An efficient inventory management system is the core of any profitable eCommerce business. Lots of retailers fail due to the absence of a clear system for monitoring their stocks well. Meanwhile, proper stock control can not just assist you in keeping your inventories organized but having an advantage over your rivals. It is easy to just state that it is significant and can help with your business success, yet exactly what makes stock control so critical for your eCommerce stores to be successful? Read on to find out.
What is Inventory Management?
Inventory management means monitoring the products a business has in stock. It involves activities like ordering, storing, replenishing your store with stock, and demand planning. In truth, well-organized stock control such as Magento inventory management could get more than 95 percent of purchase orders shipped to purchasers on time and a reduction of about 8 percent in stockout situations.
Why Inventory Management Is Important For E-commerce Businesses?
Here are the main perks for eCommerce businesses with proper stock control.
1. Predict the future with certainty
Proper stock control can aid in demand planning. By monitoring and managing the levels of your inventory storage plus output flow, you can predict necessary stock levels for a future period with much more ease. Keeping an eye on your inventory pricing regularly (say quarterly or monthly) will boost your chances of keeping up with sales.
2. Plan and respond to the unexpected
If you manage your inventory properly, you will have a far less hard time preparing for unexpected deficits and supply chain problems. These include poor cash flow, storage space running out, unexpected stock out of some goods, and delayed inventory. Thanks to your inventory analysis, you can build a contingency plan for issues that may arise. This preparation will assist in bolstering your establishment when you encounter difficult circumstances that otherwise likely have an overwhelming influence on your net income.
3. Gain customer insights
By tracking the quantity of product inventory that gets delivered (in contrast with unsold stock in storage or unable to proceed in any stage of the supply chain management), you can get significant insights into your customer behaviors. For example, this way allows you to understand better when are the peak times for shopping and a particular location that purchases your goods most frequently. Any increases or decreases in stock following a product release will likewise lend valuable feedback on the customer satisfaction with the product or your marketing efforts. This helps reduce the lead time when orders come in and ensures frictionless operations at your POS.
4. Avoid overstock and stockout
One of the most crucial parts of stock control is calculating the right amount of SKUs (in full stock product units) you need in stock at a certain time. If your inventory goes down to an extra low level, you dare your business to run out of goods, highly likely resulting in missed sales and unhappy customers. Meanwhile, suppose you have an excessive amount of stock. This case can lead to having goods that you cannot sell anymore because they become out of date or have lower demand. This is also referred to as ‘dead stock’. Research shows that you will save stock control costs by around 10 percent if you can prevent stockout and overstock. And the best approach is using order management and analytics which can support running the operations of your warehouse.
5. Reduce your storage costs
Should you have an excessive amount of stock on hand, the likelihood is that it will cost much in storage fees. Inventory management is a way out, saving you money on these fees. Why? Usually, storing products is subject to how much physical space your goods occupy in a fulfillment center. Fees differ based on the number of units needed for keeping in stock. By keeping your stock at the proper amount depending on your customer needs, you will easily reduce your storage costs and keep them from eating away at your profits. This is just one of the reasons why working with a company like an ebay fulfillment partner is beneficial to your business.
6. Boost customer experiences
Your business success is linked with customer experiences. Studies have pointed out that just a 5-percent raise in customer retention works to boost your profits by a whopping 95 percent, and having the right stock control system can help guarantee higher customer satisfaction and loyalty. Customers are never clueless about what they want in addition to where and when they want it. To keep them satisfied, you need to be all set regarding keeping a close watch on your stock.
7. Be ready for seasonal sales
Operating an eCommerce business considerably involves grasping the needs of your customers and the latest trends. In this sense, preparing yourself for seasonality will make a difference. Tapping into every festive season and getting the best of the practice of shopping during these seasons is significant for any eCommerce store. Annually, seasonal sales, for instance, Black Friday sales. see a sudden boom in eCommerce platforms. Conducting proper inventory management between these seasons is crucial as you certainly do not want stock data errors and stockouts to occur during a sale.
8. Fraud and theft control
The last thing that businesses would want is losses, particularly when fraud or theft is the culprit behind them. With a barcode inventory system, you will stay away from these kinds of situations more easily. It enables monitoring inventory levels and locations along with the employees who are handling the goods. Only grant the access to the inventory management system to staff you trust, and as you show all the others you keep track of practically anything, they will know not to be a risk-taker.
Should you adopt the best practices for inventory management, it will be a remarkable aid in effectively and efficiently operating your eCommerce store. Significantly, you make the proper choices that can scale and thrive with your business. Good stock control will help with inventory forecasting, cut down on hidden costs like storage fees, save you time, boost customer service, and ultimately improve your bottom line.