Effective inventory management is an often neglected but crucial aspect of any ecommerce business in today’s hyper-competitive marketplace. The inventory management process must be efficient, cost efficient, and accurate. If you don’t have all of those components in place, you risk failing to meet customer demand and going bankrupt with your ecommerce fulfilment efforts.
Inventory management is the process of keeping track of the goods that a company has on hand. It includes tasks like ordering, restocking, storing, and forecasting inventory.
Strategic inventory management becomes more difficult as the number of units sold increases. Inventory can also increase if new and different products are introduced and sold. The right inventory system can aid in inventory management and is an essential component of supply chain management.
Many small businesses believe that outsourcing order fulfilment and product storage to a third-party logistics (3PL) provider entails completely handing over inventory management. The truth is that a 3PL can provide great tools and data to help a seller handle their inventory in the most effective and cost-effective way possible.
In this article we are going to introduce you to the different advantages of inventory management because of which it is a essential part of Ecommerce businesses.
- Insights of customer behaviour
Able to monitor the amount of product inventory that is shipped (as opposed to unsold, in stockpiling, or stuck in any supply chain) will provide valuable insights into customer preferences. Is there a busiest month for purchasing? Perhaps an only about where your product is frequently purchased. Furthermore, any spikes or dips in inventory following a product launch will provide useful feedback on your marketing material and brand experience. This can reduce time as orders arrive and improve productivity at your point of sale. This can aid in inventory tracking and control, which is critical for a small business.
- All Planned
Nobody can foresee the future, but inventory management can help you plan for unexpected supply issues or deficits, such as:
- Manufacturer’s delayed inventory
- Unexpectedly, a product sells out.
- You’ve run out of storage capacity.
- Cash flow issues
You can create a backup plan for potential problems by analysing your inventory over time. This planning will help to strengthen your business when you face adversity, which could otherwise have serious consequences for your bottom line.
- Saving money in storage
If you have far too much inventory, it will most likely cost you a lot in storage fees. That’s money that could have gone toward branded shipping materials or absorbing accelerated shipping fees. The degree of exercise space your product lines take up in a fulfilment centre is frequently used to determine how much storage space you need. Fees vary depending on the number of units you need to keep on hand. By maintaining your inventory at the appropriate level based on customer demand, you can save money on storage fees and put it toward other aspects of your business.
- No product run out
One of the most important aspects of managing inventory is determining the appropriate number of product units (SKUs) to keep in stock at any given time. If your inventory falls too low, you risk running out of products, which can result in overlooked sales, step back, and customer complaints. On the other hand, having too much inventory can result in having products that are no longer sellable due to reduced demand or being outdated. This is also referred to as “dead stock.” Proper order management, in conjunction with analytics, can also aid in warehouse management operations.
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