Have you ever wondered how some ecommerce stores manage their products so well? Organized inventory is the key to a successful company. We can probably say it is must have component for your online store.
Keep on reading to learn 8 methods of how to be the king of your inventory management.
1. Correct Forecasting
Let’s start with the hardest one. The main goal here is to include all the indicators that can be helpful to plan your future stock. For instance, one of the biggest pinpoints to consider for your online store:
- Sales last year during the same season
- Upcoming trends
- Growth rate this year
- Ad budget
- Sales from subscriptions and contracts
When you have considered all these steps, you can start planning your inventory levels in a lot more efficient way.
2. FIFO Method
FIFO stands for “First-in, First-out” method. This is really essential especially when you are selling perishable goods. As the term says, it means that the first goods that came into your warehouse are the first ones to go out or sell.
This also requires a well-working warehouse. Because you have to add new products from the back to be able to access the older batch upfront.
3. Just in Time
It is a sensitive method but can save you a lot of money. It means that you don’t have the goods in your inventory but you will purchase them in a few days before selling.
Like every method, it has its pros and cons. The negative effect could come with not fulfilling the orders at the exact time. If you miss it, it could mean that the products won’t make it to your inventory for the desired time. On the other hand, you will not spend unnecessary money on your inventory, which could be a huge saver. However, it still sounds a bit risky for us. You can try but not sure if you fly.
Dropshipping can sound like a perfect solution for the inventory problems. Usually the process looks like this - you just deal with the customers and orders and the products will be sent out from somewhere else by someone else. Probably you are thinking right now, what a great way to reduce the warehouse costs as you won’t have them at all.
Even though dropshipping is a hot topic and sounds like a good plan, it can cause issues you can’t easily control. For instance, packing and shipping will not be provided by another company, which means if they send something wrong or pack it in a away the item breaks, it rather means more damage for your company.
Shoperb team definitely suggest you to consider all the other options until you narrow yourself down to this. Excellent customer service and flawless items should be your priority list when you think about your online store.
5. Contingency Plan
Like in every business, you can’t always predict what’s going to happen. In this case, it would be good if you’d have a contingency plan for almost every occasion.
The most intensive scenarios you should be prepared for are:
- Your sales grow overnight and you run out of stock
- You don’t have enough room for the products
- Your manufacturer doesn’t have any more products you have already sold
- You miscalculate your inventory
- Your manufacturer stops producing your product without any warning
Depending on your ecommerce business, you can have lots of different scenarios. Create a plan relying on your business and you will be more confident launching your online store.
6. ABC Analysis
By dividing your products into 3 categories you can concentrate only on the crucial things. The classes are:
- A - Products that sell the best, the most valuable ones
- B - Products that don’t sell too often but have a high holding cost
- C - Products you have the most but doesn’t make a good profit
Your main attention will definitely go for A group products therefore they are the most consumed.
7. Cycle Counting
We all know how stressful inventory can be. There is a small solution for that. Instead of physical inventory, we suggest you to go for cycle counting which means you can check products on a schedule. Every day, week or month you count different products so you don’t have to do the full counting. Shoperb offers you full product management and point of sales system for both online and physical store, so you wouldn’t miss a thing.
8. Open Communication
Last but not least is open communication with your manufacturer. This can surprisingly help your stock management. The better the relationship, the more they intend to support you with your problems. For example, if you want to return something or negotiate about the prices, its important to set realistic goals and requirements.
Inventory mistakes could cost a lot to you but if you follow up these ideas, you’ll save money and keep your inventory under control. Great to have you on board to build your online store with us!