Inventory Management for Your E-commerce Business

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To create or maintain a sustainable e-commerce business, entrepreneurs need to have a strong understanding of the complexities of inventory control. To avoid overstocking or stockouts they should have some idea of the demand fluctuations specific to their business and know the time it takes to replace inventory stock.


To build a scalable e-commerce business, you really need to invest in online inventory management software. The functionality it provides allows business owners to delegate and automate many repetitive and mundane tasks, while delivering greater efficiency in their operational processes.

Online inventory management is especially relevant to e-commerce businesses and virtual stores because it helps store owners assess how well their products are selling. It improves back-end visibility and provides the real-time information necessary for informed decision making.

By analysing historic data, systems will enhance demand forecasting and help determine the minimum levels of inventory stock required to meet forecast predictions. There may be some advantages to holding large quantities of inventory stock, particularly leading up to your busy season, but this can be expensive. In addition to the initial purchase price of inventory, you are faced with inventory carrying costs and risk being left with inventory stock that is surplus to demand.

Every e-commerce business will encounter inventory challenges at some point, but with an online inventory management system, you can mitigate these challenges by integrating systems and automating tasks that optimise inventory control, procurement activities and order fulfilment.

Automation also allows customers to track the status of the goods they have ordered, from point of dispatch until it arrives at their door.

Keep it small

An alternate idea for managing inventory stock is to keep your e-commerce business small and build a strong brand around a unique product. This works best if you can create an enticing position through exclusivity, targeting a niche market or lucrative segment. Applying the scarcity principle to promote and sell a product can be an effective enticement strategy, if done correctly.

Certain cottage industries that offer homemade, locally grown or sourced products will often face challenges when trying to expand. They become too large to source from the local market and too small to compete with larger corporations for raw ingredients and supplies.

Inventory control is simpler if you keep the business small because the number of goods you supply will remain steady. You can maintain a minimum level of inventory stock on hand and when it drops below predetermined minimum levels, you know it’s time to order more.

Once you have built a strong brand with demonstrated demand for your product, you offer a more appealing opportunity to investors, should you wish to expand in the future.


Using online inventory management software in your e-commerce business gives you big picture insights on what is happening in your business. From the seasonal highs and lows of inventory stock movements to what products individual customers are buying and when they are inclined to buy them.

With this information, you can customise your marketing activities to create promotions that fit specific customers’ tastes and purchasing habits. Because online inventory management software can be integrated with automated email notification services, customers can be sent timely emails about offers personally tailored to them. Personalising promotional activities will lead to greater customer satisfaction and retention.

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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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