Today the TradeGecko team is looking at how Inventory Management can help your Shopify eCommerce store. These inventory management techniques for Shopify will help you streamline your business, and take it to the next level.
Inventory management techniques for Shopify
Running a Shopify eCommerce store can be as challenging as running a brick-and-mortar store; that said, one key advantage of eCommerce is that you can scale quickly without having to worry about rent. As long as you ensure that you have the proper processes in place, as well as the right inventory management software to help you support your operations, you’ll be able to scale your eCommerce business in no time.
Why are inventory management techniques so critical for Shopify? A proper inventory management system helps you save cost, avoid deadstock, create a paper trail for auditing and accounting, and make decisions based on business intelligence. That’s not all – it also helps you cut back on time spent stocktaking, and engaging in other similar activities. More specifically, 55% of small and medium sized businesses save more than 5 hours per week by using inventory management software.
Find out more on how inventory management can help your eCommerce store grow, with the following inventory management techniques for your Shopify store:
#1: Save on inventory holding costs
Inventory maintenance is costly. On top of that, you’ve got other inventory costs to worry about, which include shortage costs, carrying costs, and order costs. It’s no secret that failing to keep track of these costs will potentially hurt your business in the long run.
One way to save on your inventory holding costs, is to, invest in an inventory management software that allows you to calculate an optimised reorder point. By knowing your reorder point, you’ll be able to place orders for new shipments at the right time. At the same time, you’ll also avoid the risk of shortage costs that come with disappointed customers, and avoid spending excessively on warehousing or storage costs.
What happens, though, if you end up overstocking on a few items? One way to reduce deadstock efficiently,is to sell products in bundles, or return them to your supplier. In a nutshell, clearing out your dead stock reduces your carrying costs. Be sure to keep an eye on your stock especially if these have expiry dates; you’ll want to make sure that you sell them in time, in order to avoid unnecessary spoilage.
#2: Accurate information for auditing
Regular auditing is vital for many businesses, and it can be difficult and tedious to pinpoint discrepancies found during an inventory audit without accurate information.
To know exactly how much product you have in stock, identify what inventory you need to buy, and reduce slow moving stock, you’ll need to rely on reports and software from your warehouse.
To make your life easier, make sure you have a proper inventory system which keeps your stock levels up-to-date. Also record and store the paper trail for all transactions (e.g. purchase orders, sales orders, returns etc.), and reconcile physical and virtual stock levels periodically.
#3: Better decisions based on business intelligence
Our last inventory management technique for your Shopify store deals with how you can use your inventory management system to help with high level strategy and decision making for your business.
Any inventory management system worth its salt will have robust reporting capability. If you are selling across multiple channels, being able to pull sales reports to view your realised revenue is invaluable in helping you decide when to scale channels and which to dial down or even remove.
If you have a competitive sales team to manage, having visibility into their performance month-on-month can help you increase team productivity and calculate commissions.
When forecasting sales, you will need to review the following items: planned ad spend, upcoming promotions, seasonality and the overall economy, guaranteed sales from contracts and subscriptions, this year’s growth rate, last year’s sales during the same week, and trends in the market. Fine-tune your sales strategy based on the statistics and numbers from your sales reports, and monitor accordingly.
If you want to take your Shopify store to the next level, it’s crucial to have access to the necessary information that will aid your strategic decision making. Also, you need to make sure that you have a proper inventory system that will help your business to run seamlessly, and avoid unnecessary spoilage, dead stock, and wasted resources.
TradeGecko’s inventory management system helps you to power up your Shopify store by automatically syncing your sales with stock levels, invoices, and order fulfillment. Start a free trial with TradeGecko today and manage your inventory seamlessly to help you save more time, human resources, and money.