eCommerce Inventory Management Process

Inventory management is an important term when it comes to the eCommerce business. As the whole concept of eCommerce is based on the internet, it is always important to keep sufficient inventory to cater to the demands of the customers. In simple terms, inventory management helps you to manage and keep track of your inventory so that you can channelize them accordingly and deliver to the customers without any delay. It ensures that you always have optimum stock of the products that you intend to sell. It makes no sense when you are selling products to customers and then run out of stock within a few days of time. It is not a good precedent for an eCommerce business.

Inventory Management Helps Prevent Time Lag

Having a proper inventory management in your eCommerce business will always help you to prevent any time lag from processing the order to the final delivery. In today’s highly competitive business scenario, it is important that you are always on your toes to satisfy customers. Or else there is always a chance of losing out on business. According to a recent report published in the US, eCommerce businesses invest at least $1.43 in inventory management for every $1 of their sales. However, there are still lots of small and medium scale eCommerce businesses that do not devote sufficient time to inventory management. They still use manual methods that are not at all ideal for this competitive environment.

How does the Process of Inventory Management work in eCommerce?

If you are someone who is into this business, you need to have an idea of the process and also understand the best practices. If you implement them; you will no doubt be a touch above the other competitors. Nowadays, most of the inventory management systems are computer-based and they immensely help e commerce businesses to reduce costs through systematic inventory tracking of orders, sales, and deliveries.

As eCommerce is about catering to millions of customers online, it is quite evident that you will experience good demand if your products are good. The best way to track and manage your inventory is to have a centralized inventory system. Through this centralized system, you can sell your products to multiple locations and also manage them as per demand and supply.

Proper Supply Chain Analysis for Proper Inventory Management

First things first, you need to understand that management of inventory in online retail business is based on supply chain analysis. As the first step, you need to keep track of everything ranging from raw materials, and other shipping and packaging details. You also need to make an analysis of the customers’ demands and accordingly manage your inventory. Also, be prepared for the fluctuations that may occur to economic changes.

Secondly, you need to make use of real time inventory updates as a part of inventory management. When you are selling a product, the inventory should be reduced right then and there. If you aren’t doing that, you always run the risk of overselling products. For new businesses, excess inventory can be a problem. At least try to update your inventory records once every day, if not once in every hour.

Different Aspects of Inventory Management in eCommerce

Drop shipping is also an important part of inventory management in eCommerce. In the process of drop shipping, the merchant does not have to keep inventory on hand. Instead, they can coordinate with the supplier and get more products when in demand. Drop shopping again is a good way to start an eCommerce business without having to keep excess inventory in hand.

Forecasting is an important part of inventory management in eCommerce. It tries to give you an idea of the nature of the demand so that you can stock your inventory accordingly. In order to get your forecasting process right, you need to conduct some market research or keep track of the customer demands for a particular period of time.

Last but not the least, inventory velocity, denotes the time needed to sell a particular item that is there in your stock. Inventory velocity is a good indicator of the performance and health of your product or brand.


Puneet Bhalla

Senior Marketing Manager at Shiprocket

7+ years of experience in growth hacking and product marketing. A passionate digital marketer with a great blend of technology. I spend most of my time upskilling and experimenting, for my love of doi ... Read more

Puneet Bhalla

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