6 Best Practices in Inventory Management for E-commerce

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Inventory stock management can often be a major headache for any e-commerce store and if you do not do it right, it can be very costly in terms of customer satisfaction and profits. With a little planning and effort, you can develop a system that is right for your store. Below we identify 6 current best practices in inventory management when it comes to e-commerce.

Hybrid Warehousing

Getting your warehousing right is a critical component of multi-channel e-commerce operations. A common warehousing method used in e-commerce is hybrid warehousing. This warehousing method is a mix of using your own warehousing space and that of third-parties such as your suppliers. Ultimately, you decide what should be in your close vicinity and those items that should stay with your suppliers.

Generally, smaller and lighter items are placed in your warehouse, while heavier and larger products are delivered from the supplier’s location once an order is made. This hybrid warehousing method helps you control and limit your warehousing space costs.

Stock Allocation

Allocating stock in a smarter way is an important part of effective inventory management for e-commerce stores. There are three main allocation techniques, these are equal allocation, trend allocation and universal allocation.

Equal allocation provides for your SKUs to be simply distributed into equal shares so that each sales channel will have the same amount of stock. Trend allocation is where you distribute your stock according to sales numbers of each sales channel. Sales data reveal specific channel demand for a product and allocate the amount of stock accordingly. Universal allocation uses the same amount of stock for each sales channel.

Outsourcing E-commerce Retailers Fulfillment

Outsourcing fulfilment is a common inventory management strategy for e-commerce retailers. You can track the inventory stock of your online store and transfer the whole fulfillment workflow, from warehousing inventory stock, picking, packing and delivery all to a third-party provider. For example, using the service Fulfillment by Amazon (Amazon FBA) takes care of this entire process for you right from when your customers place an order. If you use a sales channels than Amazon, you can use other third-party fulfillment vendors.

Cross-platform Inventory Stock Monitoring

Inventory management software should be integrated across all sales channels to prevent cross-platform overselling. Using a centralised inventory management system will decrease the likelihood of these types of errors. This also enables your e-commerce store to get a good understanding of performance of each sales channel and inventory requirements in real time.

First In, First Out

The First In, First Out (FIFO) method is a proven method when using inventory management systems for e-commerce stores. It is particularly valuable in the way of perishable goods. This method ensures that stock that is stored first is shipped first. FIFO is also a valuable method for items that may not be perishable but delicate goods, that can get worn out or depreciate relatively quickly.

Returns Management

Returns need to be accounted for in your inventory management system. It is easy to lose track of your stock numbers in the confusion of handling returns if there is no good system for this. It is important to keep accurate stock levels where your stock levels show the number of goods available correctly.

E-commerce stores need to implement smart strategies for inventory management that improve efficiency and reduce errors. These 6 best practices highlight effective tips for better inventory management solutions for online stores today.

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Melanie - Unleashed Software
Melanie

Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.

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