Poor Inventory Management Can Cost You Lots of $$$ in E-commerce

Poor Inventory Management Can Cost You Lots of $$$ in E-commerce

Inventory management is the unsexy part of running an e-commerce business that includes warehouse, operations, order management etc. E-commerce business owners (Sellers on Amazon, eBay, Wayfair, Jet and the endless list of marketplaces) tend to focus on selling their products, be mad about digital marketing, manage their ppc campaigns, check their social media feeds more often than they take a look at their watch etc. And finally, their product gets the buybox, achieves the Best Seller Rank that they could only see in their dreams.

On that unfortunate rainy and gloomy day, what could happen worse. They were out-of-stock with the item that they have spent tons of marketing-money, their days and nights to increase its ranking. When you don’t have inventory to sell, all you have done for marketing becomes meaningless. Amazon and other marketplaces drops you like a bad habit.

inventory management and package

Let’s cut the chase; without inventory, you can’t get any sales. In fact, you will be “ghosted” on Amazon, your dear listing will be resting in the graveyard of Amazon listings. The bad thing isn’t even that you can’t generate money. But it is also the results of not having a listing; decreased ranking, Best Seller Rank free falling, and allowing the competition to smash you. Now it’s time for you to check your shipment status more often than your Facebook feeds.

At least there is nothing else to do on this gloomy day but to come up with some lessons. Why did that happen? Let’s see that through the out-of-stock experience of one of our clients who then decided to use Logiwa for inventory management.

inventory management manager and system

Real-time Inventory through Barcode Scanning

Did he know what inventory he really had in his warehouse? He was pretty sure he had that he never wanted to check what he physically had in the warehouse. It is not very enjoyable at the end of the day. Since he has hundreds of listings on multiple marketplaces and his website, he couldn’t keep track of his inventory figures. Considering that he also receives items from various suppliers and as customer returns, it was impossible to keep track of inventory.

inventory management barcode scanning

Our client eventually decided to automate his inventory management through Logiwa.

After 1 month, our client gave us a big Drizzy-style hug.

Inventory vs Sales Velocity

Since he didn’t have actual inventory data, he was also not able to keep safety stock and decide when and how much to re-order. The actual figures are the base for healthy sales forecast, reorder management and optimized inventory. With the historical order data, he should pull out the consolidated sales velocity for all channels and he should know how many days of inventory he has remaining. Also, he will plan better how many days of inventory he should purchase depending on the lead time of new items.

Inventory vs Sales Velocity

Inventory Feed to Marketplaces

If not on Amazon, the same item could run out-of-stock in another marketplace. Our client was pushing the item inventory to all marketplaces manually. He could forget feeding one and run out-of-stock. Inventory feeding to marketplaces should be automated. If feasible, the physical inventory should be shared across all marketplaces.

Inventory Feed to Marketplaces
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