Optimising Inventory Control in eCommerce (with Case Study)

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Ever sold products at drastically low prices to clear-out dated stock? If so, you’re underestimating the importance of inventory control in eCommerce.

Or do customers abandon your online store because what they want is out of stock? Again – you’re missing the importance of inventory control for your eCommerce store. To get you across this critical part of eCommerce success we’ve put together this guide, which covers:

  • The importance of Inventory Control in eCommerce
  • Case study: Hilditch & Key
  • When it goes wrong: How to Spring Clean for Better Inventory Control
  • Multi-Channel Retailing and Inventory Management

Forecast to avoid overstocking

Effective inventory control is all about maintaining the right balance between customer satisfaction and company revenues. eCommerce businesses need enough high demand stock items on hand to meet customer orders. They also need to avoid over-stocking, overspending and incurring high inventory carrying cost to get those products to their customers.

Efficient inventory management is extremely important for any business and crucial for those businesses that function online. Stock-outs have the potential to damage an eCommerce business and permanently drive away customers if they underdeliver on their promise. This can be especially detrimental when you consider customers can, and will, publish immediate feedback online.

Keeping an adequate supply of inventory to meet online orders or even to replace returns is a challenging task. It requires the skill to forecast and plan efficiently to avoid both a shortage or a surplus of inventory stock.

This is where the investment in inventory management software will help. Inventory management solutions can improve customer-level sales forecasts, help to optimise forecast management and inventory planning accuracy.

The importance on avoiding eCommerce stockouts

The importance of not running out of stock cannot be understated. The ability to effectively manage inventory and keep track of your stock will help reduce the risk of lost sales and disappointed customers.

It is important to have a minimum quantity of inventory for each item you are advertising on your eCommerce store. Getting an ‘out of stock’ message is frustrating for your customers and can lead them to take their business elsewhere.

Real-time inventory management plays an essential role in maintaining customer satisfaction and ensuring they stay loyal to your business. It will help you to be more organised, know what levels your orders have reached, where your stock is and the quantities of each type of inventory you sell.

Inventory tracking helps you to optimise stock control for greater success of your eCommerce operations, enabling you to remove products from your eCommerce site as soon as you have insufficient stock to fill an order. All new stock items can be uploaded to your eCommerce store as soon as they are procured and ready to be shipped. Likewise, sold items will be deducted from stock the moment a customer finalises a purchase.

In addition to ensuring accurate and prompt coordination of stock levels, real-time inventory management systems help track inventory from the moment it enters stock, through to when it is shipped and right up to when it is delivered to your customer.

Multichannel integration

eCommerce has created new opportunities for retailers and wholesalers, enabling them to undertake direct online sales to both B2C and B2B customers. Businesses can now service a much larger audience and provide products that are often not available to customers in their local regions.

There are numerous technologies and inventory control solutions available to eCommerce entrepreneurs. The best platforms provide integration across multiple channels, with automated real-time updates to allow you to manage your eCommerce store. They will also offer the scalability to grow with your eCommerce business.

Case study: Hilditch & Key

Hilditch & Key have been long time residents on London’s Jermyn Street. The shirt making company started in 1899, when shirt makers Charles F. Hilditch and W. Graham Key, decided to open their own shop. Despite its long tradition, Hilditch & Key aren’t in the business of preservation. They have been silently evolving their collections to suit the modern man who appreciates style and quality craftsmanship.

Hilditch & Key continue to operate out of Jermyn Street in London, have a strong presence in Rue de Rivoli in Paris, and run a thriving eCommerce channel.

Struggling with the extremes of inventory control

Hilditch & Key suffered from two major inventory problems that were placing a strain on their time and resources.

Products ran out of stock frequently, making it challenging to manage multiple sales channels. For example, their stock on hand was not accurately reflected in their online store, meaning that their online customers were purchasing shirts, ties, pants and more that the warehouse didn’t have in stock! On the other extreme, they struggled with overstocking products.

As much as businesses should be concerned about missing out on sales, it should also be focused on operating efficiently and keeping inventory costs under control.

Hilditch & Key cut costs and inefficiencies

Scott Hale, IT systems manager of Hilditch & Key, started investigating cloud-based inventory management systems that would help better their inventory control.

Initially, they were using SAP Business ByDesign, a cloud ERP solution that they found inefficient for their business process. Most importantly, it did not integrate with their accounting or point of sale software.

With Unleashed helping Hilditch & Key across different business processes like tracking sales, reporting on profit margins, and conducting annual stock takes, they were able to run their business efficiently while also reducing costs.

“We’ve reduced stock-outs by 50% and overstock by 30%.”

Better visibility over their stock on hand meant that their understocking issues were also resolved. Now, they are able to use the bin allocation function for their warehouse staff to pick stock for their online sales orders.

Their processes are now more efficient, saving 35 hours of work a week with Unleashed and cutting down 15% of administrative costs.

When it goes wrong: How to Spring Clean for Better Inventory Control

Many businesses fall into the trap of holding old inventory in the hopes of selling it eventually, but keeping idle inventory is costing your business money and valuable shelf space. With emphasis on inventory control and business efficiency, here are three ways to spring clean excess product off your shelves.

The Case for the Clearance Sale

When it comes to retail shopping, the obvious solution to excess inventory is to offer discounts. Customers are constantly hunting for bargains and seeing a sale sign will not only draw in curious passersby but may convince shoppers to buy the product they were on the fence about.

However, it’s not as simple as just offering a discounted price from the get-go. With discount sales, it is important to start with smaller discounts and work up to bigger discounts if product still isn’t selling. This minimises the risk of loss to your company.

Starting with sales of 10-25% off is a good starting point, leaving some opportunity to earn a small profit. However, if products still aren’t leaving the shelves, the discount will need to be increased. At this stage, more focus should be on inventory control and clearing shelf space than making profit. Idle inventory on shelves is costing your business money, and even just by breaking even there is opportunity to fill that newly-emptied shelf space with more profitable product. Running promotional campaigns about clearance sales will draw in more customers while also improving company recognition.

Bundle Up!

If you have idle products that aren’t selling by themselves, try pairing them with more popular items that have a history of selling well. Customers find bundle products attractive because of the discount received, and shoppers are more likely to buy the cheaper bundle if it incorporates an item they were already intending on buying.

Keeping these bundles reasonably priced is key to clearing out excess product fast and is more likely to turn over a profit than just clearance sales alone. A good marketing idea for this type of stock clearance is to advertise the regular price in comparison to the sale price. This allows customers to visualise their savings, prompting them to consider purchasing the extra product to get that bargain.

Free Shipping is Always a Winner

For online retailers, advertising free shipping is an easy way to sell a variety of old stock without specifically discounting certain items. Just the offer of free shipping can convince shoppers to buy product, and even spend more than they were intending. Free shipping can be restricted to certain items to target your inventory control issue or can be established storewide. Specifically for online retailers, a landing page or pop up tab that advertises free shipping for a limited time will prompt shoppers to fill up their carts before the offer expires. From a profit perspective, free shipping won’t break the bank in comparison to these other inventory-clearing methods, and multiple purchases that can be shipped together will lessen any loss even further.

Presenting Online Promotions Well

The difficulties of promoting an online retail shop is understandably challenging, with no physical store benefits such as local advertisements or helpful shop assistants. However, online retailers do have the advantage of more presentation possibilities. To run an effective promotion, advertisements need to be eye-catching but not intrusive. An easy way to do this is to run a pop-up offer. Specific pop-ups that require customers to submit an email address to receive a promo code will also gain you potential customers in the future, with email promotions reminding them of your business. By including an incentive such as a promo code offering discounts, more customers are likely to become email subscribers, creating an efficient marketing platform for the future.

While everyday inventory control is essential to remaining profitable, sometimes a one off clear-out of old product is needed. An effective spring clean to clear this excess will preferably return your business costs, or even make a small profit, while also freeing up shelf space for more sellable product. By advertising clearance sales, bundling old products with bestsellers, or offering free shipping, retailers have a better chance of clearing idle inventory in a time-efficient manner.

Multi-Channel Retailing and Inventory Management

Multi-channel retailing is an eCommerce selling strategy that targets customers on various channels beyond a company’s website. Because consumers are shopping in more locations than ever we have seen the proliferation of multi-channel retailing; multi-channel retailing has evolved beyond promotion to include multi-channel selling directly to consumers on social media, marketplaces, and other spaces.

A recent study analysed over seven million online orders which compared single and multi-channel retailers. Retailers using two channels averaged double the revenue of those who sold only through one. Given user’s cross-channel interaction with businesses and products, online sales are no longer limited to any single eCommerce website. Channels that were previously considered part of the awareness stage and advertising, such as social media and content platforms, can now be sources of revenue.

Significant retail channels:

Social Media

Social sites are not only places to advertise to customers but also places to convert visitors to buyers. The Twitter Buy Button automatically appears with any product Tweeted; Pinterest has recently reconfigured their buy button so that virtually any company can have one; Facebook Shop lets businesses place buy buttons on their Facebook home pages. With any of these channels, customers can buy without leaving the social site and access it from their smartphones too.


eBay, Amazon, and Rakuten, are online marketplaces where businesses can offer their products for sale. Many shoppers begin their product search on a marketplace. Marketplaces don’t have to be considered a competitor either, they can be a source of real revenue.

Comparison Shopping Engines (CSEs)

These are an increasingly great way to let products outshine those of competitors. There are many CSE sites, including Google Product Search and dShopping.com. CSEs can either sell products directly or drive traffic to an eCommerce site product pages.

Inventory management in multi-channel retailing

Successful multi-channel eCommerce involves more than simply listing products on a variety of platforms. It requires an effective multi-channel inventory stock management solution as well. Many retailers find it difficult keeping track of inventory stock and orders when selling on a single platform. But when you’re selling the same products on a Shopify store, Amazon, eBay, Etsy and in physical locations, inventory management can be a nightmare if systems are not in sync, accurate and organised. A recent study found that 29% of retailers lack the inventory visibility across stores, vendors, and warehouses in order to accurately promise multi-channel fulfilment. Without proper inventory stock management, you risk diminished customer satisfaction levels with out-of-stock messages, losing money due to overstocking, increasing delays and cancellations due to inefficient fulfilment processes, and problems with human error. Sound Inventory stock management is imperative for a successful business, and yet over 40% of retailers still rely on pen, paper, and spreadsheets for tracking inventory.

Multi-Channel inventory management solutions

Multi-channel inventory stock management software allows businesses to easily track, manage and organise inventory sales, purchases, and production across all channels. Retailers no longer should or need to rely on pen and paper or spreadsheets to track inventory. Proven best practices use systems based on barcodes and radio-frequency identification to see when shipments come in, where they are stored, and when they have been dispatched. Best multi-channel inventory stock management solutions are cloud-based, giving businesses 24/7 mobile access to their inventory data and often in real time.

Benefits of multi-channel inventory management software

Inventory stock can be the most important asset to your business. If no inventory stock is going out, there’s no revenue coming in. However, without knowing how much inventory stock you have, where it’s located, and what you’ll need to fulfil both current and future orders, it’s almost impossible to run a profitable business.

Multi-channel retailing adds another layer of complexity to inventory management. At any one time you could have a large variety of products being sold on a number of different platforms, making manual updates of inventory levels virtually impossible. Better inventory stock management software will easily synchronise inventory stock across all channels.

Whether you are running an eCommerce store that is currently selling products across multiple channels, or you may be thinking about reshaping your business to incorporate multiple channels, it is imperative to recognise that manual inventory stock management is no longer sufficient for proper inventory management. Cloud-based inventory solutions can help you organise your business, streamline processes seamlessly that keep your customers happy, and give you the best chance for future growth.

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Melanie - Unleashed Software

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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