Best ways to imrove E-Commerce inventory management

E-Commerce inventory management – best ways to improve

EasyERP Team 22/05/2017

You can’t underestimate the importance of E-Commerce inventory management in online business. Yes, it is very time-consuming to constantly control your inventory, especially across several marketplaces. That’s why 46% small and medium business use the manual method of inventory evaluation. We think, that this is a huge problem. Not efficient inventory management ties up the capital and leads to a bad customer experience. Managing the products and items you have in stock has to be one of the top priorities. In this article, we will tell you how you should successfully manage your E-Commerce inventory.

Inventory – the Basics

First of all, let’s understand the nature of inventory. In E-Commerce inventory is a stock of physical goods that poses economic value, and are being held to be packed, processed, transformed, used or sold in some moment of time in future.

Not only E-Commerce has to manage inventory, any company or organization that is into trading, manufacturing, sale or service of products. All of them will eventually have to hold stock. Please note, that the companies may use their inventories for different reasons and purposes. For example, save them for sale, intended purposes, or, even for speculative goals.

What companies use for inventory management

In other words, the definition above dictates following points:

  • Any organization that is involved in production or sales holds inventory in some form
  • Inventory can exist in two states, complete and incomplete
  • The main purpose of holding inventory in E-Commerce or any other kind of business is for future consumption, trade, sell, future processing or value addition
  • All items that are inventory includes have economic value and are being counted as an asset of the organization

Why you should effectively manage inventory in E-Commerce

The main trick to the truly effective inventory management is to always possess precise knowledge about what is on hand, is it in use and where, and how it affects the bottom line.

So, the process of E-Commerce inventory management is basically continuous overseeing the input and output flow of items on your warehouses. Keep in mind, that you have to control the levels of items also, so you avoid overstock and understock. Or, in other words, to keep sure that there is always a right amount of items, not too much and not too little. If you want to call your inventory management competent, you will have to include control over the costs of inventory and associated with it. From the perspective of the total value of the goods included and the tax burden generated by the cumulative value of the inventory.

If you count all your assets you always show a profit. (Wilson Mizner)

Persistent inventory management in E-Commerce and in every other business makes it possible to create accurate records for tax purposes and analysis on each inventory type.Without this information, it will be impossible for a company to pay taxes in the right amount or calculate the cost of goods sold. This can be a reason of inaccurate tax payments and possibly some penalties.

So, to sum up.

The three main goals of E-Commerce inventory management are:

  • The best it can be customer service
  • Minimal inventory exes
  • Maximal productivity

And the main benefits of a successful E-Commerce inventory management are:

  • Firm grip on the inventory levels
  • Easily calculated value of any item in the inventory
  • Momentarily access to the quantities in stock, quantities sold or shipped
  • Quick response to the changes in demand
  • Overall increase in the levels sold
  • Analytic reports of the sales and other inventory data
  • Optimizing the space and resources of your warehouses


So, how to achieve these goals and get the benefits of E-Commerce inventory management?

Well, the main answer is to use modern technology. Motorola Solutions agree with this us.  Like we have mentioned before 43% of SMB do not track their inventory at all or use the manual method. This means that you should stop manually writing down the items in the spreadsheet or using Excel for inventory management. Why so? Well here are the main reasons.

ecommerce inventory management without excel

  • High chance of human error – nowadays almost everybody knows how to use standard office software package, including Excel. But this doesn’t mean that they don’t do mistakes while using it. Sure, everybody is human, but modern E-Commerce software support barcodes which greatly reduces the chance of mistake. Excel’s lack of ability to import data from other sources makes the situation even worse. You should try to automate all possible operations to minimize the chance of human error
  • Possible snowball effect – chances are that you are familiar with this effect. It happens when someone makes a mistake and it is not corrected right away. Depending on the nature of business at the incorrect number this could lead to big problems. Because one unnoticed mistake can distort other important data
  • Limited user access – it is impossible to manage inventory in a spreadsheet from multiple locations at the same time. If you have several employees that have to input some data into your Excel spreadsheet, then you know they are in trouble. Because they can do it only in turns, it is really frustrating. Not to mention that this is really inconvenient, the main flaw is that it’s raising the chance of error
  • Efficiency Losses – in order to create a suitable excel sheet for your E-Commerce inventory management most certainly you would have to hire some sort of an Excel guru. But, there is no guarantee that this sheet will answer your need in a month. Trust us, you don’t want to be depended on an expensive Excel consultant



But E-Commerce inventory management software is expensive, right?

Quite the opposite, we must say. But this is the main reason why some companies are still using Excel to track their inventory. Fortunately, a lot of modern software solutions for inventory management in E-Commerce are affordable, even for small startups. The decrease in value is caused by the growth of cloud-based platforms.

Cloud solutions provide the “best of two worlds”. You get a constant software support and update as you would if you would found your own IT department. And you don’t have to spend money on server hardware and upkeep. For example, basic version of EasyERP is free.

Try out EasyERP for free!START A DEMO


What you should look for in an E-Commerce inventory management solution

Modern software solutions will help you with the E-Commerce inventory management. The main challenge is to find such software that will satisfy all your needs, be easy to use and not too expensive. And we have an answer for you. But one thing at a time, first, let’s figure out what should this software do.

Real Time Inventory Updates

First of all, the inventory management software should be able to update inventory levels in real time. For example, when you sell an item, inventory should be updated right away, in the exact same moment. If for some reason, it isn’t updated, you are under the risk of promising your customers more than you possess, in other words – overselling. It is a real problem for the new companies in the E-Commerce , especially if they are not familiar with the concept of backordering.

Keep in mind that there is a huge gap between real time and “close to real time”. Some software promises your update once every hour or every couple of hours. You should not settle with that.

Any kind of delay in inventory levels update pulls your business to risk. The risk of having an unpleasant talk with your customers explaining why you can’t deliver in time. Or, the other way around, you can lose potential customers if they visit your E-Commerce store and see that the item is out stock, but actually, it is, but the inventory levels weren’t updated yet.

Single inventory hub for multichannel inventory

When you research for a better way to manage your E-Commerce inventory you need to take into consideration how many different platforms or stores you plan to run. For instance, if currently have only one store and do not plan to expand your business to other platforms then, probably, you will be fine using the solution of that E-Commerce platform.

In all other cases,  you will need a central hub for every inventory of your E-Commerce business. Because it is a real pain trying to synchronize and manage shared inventory between two or more platforms.

So to sum up, for an expanding E-Commerce business you need a modern software solution that is capable of managing multiple inventories on different platforms such as Magento, Shopify, Etsy, WooCommerce.

“Endless Aisle” Support

“Endless aisle” is a concept in E-Commerce where you as a merchant, ensure that you never run out of products. This can be done with the help of drop shipping or backordering. This is a great feature to have in an E-Commerce inventory management software.

A lot of online merchants use this trick to start up their business, this way they can “cold start” their company without a use of a significant amount of cash. All they need is a good relationship with the supplier and a healthy supply chain.

The backup plan of this concept is to just forward your incoming orders to your supplier. Sure you may lose some part of profit this way, but, on the other hand, you will not disappoint your customers and lose reputation.

Handling Variant Products

Another vital feature of any E-Commerce inventory management program is the ability to handle variants of products. This is a huge time saver especially if you sell items that vary from each other by one or a couple of characteristics.

If your inventory management software supports this feature, you can register a huge amount of products in your system with just a few clicks. Creating so-called “matrix of variants”. Another way around, you would have to waste a significantly larger amount of time doing tedious work, inputting similar data over and over again.

Trust us, you don’t want that.


Handling Kits/Item Bundles

There is an another type of products listings that without a proper software support can complicate your inventory management process. This type is the bundle.

Bundle in E-Commerce is when you sell multiple products as one. This is a great way to promote your products, add value to them, or sell less liquid assets by attaching them to something that is flying off the shelves. Now, imagine that you will have to register every sale of the bundle separately, by editing the quantity of every item sold. Sounds like a waste of time, doesn’t it? Well, a good E-Commerce inventory management solution should take care of this process automatically. So, the stock levels will adjust correctly after you sell each bundle.


The solution of inventory management in E-Commerce

We won’t run around the bush for a long time. EasyERP will be great for your E-Commerce business.

This multichannel inventory management software possesses all of the necessary qualities we have mentioned before such as real-time updates, support of several channels, drop shipping and backordering support, variant, and last but not least – bundles. Also, it eliminates all of the Excel flaws because of its nature. By checking the data user’s input EasyERP drastically lowers the chances of input mistake and the snowball effect. And because it is a cloud-based unlimited number of users can work in it at the same time. Feel free to chek out the pricing of EasyERP. If you have any additional questions, feel free to contact us via chat or using the button below.

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