For an eCommerce website, inventory management is one of the most important parts of keeping a smoothly running website and minimising disappointments. In this article, we’re going to look at a few tips that will help reduce problems and save you time.
Central inventory management
One of the most important parts of your eCommerce website is having all your inventory managed in a singular place. This is ideally done on a cloud based inventory management system, but for smaller eCommerce websites, could also be done via your eCommerce websites inventory management.
This is the starting point to keep your website inventory in order, avoid disappointments and wasted time on having to deal with angry customers having ordered unavailable items.
Set minimum stock levels
This is when a product reaches a certain quantity left threshold, which means you need to get more of them. Setting this in your stock management system to give alert you will be the best way to achieve this.
The number to set products will vary widely depending on what you sell, what industry you are in and how many sales you get each day. If you have a large product catalogue, this will take some time to complete and there is no definitive number we can give to set your products to.
What we can do is provide advice as to how you filter which products you should prioritise, you can start by using the ABC analysis:
- A products: Top selling products, which sell regularly and are most valuable to your business.
- B Products: Products, with decent profit, but do net sell regularly enough to be classed as A products.
- C Products: All remaining products, sales will likely be low, or you have an excess of stock available and easy to replenish.
From this, you can put your attention into your A products first, as these are the most important to your business and have the minimum stock levels will have the most effect.
Use previous data to forecast
If you’ve been operating for a while, you will likely know what products and ranges sell well and at what times during the year. Checking your sales data to find the trends of your popular products, can get an idea of when additional inventory might be needed and when the best times to run promotions on them are.
For example, fireside items such as companion sets, the demand for them during spring and summer will be low as the weather will be warmer. As the seasons change to Autumn and Winter, however, when it gets colder, the demand will rise.
Knowing this, you can get the stock in for the peak times, push your marketing and promotion while demand is high, then pull it back during Spring and Summer, when the demand dies off.
One way to do this would be to look at one of your products
- Calculate the average you sell of the product each month over the last 12 months.
- Take a look at the products monthly sales data. See if there are any significant rises in the number of units sold.
- Check through the months to see if any anomalies would have inflated the numbers, such as promotions for the product, or a single large order of the product.
- Make a note of any months where there was significant rise in ordered units.
Once you have done this for a product or product range, it’s a good idea to, where possible, compare to previous years to see if it’s a persistent trend.
Dropship where you can
Dropshipping is when you list a product on your website, but you do not stock the item yourself. The orders placed for the product through your website are actually fulfilled by the manufacturer themselves.
Dropshipping has been a growing trend in the eCommerce realm, so much so that some businesses stock very few products and simply drop ship the majority of their catalogue. This is because of the win-win it poses for both manufacturer and eCommerce business.
The manufacturer increases the places their products are available, helping increase the number of customers they can reach and their sales. The eCommerce business gets to improve their catalogue range, while not having to worry about the ordering, storage and shipping of the product.
Ask your manufacturers offer dropshipping options as this can save you a lot of money and headaches from your business operations.
Be honest with expected delivery times
Inventory management is important, but setting the right expectations for your customers is just as important for avoiding disappointment as well.
This means first off, that means making sure that out of stock items are listed as out of stock on the website. Having a delivery and returns page easily available from anywhere on your website, to give people an idea of the normal lead time when ordering a product.
It’s also worth having the estimated dispatch/delivery date on product pages and at checkout when selecting the delivery option, especially for products that are more tricky to deliver and can take extra shipping time compared to the standard.
Have a Contingency Plan
Have a plan in place for the worst case scenarios occur. You can not totally predict or control everything, maybe an unexpected surge in sales will deplete stock, inventory management miscalculations, supplier unable to fulfill your order or discontinue a product, sometimes, things we don’t want to happen still do.
These are all potential issues that will have consequences on your stocks and orders. Thinking in advance about likely potential situations and coming up with a contingency plan to deal with these.
How you deal with these will vary depending on the type business and sector you are in, but being proactive and having a plan in place will help prevent headaches later if you have to deal with an issue in the moment.