KOOL ASSET MANAGEMENT
SIMPLIFYING THINGS
With more products being distributed online than ever before, companies need to consider where their products are, how to organize them easily, and what to reorder to prevent distribution headaches.
In any case, there is one part of a retailer's life that does not get the attention it deserves. And it is understanding how to use inventory management approaches to help the company succeed.
Understanding inventory management is critical for any company, big or small. It reduces waste, reduces costs, and saves time. Keeping up with production allows more consumer attention by supplying customers with the items they desire.
Unlike marketing and distribution tactics, which can be easily pivoted, inventory management often takes time to execute and requires constant maintenance and monitoring to ensure that it runs smoothly.
E-commerce networks are no longer considered secondary to brick-and-mortar shops. In reality, creating an e-commerce portal is critical for today's market success. The figures don't lie. In 2019, global online e-commerce revenues exceeded $3.5 trillion.
The market's valuation is increasing year after year. Running an online shop will be a profitable endeavor provided the critical procedures are followed correctly. Inventory management is one such method.
At heart, e-commerce is simple. You display a variety of items online, consumers find and purchase what they want, and you then produce. What matters is that you have the things you advertise and that you will get them where they need to go. That is why proper inventory management is necessary.
This article will go into the significance of
using an inventory management system for your e-commerce projects. Also the article will cover the advantages that proper inventory management brings to your company.
Inventory Management
Inventory management, at the most simple, is the process of acquiring, holding, and selling stock. It's figuring out how much stock you have, where you should store it, and how long you should have it.
Any retail business, big or small, should have some kind of inventory management system. Understanding your inventory is important for running a sustainable business. You should be aware of:
- When to reorder?
- What should you reorder?
- How much would you need to order?
- How long do you expect the inventory to stay in the warehouse?
- and a lot more
Need for Inventory Management
Inventory management has existed in some way or another for decades. Having said that, today's market is more customer-centric than ever before, and having a more comprehensive inventory plan to handle inventory in the warehouse is becoming a must.
Without an inventory control strategy, you won't know when you're running low on supplies, resulting in orders that can't be filled. You won't know when you're overstocked, which will result in excessive warehousing costs. And as you scale, shop inventories get more complex: this isn't a dilemma that can go away.
You must be able to handle storage and inventory even when an unforeseen event occurs. Inventory management may take several forms, but all effective retailers use some form of inventory control management.
What is e-commerce inventory management?
The act of calculating the amount, location, pricing, and mix of items available from your company is known as e-commerce inventory management.
Inventory items could be hosted in your warehouse, provided by a third-party logistics fulfillment center, or housed in a separate company and purchased through drop-shipping.
Businesses may use e-commerce inventory monitoring to determine which items are overstocked, in stock, understocked, and out of stock.
Inventory management is inextricably linked to a company's finances. Right inventory management in every big warehouse offers you a bird's-eye view of the amount of sales opportunities from every single pallet.
Inventory management relies heavily on logistics and analytics. The number of items you keep on hand stems from knowledge about buying habits, seasonal patterns, and fluctuating consumer demand.
Challenges with inventory management in e-commerce
Any e-commerce company owner faces inventory management problems at some point. Knowing what any of these problems are and how to solve them ahead of time is what distinguishes decent inventory management from great management.
Here are some of the most important inventory problems that can affect an e-commerce business's development and profitability, as well as consumer engagement and retention:
- Overstocking and Overselling
If you don't have a clear understanding of your inventory and the buying preferences of your target customers. It's possible to find yourself in positions that either can't supply demand or have overestimation of how much merchandise you need to have on hand in a given month.
When it comes to collaborating with e-commerce brands these days, customers expect honesty. They want to see and believe that if you commit, you can deliver. When you oversell inventory, you risk delaying the delivery and possibly jeopardizing the relationship you've created with those who want to order your goods. An easy fix will be to mark goods as in or out of stock digitally where shoppers can see the available quantity for themselves.
- Manual Management
Scale is another inventory management problem that many e-commerce company owners face. It's pretty easy—and tempting—to manually monitor and satisfy orders, even over multiple platforms, when you're just starting with your e-commerce company. However, as you work to scale your company to satisfy the growing needs of your client base, it becomes much, much more challenging.
Scaling involves marketing merchandise on additional sites, such as Amazon, Etsy, eBay, and Alibaba, for many e-commerce company owners. It also entails collaborating with a variety of partners, vendors, and distributors. It can also imply maintaining inventory in several warehouses around the world.
When you focus solely on manual management processes, taking certain steps to expand your e-commerce business is nearly impossible. Manual accounting also raises the risk of data failures impacting product management.
- Lack of visibility
Another common issue that eCommerce company owners face as retail demand rises and inventory control becomes more dynamic is a lack of visibility. Two major exposure issues can affect your ability to satisfy demand and expand your business:
- Insufficient visibility across various platforms.
- There is a lack of clarity across many warehouses.
Without full insight through the entire inventory management system, it's impossible to realize which decisions must be taken and when they must be made to sustain market growth and satisfy customer demand.
- Lack of insights
A common inventory management problem that many e-commerce company owners face is a lack of data insights. You must become fascinated with data to expand your company and make choices that support demand.
To increase profitability, promote innovation, and listen to your customers' desires, you must consider how the inventory fluctuates over time, how demand changes over time and forecasting what it would look like in the future, where to reorder goods, where to cut back on items, and where breakdowns in your processes occur.
It is almost impossible to exploit data to make these forms of rational business decisions without a centralized infrastructure that pulls inventory information from any source in real-time, 24 hours a day, seven days a week.
What Are the Advantages of Managing Ecommerce Inventory?
Disrupted inventory control can be very detrimental to your company - if buyers aren't receiving their goods on schedule, or if you're delivering products at a cost you can't meet, you're damaging the trust you're trying to develop with your customers and suppliers.
Correcting inventory management errors will cost companies a lot of money, both in terms of missed sales income and dead stock.
If you have your inventory management plan correct, your company will benefit from increased purchasing behavior intelligence as well as a better sense of where the goods are in their lifecycle.
- More efficient business practices
- Having an eye on all inventory
- Delight every customer
- Eliminate dead stock and wasted inventory
- Create returning customers with more re-order capabilities
- Look at past purchases to predict future stock
Conclusion
Since there was only one channel to market in the storefront, traditional brick-and-mortar retail inventory was handled more simply.
However, in the era of e-commerce and multi-channel marketing, things get a little more complex, making it much more important to use technologies to grasp your supply chain.
Modern brands will sell across a variety of outlets, including brick and mortar stores, e-commerce storefronts, marketplaces like Amazon, and social media.
If a commodity is ordered from one channel, the inventory numbers must be consistent for all networks. Inventory management tools, along with precise channel management, assist brands in accomplishing this.
The front- and back-end experience with any transaction should both be optimized to please the end-user, which is where eCommerce comes in.
Getting a strong product control scheme in place will make your life a lot simpler. Using a combination of the right tools and these strategies would ensure that you keep track of your inventory, resulting in more gains for you. In the end, that means a happy client that will return.
Latest Articles
