Improve Business with Better Inventory Management
Being a successful online merchant requires much more than just a desirable product or service. You might have a more impressive selection of goods than any of your competitors, but you risk falling short if you lack one critical component: proper inventory management. In short, inventory management entails more than just selling products; it also involves the storing and processing of those products as well. If this sounds at all intimidating, do not fear. Read on to learn more about inventory management–its basic principles and pitfalls, as well as basic tips that will help you stand tall among your inventory rather than be crushed by it.
Inventory Management Basics: The Truth about Overstocking
Think of your inventory as a very large but cluttered closet. That closet may boast enough clothing and shoes and accessories to keep even the ficklest fashionista satisfied. But what good is any of it if the closet’s owner does not know where anything is and instead keeps letting things pile up inside it?
When it comes to inventory management, it is also possible to have too much of a good thing. Here’s why:
- Someone has to pay for all that merchandise to take up room–and that someone will be the poor exasperated seller.
- Hot items usually don’t stay hot forever. Capitalizing on a trend may reap great rewards early on, but this is rarely a safe business strategy long-term. The last thing you want is to be bogged down in a sea of products consumers no longer want.
- Sometimes a product’s popularity depends on the time of year. For instance, a seller will have no problem getting rid of stylish backpacks once September rolls around. After that, however, moving those backpacks will be more difficult.
Inventory Management Basics: Under-stocking Dilemmas
While some sellers get over-ambitious and buy too much stock, others fall into the habit of understocking. Here are some reasons why understocking can hurt a seller’s bottomline:
- If you use more than one channel to sell products, understocking can be particularly risky. The more often you sell out, the more likely these major players will lose interest in doing business with you.
- Most sellers would agree that their customers keep their business thriving. If you do not have what your customers are looking for, they will likely seek it elsewhere. Understocking too often will only keep those customers leaving you for better options.
- This last one may be obvious but is perhaps the strongest case against understocking: poor profit potential. Sellers who can never meet the demand of their products never reap the profits they hope for or need to stay in business.
In Conclusion: 5 Tips for Optimal Inventory Management
1. Consolidate for easier management.
Selling on more than one platform can get overwhelming fast. What if you completely overlook your Walmart inventory and as a result oversell? Fortunately, a multichannel management software like Listing Mirror can ease your worries by keeping your inventory for all channels easily traceable from one source.
2. Establish par levels.
If you have a tendency to underestimate how much stock you need, consider establishing par levels to keep in check. In other words, what is the least amount of stock you can have on hand to adequately meet demand? To determine this, look at previous sales trends.
3. Plan Ahead
If you know demand for your product reaches its peak at a specific time of year, plan for it ahead of time. Know how much inventory you need and have it ordered before you get hit with more orders than you can fulfill.
4. Use your numbers to predict future sales.
By using past sales to predict what the future may hold, you reduce your risk of getting too ambitious and as a result overstocking. Concrete data speak the truth.
5. Keep in touch with your suppliers.
If you know that a particular time of year is busy for you, make sure that your suppliers know it as well. That way, they can be sure they have your order in place and to you before the season rush begins.
Sell More. Work Less.
Need help managing your inventory? Listing Mirror is a multichannel management software that keeps all your channels in one place for the ultimate peace of mind.
Erin is the Co-Founder of Listing Mirror.