+44 (0)1604 968 820 Speak to an expert

Efficient inventory management is a cornerstone of success in the eCommerce industry. eCommerce inventory management ensures that your stock levels are maintained at a balance that meets customer demand while maximising cash flow.

Having too much inventory can increase storage costs and lead to excess stock that may never sell, whereas having too little can result in out of stock products, potentially damaging customer satisfaction and sales.

In managing an online store, knowing how much inventory you need, when to reorder products, and how to forecast customer demand are essential skills. The adoption of robust inventory management software and techniques can streamline your operations.

These tools and systems can track sales across multiple channels, analyse historical sales data, and automate inventory replenishment – crucial elements to minimise supply chain failures.

To keep your eCommerce business thriving, it’s vital to stay informed and apply the best practices in inventory management. Continue reading for our top techniques and practices!

Understanding eCommerce inventory management

Effective eCommerce inventory management is at the heart of a thriving online business. Efficient handling of inventory enables companies to meet customer demand, minimise waste, and bolster cash flow.

Inventory management fundamentals

You should understand that, at its core, inventory management involves the tracking and control of stock throughout your entire supply chain. From procurement of raw materials to the sale of finished goods, each aspect requires careful attention.

To manage your inventory effectively, you will need robust inventory management software or tools. These systems track inventory levels, orders, and deliveries to prevent product shortages and ensure the stock is used before it becomes obsolete.

The role of stock in eCommerce

In an eCommerce setting, having the right stock at the right time directly impacts customer satisfaction. As an online retailer, not only do you need to ensure that popular items are in stock, but you must also be able to respond to changes in customer demand swiftly.

Excess inventory can tie up your cash flow while insufficient stock levels might mean missed sales and disappointed customers. Good inventory management enables you to forecast customer demand and stock your products accordingly.

Challenges in eCommerce inventory

Managing inventory for an eCommerce business presents unique challenges. You may be selling across multiple channels, which requires synchronised stock levels to prevent over-selling.

As sales increase, maintaining accurate inventory tracking becomes more complex, and you might face issues regarding storage space and the cost to hold stock. There’s a delicate balance between having enough stock to meet customer demand without incurring high storage costs.

Additionally, factors such as supply chain failure or poor inventory management can hinder your ability to fulfil orders. A useful alternative to utilising your own storage space is working with an eCommerce fulfilment provider, like J&J Global Fulfilment. Our international fulfilment centres can provide you with warehousing, picking and packing, and goods in processes. 

7 Key techniques for effective inventory management

Efficient inventory management is pivotal in running a successful eCommerce business. Here are some essential strategies that can help ensure your inventory is accurately managed:

1. Automation 

Implementing inventory management software is a key method for maintaining real-time tracking of stock levels. This approach minimises human error and frees up time for other critical business activities.

Additionally, you could consider using an automated parcel sorter to streamline your order fulfilment process. At J&J, we utilise one in our UK fulfilment centre in Northampton. This has maximised our customer order procedure, so contact us if you want to find out more. 

2. Demand forecasting 

Anticipating future inventory levels by analysing historical sales data can help in predicting customer demand. This technique supports you in making informed purchasing decisions, ensuring you have sufficient stock to meet customer needs without overstocking.

3. Just-In-Time (JIT) Inventory

With JIT inventory management, you order stock in response to demand, which can improve cash flow and reduce storage costs. However, it requires accurate inventory forecasting to be effective.

4. Multichannel inventory management

Managing inventory across multiple sales channels can be complex. An integrated system helps you to track and control your stock seamlessly, regardless of where the sale originates, ensuring consistency and customer satisfaction.

5. Inventory tracking

Monitoring the movement and quantity of stock is crucial. Accurate inventory tracking helps in spotting trends and making swift adjustments to your inventory management process.

6. Economic order quantity

Another inventory system you can use is Economic Order Quality (EOQ). This can help you find the perfect amount of inventory to send or store inside a warehouse at any time. 

The EOQ is useful to reduce costs of storage and shipping, which you can use to improve your customer service or other areas of your business. To calculate this, you’ll need to do some demand and logistics planning, to more accurately understand your EOQ.

7. Minimum order quantity

An inventory accounting technique that’s just as important to consider is Minimum Order Quantity (MOQ). This is a requirement from some businesses for the minimum number of orders that can be purchased at one time. 

For example, small businesses should consider a low MOQ, as it can help test out which products work for their company and which don’t. In contrast, a high MOQ is often used by larger businesses who are committed to buying larger volumes of products and trust the supplier. 

Our inventory management software, ControlPort™ can help you see where your product levels are and keep ahead with your product sourcing

4 Best practices for eCommerce inventory optimisation

Effective inventory management is a cornerstone of running a successful online store. Regularly scheduled audits are crucial for maintaining accurate inventory records.

By routinely inspecting your stock levels, you can identify and correct discrepancies, avoiding potential stock outs or overstock situations.

1. Understanding supplier relationship management

Supplier relationship management is another key element. Building strong relationships with your suppliers helps to ensure the timely delivery of raw materials and products. 

It can also give you more leverage in negotiating better prices and terms, which can improve your cash flow and reduce inventory costs.

2. Using inventory management software

Using inventory management software is essential for tracking stock across multiple sales channels and warehouses. Implementing an inventory management system allows for real-time tracking of inventory data, enhancing order management. 

3. Establishing inventory metrics and KPIs 

By adding in a system for your inventory and eCommerce KPIs, you can begin to understand where your online business needs to focus on and what’s performing well. It’s a fantastic way for successfully managing inventory, especially if you have multiple warehouses. 

Additionally, it helps you to assess your dead stock and safety stock inventory, so that you can improve your output and warehouse logistics

4. Preparing for peak seasons

Peak seasons are common for several industries, which can result in a higher demand for certain products. So, when you get ready for peak seasons, you’ll need to do some demand planning, set up marketing plans, and ensure your website is updated. 

With this all in mind, it’s helpful to set up an eCommerce peak checklist to make sure you consider all the relevant details. 

Inventory management tools and software

In the bustling world of eCommerce, staying ahead with the right inventory management tools is non-negotiable. Your ability to track inventory accurately and streamline operations can be the difference between success and stagnation.

Choosing the right inventory management software

Selecting appropriate inventory management software hinges on your business’s unique requirements. 

Consider Shopify as a versatile choice for online stores, offering systems equipped for everything from inventory tracking to managing stock levels across multiple sales channels.

Alternatively, other systems may suit your strategy for managing perishable goods or rotating stock efficiently.

Integrating POS with inventory management

Integrating a Point of Sale (POS) system with your inventory management system is vital for synchronising sales and stock data.

This real-time connection ensures that inventory levels reflect your current stock and can prevent issues such as selling out of stock products.

It also aids in improving cash flow by providing accurate inventory counts that inform inventory replenishment purchase orders.

The impact of real-time tracking on inventory control

Live-order tracking within your inventory system offers unparalleled control, transparency, and responsiveness.

Knowing how much inventory you have at any moment allows for responsive supply chain management, demand forecasting, and reduced storage space costs.

Effective inventory control prevents excess inventory and dead stock, thereby enhancing cash flow and ensuring you are well-positioned to meet customer demand.

Wrapping up eCommerce inventory management

In the realm of eCommerce, efficient inventory management is essential for keeping your operations smooth and profitable. When you effectively orchestrate your inventory levels, you prevent the inconvenience of out-of-stock products, which directly ties into customer satisfaction.

Adopting inventory management software allows for accurate inventory tracking and can reduce errors significantly. It helps you forecast customer demand and oversees the supply chain management, reducing storage costs and improving cash flow.

This approach not only helps in setting reorder points and determining safety stock levels, but also in planning for changes. Keep in mind that good inventory management goes beyond simply keeping track of stock.

It integrates raw materials, finished goods, WIP inventory, and order management into one cohesive system, balancing the cost of goods sold with future inventory needs. Selecting a precise eCommerce inventory management method can be crucial to your business’ success, so consider partnering with J&J today. We can help you scale your eCommerce company, through our trusted order fulfilment processes and integrations. 

eCommerce inventory management FAQs

The successful management of your eCommerce inventory is vital to meet customer demand and improve cash flow. These FAQs address common concerns and offer solutions to optimise your inventory management techniques.

How can small eCommerce businesses improve inventory accuracy?

You can enhance inventory accuracy by implementing a perpetual inventory system, which continuously tracks stock levels in real time.

Consider using barcode scanners for inventory counts to minimise human error and ensure that your inventory data is precisely reflected. Adopting inventory management software can also give you a better overview of your stock levels and help in improving inventory management.

What are the best practices for managing inventory across multiple sales channels?

Managing inventory effectively across various sales channels requires a central inventory management system that integrates all platforms. It’s crucial to maintain real-time synchronisation of inventory levels to prevent over-selling and keep consistent product availability.

Utilise inventory management tools that can track and update stock levels across all of your sales channels, streamlining the inventory management process and offering a coherent customer experience.

How can technology aid in inventory optimisation for eCommerce?

Technology, particularly advanced inventory software, plays a key role in inventory optimisation for eCommerce businesses. It enables precise inventory forecasting based on historical sales data and can alert you when it’s time to reorder products.

AI-driven demand forecasting can help predict future inventory levels, while implementing a warehouse management system can improve warehouse operations and the overall supply chain management.

These components are central to effectively managing inventory, controlling costs, and fulfilling orders efficiently.

About the Author

Related news & insights

Optimizing inventory levels throughout the supply chain is a critical strategy in modern supply chain management, going beyond simply maintaining stock. Multi-echelon inventory optimisation (MEIO) is a sophisticated approach that allows your business to maintain the right balance of inventory…

Consignment inventory is a unique method of managing stock. Suppliers provide goods to retailers without transferring ownership until those goods are sold. This approach allows retailers to offer a broad range of products without the burden of purchasing inventory upfront….

Painting an accurate picture of your inventory costing isn’t exactly the easiest thing to do if you’re shipping a lot of orders each month. However, inventory management has a huge impact on profitability, so the more you understand which goods…

Calculating ending inventory is a critical component for any business dealing with physical products. It’s the value of goods that remain unsold at the end of an accounting period. It is a key figure in determining a company’s cost of…

Struggling with stock imbalances and inflated costs? Effective inventory management is the unsung hero in streamlining your business’s operations and boosting growth. Dive into our guide to discover why inventory management is important and how mastering this skill ensures optimal…

As an eCommerce business, it’s only natural that a customer may want to return a product to you. There are many reasons why a customer returns a product; sometimes it can be avoided, and sometimes it can’t. Returns management is…

It’s not uncommon for the number of SKUs a business sells to grow as the business does. When this happens, it gets much more difficult to manage inventory, and we can end up forgetting about those products lying on the shelf that nobody has bought.

For eCommerce businesses operating with large amounts of inventory, inventory costs account for a significant portion of their overheads. In this article, we’re going to take a look at the different types of inventory costs, how you can calculate your…

Welcome to a deep dive into one of the most straightforward yet impactful inventory management strategies: the FIFO method. Whether you’re managing a tech retail store or overseeing a large manufacturing unit, FIFO is a term you’ve likely come across….