Effectively managing eCommerce inventory involves balancing stock levels to meet demand without overstocking or experiencing stock-outs. This requires careful consideration of storage capabilities, current inventory levels, supplier lead times, seasonal trends, and scheduled campaigns.
For online businesses, efficient inventory management is crucial for maintaining revenue and customer satisfaction. Stock shortages lead to lost sales, while excess inventory ties up capital and increases the risk of expired or redundant stock, ultimately harming the bottom line. Three primary strategies can help optimise inventory and reduce risk: demand forecasting, inventory management, and inventory replenishment.
Demand Forecasting
Using historical data to estimate future product demand will never be 100% accurate, but it is the easiest way for businesses to make informed inventory decisions based on sales and revenue data for a specific period, thus lowering the risk of stock-outs.
Holding too much inventory ties up capital, while too little results in missed sales and unhappy customers. Effective forecasting leads to improved efficiency, profitability, cash flow, and brand loyalty.
Inventory Management
Effective inventory management goes beyond updating stock levels. It requires analysing when specific items sell faster, understanding seasonal trends, identifying peak sales days, and noting items that frequently sell together.
The Pareto Principle suggests that 80% of profits come from 20% of SKUs. Prioritising this crucial section of your inventory is essential. Understand these items’ sales cycles and monitor them closely, as proper management is vital for maximising profits.
If you choose to hold safety stock for emergencies or supply chain failures, consider average and maximum daily usage and lead time to determine appropriate levels.
Inventory Replenishment
Replenishment involves moving products to picking shelves or receiving more inventory from suppliers to ensure sufficient stock is available as orders are received. Tracking inventory and allocating stock to high-demand locations ensures quick and cost-effective order fulfilment.
Balancing inventory levels in this way enhances cash flow, optimises warehouse capacity, and consistently meets customer demand. The reorder point should ensure that excess capital is not tied up in inventory and account for lead times. It should equal the demand during lead time plus an allowed safety stock.
Conclusion
Mastering eCommerce inventory management requires a strategic approach to demand forecasting, inventory management, and replenishment. By effectively balancing stock levels, online businesses can improve cash flow, optimise warehouse capacity, and consistently meet customer demand, ensuring long-term success and profitability.
All stock received into our eCommerce fulfilment centre is verified, counted and checked for accuracy, before it is recorded into stock.
All your SKUs are synched in our inventory management systems, so that you can easily track, update, and manage products across your sales platforms, to avoid overstocking or running out of inventory too soon.
We audit your inventory for better inventory management, with comprehensive inventory counts, to ensure your stock on-hand matches what you think you have.
Our purchase order management platform simplifies vendor management, with transparent KPI reporting that highlights issues, if you have a supplier that’s habitually late, short ships orders or is the source of supply chain delays.
Maintaining inventory levels can be challenging and lead times vary widely, which is why we can expedite resupply from any region, with the widest choice of budget and time-critical services.
Oriental Global Logistics (OGL) is the eCommerce subsidiary of Global Forwarding, with fulfilment centres in Hong Kong, New Jersey, and Heathrow for the super-efficient processing of inbound stock and returns.
VISIT the Oriental Global Logistics web site, or EMAIL OGL’s managing director, John Ruan, to learn more.
