When you start your ecommerce business it’s likely that you will track your inventory using spreadsheets. Which is great for a small business that’s just getting going.
The issues with this approach arise when your business grows, you start selling on more channels and your processes get more complex. When you get to that stage you will probably start to look at a perpetual inventory system to help manage your inventory and help scale your growth.
Perpetual inventory systems are software platforms that sync up your inventory with your sales channels and shipping carriers. They then keep track of your inventory all of the time, hence ‘perpetual’. They help ecommerce retailers keep track of their inventory seamlessly and in real-time.
The importance of inventory management in multichannel ecommerce
Ecommerce businesses are selling on more channels than ever before. And most are planning to increase this number as soon as they can. Taking advantage of multichannel ecommerce opportunities is a key part of many ecommerce businesses’ growth strategies. Yet, sometimes, multiple channels just multiply and worsen the issues you already have with inventory management. Strangling your plans for growth.
If you are seeing any of the below signs in your business, then it may be that this is happening to you.
Sign 1: Inventory management is taking all of your time
Manually tracking your inventory across multiple platforms is time consuming. You have to laboriously keep on top of each product you sell across every sales channel.
The problem with this isn’t that it’s boring, although it is. It’s that steales time away from what you should be doing: growing your business. As you scale your business you will need to focus more on marketing and other tasks related to expanding your customer base. You can’t do this if you are stuck double-checking spreadsheets.
Sign 2: Overselling is hurting your reputation
Listing your products on multiple sales channels is great. But you need to make sure you can fulfill all of the orders you make.
For example, say you sell basketballs and you carry 100 basketballs in stock. Most of the time this is enough to handle all of your sales across any channel. But, imagine that a school suddenly decides to bulk order 100 basketballs on one channel. Then, because your inventory is not automatically synced across channels, you keep selling as normal on your other channels. Only these customers are placing orders you can’t fulfill. Leading to disappointed customers who probably won’t be back.
This is why the ability to automatically sync inventory across multiple sales points is so valuable to businesses looking to scale up. Inventory management software helps by keeping a constant track of your stock levels across multiple channels, preventing overselling.
Sign 3: Overstocking is costing you money
When you are growing your business, money is like rocket fuel. Use it the right way and it can supercharge your growth. But, just like fuel, money isn’t much use just sitting on the shelf.
If you don’t have a handle on exactly how much stock you should be carrying you can easily overorder from your suppliers. This doesn’t have to be by a lot, but even overstocking by a little can cause you to waste money you could be spending on advertising your products. Indeed, if you don’t know how much overstocking is costing you, you are probably not tracking it effectively.
Sign 4: You’re struggling to forecast accurately
The key to keeping the right amount of stock on hand often comes down to forecasting accurately. Right now you are probably using manual inventory forecasting. Just working out how much you need to order by how much you have in stock based on whatever your spreadsheets say.
That may seem okay, but it will lead to errors like overstocking as discussed above. A good inventory management software will work out how much you need to order by working out your sell-through rate on each product. You should even be able to account for previous sales spikes, such as Black Friday.
This type of dynamic forecasting can cut down on the wasted shelf space, improving your profitability.
Sign 5: You don’t have the data to make the optimal decisions
Data has become the key factor in business growth. Businesses that have access to better data can make better decisions. Businesses that make better decisions can make greater profits.
Inventory management software helps you generate these reports quickly. Letting you see how successfully your products are selling, how much revenue they are making and the cost of goods sold.
Having a firm grip on key stats like these can help you make more informed decisions right across your business. And being able to view these stats quickly can save you time.
Sign 6: Warehouse staffing costs are sucking money from your business
As you grow, one of your biggest expenditures is likely to be staffing your warehouse. Indeed, labor costs account for about 65% of all warehouse facilities budgets. This is quite an expense, and that’s before you account for the time it takes to train staff.
A good inventory management system streamlines your warehouse by letting your team know what to pick and when at the touch of a button. This simplifies processes, reduces human error, and cuts down on training time.
Sign 7: Returns are growing faster than sales
Just like not having the right items in stock can lead to unhappy customers, so can sending them the wrong item. Mispicks are often the result of a poor picking process or an overstretched team. Two problems growing ecommerce businesses face daily.
A good inventory management system should help prevent this by simplifying the process for your picking team and syncing with your sales channels. Essentially taking out as much of the margin for human error as possible. This could be by providing optimal picking lists for your team, by using digital picking, or by giving you more visibility over your warehouse operations.
Sign 8: You aren’t meeting customer expectations
It’s impossible to ignore the fact that customer expectations have skyrocketed over the past few years. As more and more people are used to next-day shipping, free shipping, and easy returns it becomes vital for businesses to meet these expectations.
Doing so at scale relies on being able to connect your shipping carries, warehouse processes, inventory counts, and sales channels together. This simplifies both order management and your returns management. Allowing businesses to focus on growth not worry about meeting customer expectations.
Sign 9: You can’t keep your cross-channel messaging consistent
A brand relies on being consistent. Your customers need to know that, wherever they buy from you, they will get the same experience. Indeed, 83% of customers said they want a consistent experience across all shopping channels (according to a BRB study).
When you are building your process around a single channel it’s relatively simple to control your messaging and customer experience. However, as you scale up and start selling across multiple channels you will be required to manage your messaging on different channels that have slightly different requirements.
If your brand is important to you, and it should be, you will need some software that lets you customize labels, invoices, and emails in a way that reflects your brand. There are various tools that let you do this, some of which are specialist tools and some that come as part of an all-in-one inventory management solution.
We hope that you aren’t seeing any of these signs in your ecommerce business. But, if you recognize any of them in your day-to-day operations, it may be worth looking for a solution that helps your business grow.
Veeqo is an ecommerce software platform to fulfill all of your ecommerce needs. Connecting your inventory with your sales channels, warehouse process and shipping carriers. It is designed to work with small businesses to help them grow.