eCommerce inventory management: - Dash101 Blog

A Quick Guide to eCommerce Inventory Management for Business Success

Inventory Management
Warehouse worker after an accident in the storage. Man in uniform lying down on the ground

Inventory is the building block of your business. No matter where you’re selling, if your inventory is not up to the mark, customers will not purchase from you. Similarly, if you take too much time to deliver an order, your customers will not come back to you for purchase. The lack of proper management of your inventory can lead to irreparable damages for your business. This is where eCommerce inventory management comes into the picture. 

Managing your inventory in an eCommerce business can seem like a daunting task. You will have to keep a track of your inventory, monitor the incoming and outgoing changes. Along with this, you will need to understand which of your inventory is selling fast while which ones are not. Similarly, you will have to be prepared with the stock at all times. This is to avoid any loss in sales opportunities and stay competitive in the business. 

But, eCommerce inventory management doesn’t have to be this way. As a seller, you have to concentrate on increasing your sales and driving your business’ success. While the nitty-gritty details are important, you shouldn’t have to fret because of these. Thanks to the efficient eCommerce inventory management techniques, you don’t have to do any of these by yourself. 

We’re not even referring to you hiring a large staff for the task. All you have to do is adopt some practices and your eCommerce inventory management will be put in place. In case you’re clueless about where to star, we’re here to help. Read on to find out all you need to know about eCommerce inventory management. 

What is eCommerce Inventory Management?

Close up of shipping labels with bar codes on cardboard boxes sitting on a motorized conveyor roller

eCommerce inventory management is a practice that helps in monitoring your inventory. Since your inventory is what helps you establish your reputation with your customers, you must not neglect it. With eCommerce inventory management, you get to stay on top of your game.

Often sellers run out of inventory, losing the opportunity of sale and revenues. As an online business, this can be disappointing. Especially when you’re just starting in the market, losing sales can mean huge disappointments. 

The one golden opportunity you had to make sales, will then be captured by your competitor because they had the product in stock that the customer was looking for. So, even before you build your reputation, eCommerce will seem like a dead end. 

With inventory management, on the other hand, this isn’t the case. Your inventory is all sorted out, with proper quality checks at intervals. Your warehouse has ample space left for you and your staff to move around and avoid any injuries. Moreover, you are able to dispatch your orders quickly. 

Therefore, inventory management is as fundamental to your business as is its online presence. As you manage your inventory, you also come across several terms. These are extensively used in inventory management. These are the pillars of inventory management and you must know about these. 

eCommerce Inventory Management: Why is Inventory Important?

people are working at warehouse
people are working at warehouse

Inventory is an important asset for your business. But, the intuitive question is why? You already have an online business and you can cater to the demands of your customers effortlessly. You’re investing in marketing so that you can reach out to more and more customers from across the world. So, what is it that makes inventory so important?

The point is that no matter what efforts you take for your business, the tangible asset will always be the inventory. It is what gives the real-time evaluation of the company’s performance in the market. To check how much revenue a company has earned, they will try to find out how much inventory they have sold. 

As businesses sell different kinds of inventory, they become famous for their products. For example, everyone knows Reebok as the shoe brand. Similarly, when people talk about Amazon, they know that they will find the A to Z of goods there.

Depending on the type of inventory you choose to sell, you can adopt the right inventory management strategy. Too much inventory in a business can increase its expenses and reduce revenue if it isn’t fast selling. On the contrary, if a business doesn’t have enough inventory and this continues for a while they will run out of stock. 


Types of Inventory in eCommerce Inventory Management

To manage your inventory you must know the types of inventory that exist in different parts of eCommerce. While some of these can be directly sold to the customer, others are just intermediary stages in business. For example, you’ll have raw materials that manufacturers use to produce finished goods for your business. But that doesn’t mean you’re going to sell the raw materials to your customers. 

On similar lines, your finished goods and raw materials will have different inventory management procedures. You will have to take care of these separately since they have a set of requirements of their own. Let’s first take a look at the types of inventory in eCommerce-

Raw materials

Manufacturers use this type of inventory to create finished products or intermediate products. These ultimately help develop finished products.

Work in Progress

This type of inventory is waiting to be processed by the system. For example, all materials or parts that are made but waiting to be assembled or brought together fall in this category.

Finished Goods

Finished good is that good that is ready for the customer to purchase. What you sell in your website or eCommerce marketplace is a finished good. 

Transit Inventory

Some item\s have to be transported from one location to another. During the time that they are in transit, they are called the transit inventory. 

Buffer Inventory

Sellers like to keep some extra units of the products apart from the forecasted amount as a safekeeping token, this is called the buffer inventory. 

Anticipation Inventory

In case the demand for a product rises suddenly. This will push all the sellers in the industry to make a purchase. Therefore, it is essential that some of the inventory is kept by the seller for such a situation. This is called the anticipation inventory.

Decoupling Inventory 

To allow quick repairs and damage control, certain parts and components are kept in the access. These are known and decoupling inventory.

Cycle Inventory

It refers to the type of inventory that reaches its minimization point due to being in excess. Such inventory is known as cycle inventory. 

How does eCommerce Inventory Management Benefit a Business?

Business woman inspector doing inventory in a warehouse
Business woman inspector doing inventory in a warehouse

eCommerce inventory management impacts a business in several ways. From helping them pick the right plan for their inventory to avoid any unwanted interruptions. eCommerce inventory management is important.  Let’s take a brief look at the benefits of eCommerce inventory management for online businesses-

  • eCOmmerce inventory management helps save time and resources of online businesses
  • It identifies the inventory that has will son go out of to due to impending demands
  • Increases business efficiency and productivity
  • Helps companies get a competitive edge in the market
  • Make sales and provide customers with premium service quality
  • Grow the organization and explore new business areas with profitable inventory options 

Get Started with eCommerce Inventory Management

Senior Manager Discussing Factory Plans
Senior Manager Discussing Factory Plans

Now that you know the basics of inventory management, let’s take a look at how to start with managing your inventory. Most eCommerce sellers don’t know how to start managing their inventory. But, don’t worry, keep on reading to find more-

Figure out our product demands

The first step to managing your inventory is to understand the demand of your product category. Try to understand how the demand fluctuates for your product categories. To do this, you can leverage the tool Google trends for the task, you can view how the demand for goods has changed in the past 12 months or certain years.

Forecast future

Once you understand how the seasonal demand varies, you can forecast the future. This is the second step of eCommerce inventory management. To forecast demands, you need to look at the past sales and determine when the demands and interests of the customers were high for the product categories you’re selling. 

Keep minimum stock levels

You must keep the minimum stock level at all times. From your past purchases and future estimates, try to find out the minimum stock for every product that you’re selling. This will help you avoid any delays in fulfillment and cater to the customer demands instantaneously. 

Do an ABC Analysis

The next step to eCommerce inventory management is to perform an ABC analysis for your products. This means you have to divide your inventory into three categories, A, B, and C. Category A will have the high value products with low frequency of sales while category C will have low value products that sell more. This will help you focus your attention on the right products.

Prepare for the Seasonal Change

Prepare for a seasonal change in your inventory. Understand that holidays or summers will be a time where demands for certain products are naturally high. Figuring these out helps in preparing better.


Conclusion: eCommerce Inventory Management

Inventory can help your business grow in many ways. But, only if you know how to get started with it. eCommerce inventory management is mandatory regardless of the size of your business. For this reason, you must adopt the best practices as soon as possible. Make sure you ship your inventory with a reliable courier partner like Dash101 that helps you ship with multiple courier partners at rates starting Rs 23/500 gms. 

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