7 Tips on How to Grow Your Ecommerce Inventory and Satisfy Your Customers Needs

No matter how much capital you have, whether you’ve exhausted your PO financing, inventory financing, or other financial resources to save your inventory, you won’t be able to reach your desired sales volume without proper inventory management. 

Inventory management is one of the most crucial aspects of running an eCommerce or online business. It’s also one of the most complex topics to understand as a new business owner. You need to know which products are running out, near expiration, which ones are in high demand, and others. With a lot of products to handle, it can become overwhelming to track the status of each product you hold. 

If you’re struggling with keeping effective inventory management in place, this one’s for you. In this article, we’ll share seven tips on how you can effectively grow and manage your eCommerce inventory so that you can meet and satisfy your customers’ needs. 

1. Track and understand product category demand

When it comes to re-strategizing your eCommerce inventory management, one of the first things you want to do is understand the very nature of your product – specifically how the demand increases and fluctuates throughout the year. 

Some tools that can help you with tracking product trends are Google Trends or Google Analytics. This allows you to get information about the product for the last few years or months (depending on which data you want to use). For instance, if you primarily sell beachwear, the demand is most likely to increase at the start of the summer months and decrease at the beginning of the cold season. 

With that knowledge, you’ll be able to determine which months you should order more or less of your inventory to keep your stocks at an optimum level.  

2. Establish minimum viable stock levels

As an eCommerce business, you need to know how many stocks you need to have at hand to sustain your customer’s orders. While you can always choose to overstock to prevent missing out on orders, doing so could mean investing a significant portion of your capital which can potentially cause cash flow issues. You also need to make sure that you’re not understocked to avoid overselling and disappointing your customers.

By establishing minimum viable stock levels, you can ensure that you’ll always have enough stock on hand to meet customer demands. To arrive at a number, you first need a good grasp of the demand for each of your products. Again, you can do this by tracking the trends using Google Trends or Google Analytics. Next, you have to figure out how long it usually takes to replace out-of-stock inventories. Once you have all that information, you should be able to set a number to serve as your minimum. 

As your inventory goes below the minimum, this should signal you to place an order to replace out-of-stock products. As your business grows, you may need to adjust these numbers to meet the increasing demand. As long as you know your minimum levels, you’ll be able to maintain enough stock levels – not too much or too little.

3. Physically organize inventory

Effective inventory management requires proper organization. If you sell diverse product types, keeping track of them can be arduous, especially if the records are all over the place. Not only will this result in wasted time in looking for the products, but it can also cause delays with shipping. To avoid that, you need a strategic system that will keep your products organized and easy to find. 

One way to organize your inventory is to arrange products by category for easy access. They can organize their warehouse or storage area so that the most in-demand products are situated closest to the processing area. In turn, they can save significant time in walking back and forth between aisles.

Overall, leveraging your organizational skills and keeping your items strategically pays a lot when creating a better inventory management system. It will promote efficiency within your team while minimizing mistakes along the way. 

4. Use ABC analysis to prioritize products

The ABC method is an inventory management strategy wherein inventories are prioritized according to their importance to the business. It uses three categories, namely:

• Category A represents high-value products that constitute the lowest percentage of your inventory;
• Category B represents moderately valued products in moderate quantities. 
• Category C represents low-value products that constitute the highest percentage of your entire inventory. 

The products under category A typically have the most monetary impact on your company as they’re the most expensive products you have on hand. The more people buy the products in category A, the higher your revenue will be. Products in category B have a lesser (but still significant) impact on your company’s bottom line. Category C covers the products that have minimal impact on the company because of their low-cost and low-demand nature. 

ABC analysis uses the Pareto Principle, which states 80% of your company’s sales can be attributed to 20% of your customers.  It’s worth noting that most of your company’s revenue comes from the products under Category A. With that, you’ll probably need to pay more attention to the products in that category than those under Category B and C since it will be more costly to lose category A customers than Category B and C consumers.  

The primary purpose of using the ABC analysis is to help you prioritize your products, so you’ll know which ones you need to replenish more often. In most cases, you’ll need to hold fewer Category A products as they’re expensive, and overstocking could disrupt your cash flow. 

5. Take advantage of a better inventory management software

The advancements in technology have allowed us to do things in a much simpler way. Just as there are tools that help you edit your marketing videos (check out ClipChamp’s tool here) and track their performance, there is a lot of software that can help you track your inventory. 

Gone are the days where you’d need a traditional pen and paper for record taking. Now, you can streamline your processes with the use of inventory management software. There won’t be a need to hire more people to keep up the growing inventory. These inventory management tools can help you track your stocks and promote accurate information and documentation on the movement of goods. 

From there, you can determine which products are currently overstocked or understocked without going through so much work. The software will send an alert if some of your products are running below the minimum viable stocks so that you can reorder inventory immediately. All this saves you time, effort, and money while minimizing mistakes in the process. 

Among the top-rated inventory management software include Unicommerce, Netsuite by Oracle, SkuVault, Ordoro, and TradeGecko.

6. Develop positive vendor relationship

You may not realize it, but there is power in maintaining a good relationship with your vendors. If your company is growing, you may have to increase the order you place. If you have a good relationship with your vendor, you’ll be able to negotiate the payment terms. 

For instance, if you’ve been getting your goods from the same vendor over the years, they may give you a discount on the products or extend your payment terms. Not only that, but good suppliers can provide you with top-quality products and give you insights into the current industry trends. This will help improve your reputation among your customers, increasing your sales. 

7. Conduct inventory forecasting

Understanding your product’s turnaround time is critical when managing your inventory. This will allow you to plan ahead of time and maintain a healthy stock level for your eCommerce store. 

If you’ve been running your eCommerce store for years, then you’ll probably have a good idea of which products are popular at a particular time. If you don’t have this information, all you need is to look at your past sales and see which time of the year the product demand was the highest and lowest. With that information, you’ll be able to predict when you should increase or decrease the inventory you hold. 

Tools like NetSuite, Zoho Inventory, UniCommerce, and other eCommerce inventory management software can help you get the information you need to back your forecasts up. 

The Bottom Line

Inventory tracking is not the most glamorous part of running an eCommerce business. However, every entrepreneur must know its ins and outs in order for them to meet their customers’ needs and demands. The tips mentioned above are just a few of the many you can follow. Keep these in mind, and before you know it, you’ll be seeing your company reach greater heights.  

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