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A Complete Guide to eCommerce Inventory Management

Time to read: 6 minutes

There are some “must-haves” for an eCommerce business to succeed. They’ll need to have a visually appealing and user-friendly website, a well-thought-out shipping plan, and insight into the locations and counts of their goods. Unfortunately, many small eCommerce companies make costly inventory errors at the start. Many of their challenges stem from failing to implement an inventory management system.

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eCommerce inventory management is a system that can assist businesses in expanding all facets of their business. Business owners may make better financial decisions and streamline warehousing operations thanks to modern digital solutions. Everything makes much more sense when you know how much inventory you have.

Effective inventory control is essential as it supports your operations’ front and back ends. It is a crucial component of the supply chain on the back end, frequently serving as a go-between for your suppliers and customers. For instance, it maintains the accuracy of your front-end quantities, so inaccuracies won’t cause you to lose business.

Simply put, eCommerce inventory management involves keeping track of the kind, quantity, price, and location of your company’s merchandise. The eCommerce component takes into account the requirements of an online merchant. Each seller might have to manage inventories for several different online sales channels. 

The rapid growth of eCommerce has forced companies and merchants to expand their warehouse space to handle various new markets. Customers have become more flexible with shopping preferences, patronizing boutique items to big-box stores and marketplaces. An internal warehouse is slowly becoming a thing of the past. Contemporary online retailers need to be able to see everything beyond their internal warehouses. Online merchants must keep track of dropshipping, in-store inventory, 3PLs, FBAs, and marketplace fulfillment centers.

Using effective tactics and inventory management software, you can quickly determine whether goods are in stock, overstocked, understocked, missing, or out of stock. This helps prevent overselling, underselling, and paying exorbitant marketplace fees. 

Why Your Business Needs eCommerce Inventory Management

Evaluating your company’s needs before implementing an eCommerce inventory management system is essential. Every facet of your company’s operations is impacted by inventory management. 

Inventory tracking provides visibility into inventory counts and product locations from when they enter the warehouse until they are delivered to your customers. Items that are entirely missing, out of stock, understocked, or overstocked can all be easily tracked. With this visibility, you can more accurately anticipate inventory purchases and prepare for shortages. 

Running an effective inventory management operation might be difficult, but several tools can help you. Inventory management software helps larger organizations with their more intricate back-end procedures. It can automate new channel expansions,  bundling and kitting, managing perishables, and reducing fulfillment and shipping times. Smaller enterprises can become lean and agile enough to remain competitive.

Consistent Stock Counts

A key component of eCommerce success is maintaining consistent stock counts. Keeping an ideal item stock level boosts gross profit, lowers loss, enhances allowance management, and reduces waste. 

What is Inventory Management? A Guide For Retailers (2023) (

Regular, real-time counts can be carried out by eCommerce inventory management software. An online dashboard helps detect any theft, enhances your stock ordering procedure, and identifies inconsistencies in your pricing methods. If you see all your data at a glance, you can determine whether your business is fulfilling its continuous objectives. 

Safety Stock Monitoring

Utilizing eCommerce inventory management software to track your safety stock will help you maintain high customer satisfaction. You can deliver an excellent online shopping experience by preventing stock-outs, manufacturing, or delivery disruptions. It can also compensate for forecasting errors. Additionally, you can implement automation rules to ensure a new purchase order is made as soon as the safety stock runs out.

Automated Reorder Points

An amazing advantage of using eCommerce inventory management systems is the ability to set up automatic reorder points. Retailers can easily manage their warehouse areas. It can save time by automating the reorder point formula. It can also prevent receiving new items too early and reduce inventory expenses by implementing reorder point automation.

Prevent Human Errors

For the best results, you should use eCommerce management software to minimize the likelihood of human error occurring in your operations.

In the long run, inventory management errors made by your staff can start to pile up and hurt your company’s bottom line. Conversely, automated systems save your team time and effort while producing accurate, dependable outcomes. 

Five Tips for Effective eCommerce Inventory Management

Inventory management, which involves several methods and approaches, can get complicated. This is especially true for more extensive operations with several moving components.

Businesses can employ various inventory management techniques, but not all apply to every type of company. Variables, such as the sales volume, the products offered, and inventory quantity, will determine your company’s optimal inventory management plan. What matters most is finding a strategy that works for you and your business.

1. Implement Inventory Management Software

Today’s online merchants can access many top-notch inventory management software options. Their practical automation capabilities can help eliminate human error and streamline inventory management procedures. It’s easy to follow what enters and goes out of your warehouses. The vast amount of information you can access at your fingertips is just one of the many capabilities this software has for inventory management. 

It’s important to realize that one of the simplest ways to streamline the eCommerce inventory management process is to utilize inventory management software solutions.

2. Understand Product Demand with ABC Analysis

The ABC analysis approach divides inventory into three categories. The profitability of each SKU is the basis for each category. 

Let’s break this down further. Inventory falling under Category 1 could have a high value but a low quantity. Inventory that falls into Category 2 may be moderate in quantity and value. Finally, low-value but large-quantity inventory may fall under category 3. 

What is ABC Analysis in Inventory Control? (

This category-based inventory management allows your business to offer multiple product lines. This is important because different product lines allow for the development of unique restocking plans for every kind of category. 

For example, if you’re an electronics retailer, you wouldn’t employ the same fulfillment techniques for in-person and online sales of $2,000 laptops and $50 computer mice. One product is more valuable than the other. 

Because of this, using the ABC analysis strategy—especially in conjunction with an inventory management system—allows for greater control over the replenishment of individual products. 

3. Forecast Future Demand

For any business, success can be measured by making the future a little less uncertain. Just look at previous sales to see when interest and demand peaked. You can plan for more demand by identifying significant selling opportunities throughout the year, such as holidays and festivals.

After that, place the appropriate orders and stockpiles to ensure that no items run out during periods of high demand.

When projecting future demand using historical data, you’ll need several crucial elements. First, it’s vital to spot anomalies and outliers that could cause forecasts to be off. 

Let’s take an example where a viral marketing campaign generates significant sales for a specific product. These findings suggest that estimating demand for sales the following month could result in overstocking after your marketing campaign concludes. 

Similarly, you might order more products than necessary if you predict January demand based on December sales. You’ll need to contextualize the demand and consider the influence of the holiday season.

Analyzing historical data is the most efficient technique for accurate inventory demand estimates. But first, you’ll need to conduct a comprehensive study of your inventory data and identify any outliers that can affect your forecast.

4. Set Par Levels or Minimum Viable Stock

Par levels guarantee a minimum quantity of stock at all times, providing eCommerce sellers with a safety net. A minimum feasible stock is essential for all online merchants, provided they are not selling food or perishable goods.

The demand trends for your items and the production schedules are the main factors determining par levels. Your main objective is to know the least amount of inventory you can have while still meeting demand and preventing fulfillment delays.

Place a new order with your manufacturer or wholesaler when volumes fall short of the specified amount. 

5. Prepare for Seasonality

Make every effort to be ready if you manage an online store that capitalizes on a specific buying season, such as the holidays or summer.

During slow months, keep your inventory low. But always be aware of demand; don’t wait too long to increase your supply. To avoid carrying too much dead stock, run special offers around the end of a peak season to sell off most inventory.

For as long as possible, keep your operational expenses low. Take advantage of the slower business to ensure you have all you need for a great sales period, including partners, tools, warehouse storage, human resources, etc.

Your inventory is one of the most important assets your business has. Implement smart and meaningful eCommerce inventory management techniques to improve logistics performance. Greater oversight helps you make better purchasing decisions and understand how to optimize your inventory for sales.

ZhenHub is an effective digital solution for hassle-free eCommerce inventory management. Take the guesswork out of inventory tracking. Get an insightful look into all your inventory processes and performance, all with just a few clicks. Sign up and integrate your online marketplaces into our online dashboard.

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