking is intuitive, there are some limitations. For example, you are limited to tracking one location, have limited information on the items you are tracking, and need additional apps for more complex details.

Multi-location

Depending on the plan you choose, Shopify limits product inventory tracking to one location. This can be a challenge if you need to track inventory across warehouses and retail locations

Alerts

There is a limitation to how detailed you can get with your inventory tracking. For example, if you need specific rules when inventory levels drop or are updated, such as automatic restocks or backorder policies, Shopify does not let you get into details without third-party apps.

Traceability

For example, if you need additional details and serial number tracking, Shopify does not support this feature without the need for additional apps and integrations. While Shopify inventory tracking is intuitive, if you're a more complex business with different warehouses and locations, you must integrate various apps to activate and organise the inventory process fully.

Shopify inventory management system is the process of tracking, managing, and organising inventory for your business. This system covers your entire business operational structure, from suppliers to getting a product into your customers' hands, to creating a restock system. You may need more than just Shopify to achieve this. 

Apps are an integral part of having an ecommerce site set up with Shopify. Shopify inventory add-ons are third-party apps you can integrate easily from the Shopify app store. These apps have an additional cost but unlock more in-depth solutions to your inventory management and enhance the functionality of Shopify's built-in inventory management systems.  

Some additional features can include a deeper insight into analytics and demand forecasting, requesting purchase orders, stock transfer capabilities, managing multiple warehouses, integrations with 3PL partners, and more. 

Shopify's inventory management system is a great start, but if you need more complex solutions or are a larger business, inventory add-ons are the perfect tools to integrate.  

Integrations: Shopify inventory management software features 

There are several features or requirements to look for when selecting a Shopify inventory management software, including:  

• Ensure it integrates with your Shopify business in the first place. 
• Provide stock updates and real-time visibility into all your stock movements across your business.
• Synch inventory data across your tools.
• Manage multiple warehouse locations.
• Ensure customer data is flowing to the right channels. 
• Multi-channel selling across platforms and channels. 
• Streamline your order fulfillment through your software. 

Shopify’s inventory management system is a great starting point for managing and organising your inventory. However, while it is intuitive, it has limitations, especially if you need to scale or are a growing Shopify brand.   

You need a strong Shopify inventory management software to optimise and streamline your business operations. The Unleashed Shopify integration instantly clarifies all your product and sales data in real-time. You are able to connect with all your sales channels in one place for effortless multichannel selling. 

Got questions about the Unleashed Shopify Integration? Contact us for a chat or start a free trial to see it for yourself.