Having sound inventory management practices is crucial to any online business that deals with goods. Tracking, measuring and forecasting inventory stock should be a primary focus. It can be challenging to fulfill orders on time if your inventory stock is disorganised or difficult to track, which can result in lost profits.
Having too little of inventory stock available leads to lost sales, but having too much inventory stock can lead to goods collecting dust, getting harder to sell off in time and may become obsolete. Despite the importance of properly managing inventory stock, it is estimated that nearly half of small businesses fail to track it. Follow these simple principles so you can get the competitive advantage your online business deserves.
Keep current and accurate inventory stock data
To get an accurate idea of your inventory stock data it is important to have a system that can display this in real time. As the number of SKUs grow in your business, getting an early handle of inventory stock management will ensure your data is accurate and has the capabilities to grow with your business.
A sound inventory stock management system will be able to show your business:
- Which products are available and their location
- Which sales channel is most popular
- When you run out of stock
This data can directly inform and improve decision making. Processes can be reviewed and fine-tuned where necessary to increase productivity. Having clear and up-to-date inventory stock data can facilitate business growth.
Tracking the velocity of your goods
Inventory velocity is an important indicator of business health and is determined by the time it takes to sell each individual item in stock. When you know the velocity across all product lines, you can make better informed inventory stock decisions. For example, if a particular product tends to sit in inventory for weeks before a sale, you could do a cost/benefit analysis to decide whether the margins of that sale are worth the incurred warehouse costs over time.
Knowing a product’s velocity allows business to make an informed and quick decision to liquidate a product. Without it, inventory stock can languish in storage, being in risk of becoming obsolete and this is very costly to a business. Inventory stock velocity can also be beneficial as it allows you to make forward-looking decisions for your business. Highly sought-after products often have greater velocities, so you can use previous velocity metrics based on real-world sales information to inform future ordering decisions. This type of data-driven purchasing can help you better ensure that high-demand products are always in stock and available for purchase, earning you more business and happy customers now and in the future.
When it comes to online stores a major practice in this industry is outsourcing fulfillment. Take for example, Fulfillment by Amazon (FBA) where your business uses Amazon to overseeing packaging and shipping. With Amazon, all of your final products are shipped directly to an Amazon warehouse, and Amazon let’s you know where. Then when a customer orders, Amazon handles everything from boxing to customer support.
When inventory stock management practices are sound and available inventory stock is visible across an entire business, online customers receive consistent eCommerce fulfillment, enhancing a positive and productive relationship with your business and brand.