You don’t want to be in a fix when your target customers make an order and find that you don’t have the products to deliver. Your customers want the best customer experience from your business to keep using your brand products. It is essential to keep an inventory of your products to ensure their quality and availability when customers make an order.
It’s all about sourcing your products, storing your stock, and how you sell them. Inventory helps keep your products, available and in good condition before selling them to your customers.
Having a great inventory management system saves your business time, resources and makes the operation of your ecommerce business smooth.
Delivery of products to customers faster. Since you know the availability of your products and their state, it will be easy to deliver them to customers once they order the products from your store.
Retain customers for a long time. Customers love businesses that deliver great products that help them solve their pains. With your well-managed inventory, your products will be in good condition, and you will deliver the products at the right time to customers. It will build your customer relationship and trust and increase customer lifetime value.
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Have accurate order fulfillment. Since you have inventory for your products, it will be simple to fulfill customer orders accurately. You will know what to pack, the right quantities, and avoid misshipment. You can fulfill customer orders quickly and effectively and keep growing your customer experience with your brand. Keeping inventory ensures your customers get their orders the way they place them.
Better planning and stock item ordering. Inventory management helps you better plan and stock your items. You know the goods you need at certain times and the plan you have to order them. Scanning barcodes on packages makes it easy to keep inventory for incoming goods in an easy way.
Improve your warehouse organization. Professionalizing your warehouse will be easy if you practice good inventory management practices. The right inventory management will make it easy to plan and organize goods in your warehouse for easy movement, planning, and ordering when customers place their orders. For example, Radio Frequency Identification used in larger warehouses helps handle large quantities of products.
Have a Positive Supplier Relationship
You want to make sure you always have the products your customers require. You need to nurture your supplier relationship to ensure a consistent flow of these products. Ensure you’re on good terms with your suppliers to keep products available to your customers anytime they need them.
Organize your supplier communications on emails and organize the emails on a spreadsheet where you can track any updates and follow up with your suppliers with ease. Pay their bills on time and offer them a great working environment to ensure they deliver the products you need on time and in the right quantities.
When your supplies have a habit of late deliveries or not following your item order placement, you can sort the problem out with them. If it persists, you can look for other supplier partners for your ecommerce. It is essential to have a working agreement with your suppliers.
Sell Old Stock First (FIFO, First-in-first-out)
Selling your products as they come, starting with the oldest stock you received in your store, is essential. When products are kept for long, they can expire. For example, perishable goods like flowers and food can’t stay for long in stores, as they will expire. Even for nonperishable goods, keeping them in your store for a long can affect their value as they can get damaged and hence become a waste.
Manage Returns Effectively
You need a system for checking and updating the goods you receive in your store. When you receive products, you need to carefully check the packages to see if all the products are there before storing them.
Sometimes the suppliers make mistakes when packaging or labeling the cases or boxes. You don’t want customers to complain once they make purchases because products were not correctly checked in when they made the order.
Sometimes you can get products that take time to sell. It is important to have a working agreement with the vendors on the returns policy when goods stay for long in your store.
5Have Backup Suppliers
Your best suppliers can have issues with their delivery, and if they can’t deliver goods at the right time, that can influence your customer relations and your entire business. Have backup suppliers for your products in case of delays with the other suppliers. You will ensure your customers get their goods at the right time and in good condition, and they will keep using your business for their needs.
With this method, you don’t need to keep inventory. With drop shipping, you can fulfill orders for your customers when they purchase from your ecommerce store. You can use online data supply tools like AliExpress to get the best wholesale suppliers for your ecommerce business. Import the products that interest you through integrations to DSers.com sites like Shopify or Wix. Your completed customer orders will reflect on the DSers app
Have Regular Stock Checks
It is essential to check out your stock manually. You can periodically check out your stock to know the products available. Ensure all the details in your inventory tool match the products you have in your store.
Use The Right Inventory Management Tools
Customers are the priority of your business. They will be willing to stay with your ecommerce for a long time if they get a great experience from your store. That experience is enabled by an ecommerce store using the right inventory management tools.
The tool makes it easy to make informed decisions to run and grow your business if you use the right tools to ensure a consistent flow of products to customers.
Calculate the Marketing Costs Involved
You don’t just want to keep inventory but make a profit from your ecommerce store. You need to be aware of all the expenses involved in your ecommerce business operation. It will help you understand how much to charge your customers and avoid going on a loss with your business. Remember, you’re in business to make a profit, right?
Predict Future Purchases with Past Stock
You have been in business for some time and sell products to different customers. From our past customers, you know the products that sell faster, and hence it is essential to have those products ready.
Ensure those products are always available whenever your customers need them. Let your suppliers know your schedule for the supplier of such products to ensure their availability anytime. You can use data and analytics to predict and improve demand forecasting of your products.
Use the 80/20 Inventory Rule
The rule states that 80% of the business profits come from 20% of your stock. It means 20% of the stock that sells most and drives consistent profits for your business. Knowing the selling cycle of these hottest items is crucial for the smooth running of your business.
For example, know how many such items sell in a day, week, or month. That helps ensure you will have the products for your customers whenever they need them. With the help of this rule, you can set reorder alerts for fast-moving goods to ensure the availability of these most used items.
As you run your ecommerce store and manage your inventory, here are some key metrics you need to measure for the continued growth of your business.
- Inventory Turnover. This metric helps you measure the number of times your inventory is sold and replaced within a given time frame e.g. a month or year.
- Perfect Order Performance. This KPI predicts customer satisfaction when using your business products. For instance, you can fail to deliver goods on time or deliver them not as per customer expectation, or not fulfill specific customer requests. These lower your perfect order performance metric.
- Order Cycle Time. It measures the time gap between when a customer places an order and when they receive it on delivery. The metric helps businesses know how effective their production and supply chain management is when serving customers.
- Days Sale of Inventory. It measures how long it will take your inventory to turn into sales. Here is how to calculate this metric.
- Carrying Costs. The metric measures the costs involved in storing your goods for a given time frame. It helps you plan how much you will sell your goods so as not to make a loss. You minimize the maintenance expenses and improve your business profits when carrying costs KPI is well measured.
To ensure your customers are well satisfied and keep growing your business, you need to have products to sell anytime an order is made. Having well-organized inventory management will help ensure a consistent supply and availability of goods your customers need. If you’ve been having issues with your inventory management or needed some tips to keep your inventory management system effective, try these tips.
James Nguma is a B2B SaaS and Ecommerce content marketer and blogger. He helps SaaS and eCommerce businesses create marketing content to engage, build trust, and convert leads into customers. Connect with him on LinkedIn.