Running an eCommerce business isn't limited to buying and selling products. Owners have to be cautious about a lot of factors, from showcasing products to having stable logistics channels to meeting customers' demands and many more. Among all those factors, the most important and neglected one is inventory management.
Approximately 43% of US' small eCommerce stores neglect to keep track of their inventory. Result: They often end up shutting down operations or, in extreme cases, getting dissolved.
If you don't want to meet that fate, you're in the right place. In this article, we will talk about Shopify inventory management, its benefits, and the common issues that come in the way of eCommerce business owners. So let’s dive in.
2) What is Shopify inventory management?
Shopify inventory management is nothing but tracking products and raw materials present in a business owner's Shopify store. For instance, if you are running a stationery shop, you must know how much stationery to sell in order to earn revenue and make future projections.
And to have an idea about your sales, you must know about your purchases. This is where inventory management comes to aid. It tells you which and how much product to buy at what time to fulfill customers' orders and avoid shortages.
3) Why is Shopify inventory management vital for your business?
There are numerous benefits of Shopify inventory management to businesses, including-
a) Inventory tracking for each product
Shopify allows eCommerce business owners to set up individual listings for each product. They can even organize products depending on their type, availability in season, and of course, customer demand and much more. Alongside each product is an inventory field that owners can alter manually.
b) Handling product variations
Owners can manage variations of each product without paying or using any additional tool. They can create endless variations of a single product depicting various colors, sizes, or limited-edition merchandise and customize weight, pricing, inventory number, and SKU for each variant.
c) Access to inventory history
Owners can keep tabs on the inventory history of each product and its variants. They can check the date the change was made, the person who made it, the number of adjustments, and the quantity which went out of the store or came into the store.
d) Cash flow optimization
Every eCommerce business owner has to buy, store and sell products to earn revenue. Till the time those products sit idle in the warehouse, owners have to pay for them. When they've got an inventory management tool guiding them while making purchases according to the forecasted sales and alerting them when the inventory is going out of stock, they can easily manage their cash flow.
e) Spoilage prevention
When eCommerce owners invest their hard-earned money in a particular product, they hope to utilize it. If that product is perishable or comes with a short shelf life, owners would want to sell it off rather than let it spoil in the warehouse. Proper inventory management helps them meet that goal and avoids any wastage of products.
f) Deadstock prevention
Products that can no longer be sold to customers come under deadstock. Owners don't always get rid of products post expiration. Sometimes they have to remove them because they've gone off-season or out of style. Inventory management helps you keep track of such products and alerts you to remove them before time.
g) Maintains storage costs
Since owners have to pay for warehousing, the more products they accumulate in the store, the more prices rise for them. With Shopify inventory management, they can regulate stock and pay for only those items they can sell off easily.
h) Improves customers experience
When owners are aware of the products available in their inventory, they can promise customers their delivery date and secure a spot in their good books.
4) How to set up Shopify inventory management?
Managing inventory on Shopify isn't too tough. If you follow the basic steps religiously, you can get started with it in no time.
4.1) Step 1: Fix inventory tracking
To handle inventory levels by-product, you need to set up inventory tracking. This gives you access to the inventory data for the past 90 days and allows you to make changes to inventory easily. Here are the steps to be followed:
- First, click on your Shopify admin and go to Products.
- Under products, find the All Products subhead and click on it.
- Select the name or variant of the product you want to monitor.
- Go to the Inventory section and click on Track.
- Finally, set the quantity and save it.
4.2) Step 2: Choose your inventory location
Since you'll be storing products in one or more locations, you'll have to update it on your Shopify store. You can even change the locations of products or modify inventory levels at different locations till you've got products stocked at least at one location.
- Go to Products and open the product or variant you want to edit/select the location for.
- Click on the Inventory section and ensure the product's quantity is mentioned.
- Click on Edit Locations.
- Verify the location that stores the product and click Save.
4.3) Step 3: Modify inventory levels
You can modify or update inventory levels for a single location by following the steps below.
- From the Locations subhead, select your location.
- Find the Update Quantity column and enter the quantity modification.
- Click on Set or Add and then click Save.
5) Types of inventory management available at Shopify
Though Shopify gives access to its inbuilt inventory management tools, eCommerce business owners can't rely on them completely. Businessmen whose operations are limited to purchasing finished products from suppliers and selling them after a few tweaks can easily manage with Shopify's inventory management tools.
Contrary to that, large-scale businesses or growing businesses that go through numerous steps to reach their customers need a third-party inventory management integration for their Shopify store. Here are the five best Shopify inventory management integrations you can trust.
Using multiple channels can take your business to great heights. But at the same time, it can be quite overwhelming if not handled with care.
By using the Skubana app, you can manage data both from your Shopify and Shopify Plus stores. The cloud-based inventory management app enables you to access all your sales, inventory, and analytics on a single screen, reducing the number of errors occurring during manual Excel entry.
SkuVault's inventory management software enables fast selling, pick-up, and shipping of products to ensure the best customer experience. The platform connects all business channels smoothly, offering inventory management optimization and warehouse handling.
Primarily, ShipBob is an order fulfillment solution that comes with exceptional built-in inventory management software. The software helps in order management, demand forecasting, supporting multichannel and also gives access to numerous free data and analytics reporting tools.
5.4) Inventory Planner
A cloud-based multichannel inventory management app, Inventory Planner, can help optimize your cash flow by using its inventory forecasting tools that provide data by analyzing vendor lead time, stock levels and sales trends.
TradeGecko allows eCommerce business owners to track products, manage orders, analyze customers' behavior, and perform a lot more tasks necessary for the smooth operation of a business on a single screen. It offers barcode scanning and integrates with almost all eCommerce platforms.
6) How to manage your Shopify inventory?
Managing inventory is vital for every business, but often owners seem to struggle with it. If you're also facing issues managing your stocks, here are a few strategies to help you out.
6.1) Accurate forecasting
Good inventory management itself begins with accurate forecasting. When you can predict your sales, your purchase stays apt, and so does your revenue margin. Forecasting correctly can save you from spoilage and deadstock and also extra warehousing charges that you might have to pay for longer or more storage.
6.2) Use the FIFO method
The FIFO or first in first out method says that the oldest stocks (the products brought first) should be cleared first; especially before the ones that just came in the store. If you have perishable goods in your warehouse, this is the best way to keep track of them before getting spoiled.
To implement this method, owners need to organize their warehouse keeping the oldest stock ahead of the new one, so that during shipping, it is the first one to catch the eye.
6.3) Always have a contingency plan
A lot of issues can arise while running a business. For instance:
- Your sales could rise, pushing you to oversell stock.
- Your warehouse could run out of space to hold seasonal stock.
- Slow sales could take up more storage time for products.
- Your manufacturer is unable to process your sales order.
- You fall short of cash and require products.
In such situations, you should be ready with a Plan B to service your customers and continue with your business.
6.4) Be consistent with auditing
Generally, most eCommerce business owners rely on software or integration reports to manage their warehouse. However, they need to verify the facts mentioned in those reports, and this can only be done by physical, spot, or cycle counting.
6.5) Just-in-time inventory management
Just-in-time or JIT inventory management is for risk-takers who don't prefer stocking inventory. Instead, they keep only that amount with which they can meet their sales without running out of stock.
7) Tips to optimize Shopify inventory management
eCommerce business owners who already follow strategies for better inventory management can optimize their solutions by implementing the tips given below.
7.1) Classify your inventory
Prioritizing your inventory goes a long way. Start differentiating products based on their price and the time taken to sell. Since not all products are the same, you can't treat them equally, and if you do so, you might end up giving less time to a deserving product.
7.2) Invest in inventory management technology
If you've got a small business sticking to minimum technology is fine for you. But for owners who manage multiple channels and deal in a variety of products, it’s better to invest in smart inventory management technology than using the same spreadsheets and notebooks.
7.3) Pay attention to customer satisfaction
Many times, while avoiding excess stock in inventory, people forget their main goal, which is customer satisfaction. They keep their inventory at such low levels that they fail to meet customer demand, thereby losing loyal customers.
7.4) Analyze your supplier's performance
Since most businesses rely on suppliers for products, choosing a bad supplier can destroy your organization completely. If your supplier doesn't provide products on time or delivers less quantity than needed, it can affect your operations and customer experience.
8) How to troubleshoot common problems with inventory management?
eCommerce business owners often face a lot of problems when working with Shopify. Here's a list of the most common problems with necessary solutions.
8.1) Multichannel selling management
In today's time, online sellers aren't limited to a single channel. They're operating through multiple channels giving more buying options to customers. But this effort of owners is making it impossible for them to monitor all channels equally.
The best way out is to switch to omnichannel retailing. Though omnichannel and multichannel retailing are somewhat the same, omnichannel retailing has channels connected throughout, providing a seamless shopping experience.
8.2) Security issues
Not all customers prefer COD. Many of them use cards or link wallets to pay on Shopify stores. Data of these cards or wallets get stored on the website, scaring owners about a potential data breach.
Sellers should have strong security on their website, including multiple authentications, identity checks, and SSN verifications. If needed, they should even invest in security plug-ins and safety components for their platforms.
8.3) Poor site performance
Site performance matters the most. If customers have to wait for long periods to go from one page to another, eventually, they will lose interest and switch to other websites.
Therefore, sellers should have a lightning-fast page load time along with efficient SEO optimization that keeps their website on top every time customers search for a product.
Shopify inventory management can make your store gain more customers and earn higher profits. If done correctly, it can even reduce any product or money loss and save owners from unnecessary expenses. Large businesses using a multichannel approach can benefit a lot from smart inventory management. Hence owners should pay close attention to the tips and tricks involved in it.