Businesses equipped with efficient fulfillment models, pretty websites, and inventory visibility may feel ready to achieve their eCommerce goals. Yet, none of those things can prevent customers from mulling over a product for a half hour, clicking on it, and learning it’s out of stock.
The cost of understocking products is just as serious on the front end as the cost of storing overstocked merchandise on the back end. If businesses survive on customer loyalty, they get killed off by problems like these.
How can eCommerce retailers address an issue that can’t be solved by visibility alone? The problem boils down to consolidation, or whether businesses can achieve a fulfillment model that tracks inventory in real-time, integrates and automates replenishment strategies, and centralizes order management and inventory tracking onto one multi-channel system.
Software that takes the human error out of eCommerce inventory management is the key to competing in modern retail spaces. When inventory counts are accurate, you can make decisions for that moment, but when they’re always accurate and updated in real-time, you can strategize for the present and future at the same time.
This article explores what eCommerce inventory management is, including the definition of inventory management software, its importance and use cases, and examples of the best eCommerce inventory management software for 2024.
What is eCommerce inventory management?
The term, “eCommerce inventory management” includes all the programs and strategies that businesses use to integrate technology with online retail fulfillment. Some popular strategies include just-in-time inventory, which entails buying products on an as-needed basis, and dropshipping, which means fulfilling orders directly from the manufacturer to the customer with no warehousing needed.
We’ll talk more about these strategies in a bit. They’re just the tip of the iceberg, one that online retailers have to scale if they expect to deliver the customer experience that people expect in 2024 and beyond.
Today, eCommerce inventory management is about more than a fulfillment strategy. It also involves selecting the right inventory management software for the job.
What is inventory management software?
Inventory management is taxing. Any business with a retail component knows how many pain points need to be addressed in fulfillment alone. Inventory management software alleviates some of these concerns, particularly in online retail scenarios, with features that include:
- Real-time inventory optimization
- Barcode scanner integration
- Real-time stock alerts
- Automated fulfillment processes
- Real-time replenishment
- Multi-location warehouse management
- Advanced analytics
Software equipped with these features can help businesses achieve the ultimate goal of consolidating their workflow, increasing their inventory visibility, and lowering costs. But these programs are only a means to that end. They need to be backed up with an efficient inventory process, one that seamlessly integrates with the program you choose within your fulfillment objectives.
Managing eCommerce inventory
How can businesses consolidate their workflows to establish an accurate and efficient inventory process? Here are a few terms that every eCommerce retailer should know.
Inventory audit
An inventory audit is a crucial part of inventory accounting. It compares the actual levels of a business’s physical inventory with its financial and sales records. In the past, this has required a physical count, subject to human error. Additionally, even if discrepancies are discovered, it’s hard to roll back the clock and figure out if the error was caused by stocking issues, theft, damage, or fulfillment inefficiencies.
A warehouse management system for eCommerce simplifies the process with barcoding and real-time accounting that updates whenever inventory (or company assets) change location.
Inventory management
Unlike inventory auditing, which is an accounting process, inventory management deals with the everyday ordering, storing, fulfilling, and reordering of your company’s products. Management also involves demand forecasts, which feed into replenishment strategies.
Cycle counts and audits are sometimes lumped into inventory management in a more general sense, but in this context, management is the end-to-end handling of stock from the time it’s ordered or made to the time it’s out for delivery. This includes both products and raw materials.
Inventory control
Inventory control is a crucial aspect of inventory management. It refers specifically to how stock is handled daily at your warehouses, including how it is received, stored, transferred, tracked, and fulfilled.
Control also refers to how your warehouses are organized, whether there is a barcode system in place, whether old or recent inventory is shipped first, and other organization systems.
The role of eCommerce inventory management software
Businesses with warehousing and online fulfillment components have a lot to juggle, including product description, price updates, batch updates, replenishment schedules, demand forecasts, multi-location management, and more.
An eCommerce inventory management system like Sellware allows businesses to gain control over their inventory while connecting different marketplace channels through a central hub. At the same time that your organizers are managing your inventory, Sellware centralizes orders and optimizes listings on various channels with custom kitting and bundling options, bulk listing options, reusable marketplace templates, and more.
This gives managers, team leaders, and warehouse organizers a functional way to communicate with teams, organize fulfillment strategies, and automate fulfillment tasks for greater efficiency on multiple channels. In short, it achieves the ultimate goal of inventory management in 2024: consolidation of resources, labor, costs, and management tasks.
8 eCommerce inventory management techniques
The phrase, “eCommerce inventory management,” is an umbrella for many possible techniques. The right one for your business depends on your market, infrastructure, and demand forecast. Here’s a breakdown of 8 common strategies and tips.
Just-in-time (JIT) inventory management: This strategy involves ordering your supply when customers order the products, cutting storage costs, making inventory tracking easier, and increasing your turnover ratio. However, businesses that practice JIT are more susceptible to unforeseen supply chain breakdowns caused by natural disasters, shortages, or labor strikes.
First in, first out (FIFO) inventory management: FIFO means that the first products delivered to your warehouse are the first products shipped out when they’re ordered. It’s particularly prevalent in the food & beverage industry where spoilage is a constant concern. Your COGS can be difficult to calculate, however, if these goods fluctuate in price.
Dropshipping: Dropshipping involves shipping products to customers directly from manufacturers, cutting out warehouse storage altogether, which saves storage costs. However, dropshipping often results in higher overall fulfillment costs since manufacturers can no longer sell the items to your warehouses in bulk.
3PL fulfillment: 3PL or third-party logistics fulfillment involves another company handling the fulfillment process for an eCommerce business. The vendor offers their supply chain, storage facilities, and fulfillment infrastructure to help companies save time and money at the cost of paying the 3PL company as well as having less quality control.
Use historical data to forecast demand: This strategy assesses the need for reorders through demand forecasts using predictive analytics. Manual accounting methods won’t be enough to use this method, which aims to make replenishment strategies more reliable using historical data. A robust eCommerce stock management system is needed for this method.
Implement a scanning system: Barcoding helps you weed out unneeded tasks and prevent human error from misguiding your replenishment schedule. Stock can be moved in and out of warehouses while automatically updating the inventory in real-time using an eCommerce inventory management system. Today, this is a must-have feature of any fulfillment process that has to deal with more than a few products.
Use audits to improve your techniques: Inventory audits are useful even if you have only a few suppliers because they allow you to compare your lead times and costs to your competition. They also alert you to negative trends like defects or customer returns for certain products.
Integrate a warehouse management system for eCommerce: With any of these techniques, dedicated eCommerce product management software can allow you to manage your inventory numbers, automate basic tasks, and go a step further with custom APIs. The power to integrate with other technologies means you’re no longer limited by your infrastructure in terms of how cost-efficient your fulfillment process can be, provided you pick the right software.
Choosing the right inventory management software
As important as it is to match the management technique to the fulfillment model, the software you choose to carry off your chosen technique is just as important. Many businesses know they need a robust warehouse management system for eCommerce without knowing how to choose the right software for the job. These are some of the questions they should be asking:
- Is the software scalable?
- Does the software integrate with other systems?
- Does the software allow audits?
- Does the software offer personalized reporting?
- Does the software support multi-channel fulfillment approaches?
E-commerce product management software allows you to address these points with multi-channel order management, reduced fulfillment costs, and real-time accurate inventory counts, among other benefits. This promotes visibility and scalability, allowing businesses to integrate with existing systems (like your existing POS) while becoming more cost-efficient.
Which software is recommended for inventory management?
To get a better sense of the offerings, here are our picks for the 7 best inventory management software solutions out there in 2024:
- Fishbowl
- Sellware
- ShipBob
- SkuVault
- Cin7 Core
- Zoho Inventory
- Linnworks
These programs share a goal in common: to present centralized, consolidated inventory management solutions to businesses that want to scale their operations (up or down), lower costs, and create a more efficient fulfillment workflow.
To match the program to your business’s existing infrastructure and future goals, contact the software vendors and tell them your use case. Ask them the questions listed earlier to learn whether they can offer a warehouse management system for eCommerce that has the features you need.
Elevate your eCommerce game with Fishbowl
Choosing the right eCommerce inventory management system gives businesses a crucial edge over their competitors. Instead of wasting labor and storage costs on tasks best left automated, they can devote time and energy to developing and executing more efficient fulfillment strategies.
Fishbowl helps businesses control their profit margins even as they expand into the realm of eCommerce inventory management by matching the pricing structure to the inventory usage. This personalization is key to consolidating your workflow effectively, especially considering your competitors could be reading this and planning their own inventory management strategies at the same time.