How to Manage Inventory for E-commerce?

When you run an online store, it is essential to know and familiarize yourself with the world of ecommerce inventory management. Before we dive deep into it, it is vital to know what an inventory management is and how important it is while running your e-commerce store.

Inventory management

In simpler terms, Inventory management helps you manage your inventory as well as supports you to plan your goods properly. With Inventory management, you can now check your inventory’s volume, products, pricing and the quantity of the products available for your customers. Managing your products as it moves through the supply chain is pretty easy if you have a good inventory management tool.

Please do note that ecommerce inventory management does not manage your company property or other assets such as equipment etc.

How important is Ecommerce Inventory management for your Business?

Every e-commerce business out there wants to create profitable revenue for them. Without proper revenue, it is hard to sustain in the market. So how you make sure you manage your revenue properly? That’s where inventory management plays a big role. It helps you tracks your revenue in terms of your products.

Managing your products is a quantifiable asset to your business. It gives you a real-time evaluation of the revenue your business generates. It is important to note that certain products have a longer shelf life while few others have a shorter shelf life. So with the help of ecommerce inventory management, you can plan your inventory carefully.

How does inventory benefit e-commerce businesses?

In addition to helping e-commerce store owners’ gauge how their products are selling, inventory management provides a number of other benefits to online retailers as well:

  • E-commerce companies manage order increase without overselling what’s currently in stock
  • Business owners keep product information updated
  • When handling multichannel platform for sales, business owners are able to keep a check on their inventory.
  • Back-end visibility is improved with inventory management
  • Real-time data is updated across all platforms used for sales
  • Overall product organization is improved through increased visibility
  • With increased visibility about the inventory, business owners are now empowered to manage their products effectively
  • Improved sales.

Guide To Launch Your E-commerce Store: A Step-by-Step Guide To Launch Your E-commerce Store

Inventory Management Process

Next, we have to understand the steps involved in an inventory management process. These step will help you plan your inventory better by understanding your business needs and your customer needs better, thereby enabling your business to be profitable.

1. Understand your customer needs and predict demands

This should be the first step in determining the ecommerce inventory management process. Though this is a difficult step, it is absolutely vital for your business. Make sure you understand your customer needs. Have a look at your past sales data, the products that sold quickly and the ones that did not. Based on this you can predict demands in the future. If you are in a new business with no sales data, do not fret. You can conduct a conclusive market research based on your products and business and predict the demand. This step helps you stock your inventory without running out of stock or dumping your inventory with too many products that do not sell.

2. Sort your inventory

The next major step is to sort your inventory. Organize your inventory with your previous sales data and you can sort out products that sell out at a fast pace, products that sell out at a moderate pace and finally, the products that are not in huge demand. This will help you organize your warehouse and will result in efficient use of your space.

3. Choose a method that suits your business needs

There are many inventory management techniques out there and it is up to you as a business owner to decide the best method for your business. You can choose to maintain a least possible stock level or if you are worried about the overhead cost you can opt for a ‘just in time’ stock management method where you bring the stock only when there is a demand.  However, analyze your business needs as well as your customer requirements and choose the best method for your business.

4. Track your inventory when you buy or sell your stock

Make sure you know the exact amount of inventory that you currently have as well as the inventory that has been moved out of the warehouse. Usually, new business owners does it on a daily basis on either paper or excel sheets.  However, with a growing number of software to cater to all the needs of a business, it is pretty easy to figure out one that actually helps you understand your inventory better. You can even forecast demand and generate reports that will help you in the long run.

5. Do random checks to make sure your inventory data is accurate

You might have decided to go with an ecommerce inventory management software. However, random checks are necessary to ensure your system is accurate about the inventory data. Performing physical inventory checks is one of the methods that can help you eliminate doubts about your system. The most commonly used method for the physical check is the cycle counting. In this method, you specify a certain amount of inventory to count each day and the data is compared against the system data. This method ensures your data is correct and help your business perform better.

Now that we are aware of the steps involved in ecommerce inventory management process, it is time to understand the techniques involved in inventory management. Planning and optimizing data is the most crucial technique.

Ecommerce Inventory management techniques

Inventory management techniques involve proper planning and optimization. It flows along with the rise and fall in demand in a product. These techniques will help you use the data in hand to make sure you have the right amount of products at the right time to help your business grow.

1. Conserve a minimum stock amount

This is the most basic technique that is predominantly used in smaller businesses. They set a minimum stock level and if their product reaches that stock level, the products would be restocked. Consider an online store that sells shoes. They can maintain a minimum stock level of 100 pairs and when the shoes in inventory reach 100 pairs, the shoes are restocked.

2. Maintaining additional stock for safety

This method is also mostly used in small businesses. They maintain an additional stock which exceeds their normal level to meet the sudden increase in customer demands. Though this method allows you to meet your customer delivery dates and your customer requirements, there is also a lot of disadvantages such as increased overhead cost, inability to sell the additional stock which may result in losses.

3. JIT

“Just in Time’ method is followed by many e-commerce stores since they don’t have to spend money on buying inventory without orders from their customers. Usually, this method involves buying the product from another supplier based on time of delivery. This method is called ‘Dropshipping’ and is quite popular among a lot of e-commerce business owners. However, like many other techniques, this also comes with its own disadvantages such as the dependency on a supplier and delayed deliveries for your customers.

4. Measure and perfect response

This method is completely dependent on forecasting the demand. This is possible by using data analytics to understand your previous sales data and predicting your inventory.

Please do make a note that with all these techniques, business owners can decide to use one or more methods according to their business needs.

Best practices – Ecommerce Inventory management

Now that you have understood how important inventory management is for an e-commerce business, it is also essential to understand the best practices that must be followed for optimal inventory management.

1. Do not postpone your real-time updates in your inventory management software

The real-time update is a key feature that helps you manage your inventory better. So it is essential that you feed the real-time data as soon as it is done. If it is not done, it might result in affecting your sales and your reputation. Planning to update your inventory at the end of the day might ruin your business. Nobody likes a delayed delivery and I’m sure your customer will not be pleased about it either. Make sure that your inventory management software is able to handle real-time data updates from all your warehouse locations.

2. Make excellent use of Drop Shipping

As you are already aware of drop shipping, it is a process that helps you procure a product as soon as you receive an order. All you have to do is forward the order to your supplier and they will pack and send the product over to your customer. If your supplier does an excellent job, you will reap its benefits as the customer is unaware of the supplier. You will never run out of stock as your supplier meets your demands. Make sure your inventory management software handles the transactions between you and the supplier by ensuring correct updates in your inventory, order status, as well as the purchase orders.

3. Integrated inventory

If you are a small business owner selling on a single platform, you can manage your inventory from your e-commerce platform. However, if you are selling on multiple platforms, it is best to integrate all your inventory in a dedicated system such as a POS or an ERP; so that you are aware of real-time orders from multichannel.

4. Managing product variants

It is exhausting and cumbersome. Managing a single product is relatively easy than maintaining different versions of the same product. Managing this through your e-commerce store is going to be difficult, as you will have to manage each product variant separately. So while selecting your inventory management software make sure you select one that handles product variants effectively.

5. Integration of multichannel e-commerce store

As discussed earlier, we understood that a centralized inventory is essential when selling across multiple channels. However, it is also essential to have multichannel integration in your inventory management software since real-time data must be updated in the system from all the different channel for growing your business. This enables you to sync data such as inventory across all your sales channels.


Also Visit: How to Launch an Ecommerce Store – Infographics

Avoid these common mistakes during Inventory management

Though you decide to opt for the best ecommerce inventory management software, it is also essential to make sure that you do not make these common mistake.

Do not oversell your products. Similarly, do not stock your inventory more than what is needed as it may result in an additional overhead cost. Price your products properly. Do not overprice your product. Similarly, do not offer extravagant discounts on your products. Both these will result in an excessive loss. Make sure your staff is properly trained to use the ecommerce inventory management software as they will be the ones using it on a regular basis. Proper knowledge of the software will help you grow your business.

Inventory Management Software’s that you can use

So, I’m sure you realize the importance of maintaining your inventory. This top priority task can be accomplished with the help of inventory management software in the market. Let’s see a few of them that might help you run your business successfully.

1. Delivrd

This free inventory management software can be used for businesses of all sizes. This cloud-based software helps you manage your inventory, performs data analysis to understand your product’s sales record as well as help you manage your future consignments.

Delivrd free inventory management software

2. Notify Me

This free software that can be used by business owners that use ‘Shopify ‘ as their sales outlet.

This software allows you to set reminders to alert you about your product’s availability. This feature is highly helpful for owners who are new in the e-commerce industry.

Notify Me free software

3. Oberlo

Oberlo is free to use for business owners till their 50th order. After which they will have to pay to use this software. This is a great tool for drop shipping stores as it allows seamless transactions between the retailer and the supplier. With this software, you can track consignments, and even change your product supplier. This software can also be used for ‘Shopify’ users.


With so many apps out there to help you with your inventory management, what’s stopping you now? Go ahead and let us know what suits best for you ecommerce inventory management needs.

Summary of Ecommerce Inventory Management

Summary of manage inventory for e-commerce

Also Read: Ideas to Improve E-commerce Site Performance

One thought on “How to Manage Inventory for E-commerce?

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