How To Manage Your Ecommerce Inventory

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In short, inventory management can be defined as ‘sourcing, storing, and selling inventory’. So, why is inventory management important for ecommerce businesses and how do you manage your ecommerce inventory?

Inventory management is essential for an ecommerce business to establish how much stock you have, when you need to order more stock to meet demand, and how long the stock can remain in your inventory.

In turn, this can help to improve cash flow and, for some businesses, help you to save stock from spoiling.

Failure to manage your ecommerce inventory can quickly lead to a loss of revenue if you don’t have a good system in place.

There are numerous methods to help you manage your inventory. These include, but are not limited to:

  1. Use inventory forecasting to help predict what products to stock
  2. Coming up with an effective storage solution
  3. Ensuring you have an inventory of safety stock
  4. Implementing a kitting strategy
  5. Balancing inventory

1. Use Inventory Forecasting To Help Predict What Products To Stock

One of the most important ways to manage your ecommerce inventory is to track what stock has sold in the past to help predict what products you need to stock in the future.

This is also known as inventory forecasting, and is what helps businesses ‘understand future demand by taking historical data, seasonality, and external factors into account’ to aid accuracy and increase sales.

While it’s difficult to forecast for new products that you bring out, tracking what stock you’ve sold in the past will help you to notice patterns. In turn, this will allow you to capitalise off these trends whilst also determining what items aren’t selling as well.

If you fail to carry out inventory forecasting, then you won’t be able to make an accurate decision on stock. This can easily lead to missed opportunities for sales if your safety stock buffer runs out and customers are met with an ‘Out of stock’ banner on your site.

2. Coming Up With An Effective Storage Solution

To manage your ecommerce inventory, you will also need to come up with an effective storage solution.

A good storage solution is ever-evolving, as it’s strategic to base the location of your products on trends as well as sales, both of which fluctuate and are informed by customer demand. 

This emphasises how important it is to track what stock has sold and make note of any emerging patterns. This will help you to alter and make changes to your storage solution as and when you need to.

Regardless of where you’re storing your products, you need to ensure that they’re easy to locate and access to ensure orders are able to go out in a timely manner.

If you don’t come up with an effective storage solution for your items, this can easily lead to disruptions in delivery. This subsequently has a knock on effect to your reputation and authority if your customers aren’t receiving their orders quickly enough. 

3. Ensuring You Have An Inventory Of Safety Stock

If the last two years are anything to go by, you need to be prepared for the unexpected as a business.

As a result, ensuring you have an inventory of safety stock is key to managing your ecommerce inventory. In fact, safety stock that is held by UK manufacturers has risen ‘by a third’ to help combat issues with the supply chain.

In short, safety stock helps businesses to ‘reduce the risk of completely running out of a certain product and prevent operations from coming to a halt’. 

This will ensure that the business is able to cope with a sudden influx of orders, as safety stock will act as a buffer to give you more time to order more stock, thus saving customers missing out when orders are spiked by external events out of your control. 

4. Implementing A Kitting Strategy

Implementing a kitting strategy can also help you to manage your ecommerce inventory, as it helps to encourage sales by offering people a deal that they cannot resist.

People are always looking for a better deal, especially with a recession looming and the need to make savings increasing. 

In fact, 93% of shoppers have previously used a Buy One Get One Free deal before, highlighting just how popular they are amongst consumers.

That said, it’s good to implement a kitting strategy to get rid of overstock at a decent price and to give your target audience a deal that catches their eye and encourages them to convert.

If you continue implementing kitting strategies, this will also keep customers coming back.

Two women shop online on a laptop.
Never underestimate the importance of safety stock, as this will act as a buffer and allow you more time to order more stock.

5. Balancing Inventory

Last, but not least, it’s essential that you get the balance right to manage your ecommerce inventory.

Simply put, for the balance to be right, you need to ensure that you’re not over or understocking. 

Why Balance Is Crucial To Achieve

  1. You don’t want to be in a position where you’re missing out on potential customers by not having enough stock. 
  2. You don’t want to be forced to liquidate stock because you’ve bought too much.

If you don’t get the balance right, then you’ll be losing out on profit either through being forced to have clearance sales or through losing potential customers.

If a product is constantly out of stock, this can even lead to customers leaving bad reviews, which can cause irreparable damage to your reputation as a brand if it’s not rectified and better managed in the future.


We are Velocity Juice: we help digital-first companies scale faster by offering flexible eCommerce startup and scale up funding with no equity dilution. For more information about what we do, check out our insights blog or get in touch to speak to a friendly member of our team.

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