Routine evaluation is vital for any business owner who wants to succeed. This need is especially relevant for eCommerce brands monitoring their inventory levels. Inventory management is one of the aspects of business management that can be the difference between becoming the next Amazon or going bankrupt entirely.
If you’re reading this post, your business’s inventory management might need some help. Before making any changes, you should take a close look at your current inventory management and answer the following questions:
How is your current inventory control system affecting your business? Have you struggled with supply shortages? Do you know how to source products to sell on Amazon? Upon closer inspection, what specific aspect of your inventory management system seems to be the issue?
Once you answer these questions, you’re already one step closer to figuring out how to improve.
How to Avoid Critical Inventory Shortages
One of the quickest ways for an eCommerce business to go bankrupt is to run out of its in-demand products too frequently. If consumers are going to your online store’s website for a specific item, but you never seem to have it in stock, they’re probably not going to stick around and spend money on any of your other products. Not only that, but they may warn their friends against shopping with you.
Having chronically low stock levels damages your business. When most consumers decide to buy a product online, they trust that they can get it quicker and easier than they could by going to a brick-and-mortar store. In addition, they view online shopping as a guarantee that they can get that product, whereas it’s hard to know whether or not a physical store would have it.
To avoid running out of stock and becoming less reliable in a customer’s eyes, you need to implement a system that minimizes this likelihood. First, you need to know how to predict future product demand by monitoring and analyzing present and past buying trends.
Ways of Researching & Predicting Trends
There are a few different ways to better predict demand trends and manage your inventory. These include trend projection, market research, sales force composites, the Delphi method, and econometrics.
Trend projection uses past sales data to attempt to find a pattern and apply it to what future demand will look like.
Market research involves implementing customer surveys to get their first-hand opinions on what they’re likely to buy in the future.
A salesforce composite requires you to rely on your sales team. The theory is that sales works most closely with your customers, so they understand both positive and negative customer feedback. Therefore, they know what customers do and don’t like, and can use that information to predict future buying trends. This can be time-consuming, but many business owners find it worth the effort.
The Delphi method involves recruiting outside experts and using external professional opinions to cross-reference and make conclusions about future buying trends.
Lastly, econometrics is a numbers-based technique for predicting product demand. This method requires you to cross-reference sales data with information regarding possible factors that will affect what consumers are interested in. You create a mathematical formula to determine what you’ll need using this data.
Once you determine your most accurate prediction regarding future buying patterns, you can begin drawing up plans regarding purchase orders, pre-stocking items before the demand drives up their prices, and irregular stock.
A few other things you should do to manage your inventory include:
Routine inventory audits
When checking financial records against inventory and sales records, you could find discrepancies that may indicate loss, theft, or misplaced items. You may also find that items marked out of stock are merely on the wrong shelf.
This approach consists of checks and balances to ensure that your inventory records match your physical inventory stock.
Verifying that a specific inventory area in your stock room contains precisely what it’s supposed to.
Tracking lead time
Be aware of the amount of time it takes from ordering your inventory replenishment to when it arrives.
What to do if Your Inventory Starts to Run Low
It’s easy for business owners to panic when their inventory starts getting low—especially if you run small businesses. Dealing with this problem can be especially difficult in the world of eCommerce.
When this happens, the first thing you need to do is to mark the products you’re out of as “out of stock” before any customers can order something that you can’t give them. If you don’t have as many items in stock as you thought and can’t fulfill all the orders, you can give your customers a few options.
When handling a situation like this, you must remain calm and understand that they’ll be annoyed or frustrated with the situation. Try to calm these feelings as best you can while remaining honest about the situation. If they are willing to listen and cooperate, begin offering them some options.
The very first thing you want to do is confirm that they do, in fact, still want to wait for their product and have it sent to them as soon as you get it back in stock. If they don’t, you can either offer them a full refund or some discount codes or store perks that add up to the same value.
Another thing you can do if they don’t want to wait is to suggest a similar item you have available instead (but ONLY if this item is a truly acceptable alternative to the product they originally wanted). If all else fails and the customer doesn’t want anything you’ve offered, consider politely suggesting another store where they can find the item—yes, even if the store is one of your competitors. This will at least leave them with a good impression of your customer service efforts and desire to help them resolve their problem.
If they still want to wait for their item, give them as accurate an estimation as possible about when their product should be available. Thank them for their patience, and offer them a discount as compensation for their troubles.
Using Software to Better Manage Your Inventory
Inventory management software is one of the best tools a business owner could have to track and manage their stock. It’s crucial to ensure that your inventory management software has everything you need for success.
What Should I Look for in Inventory Management Software?
Good inventory management software depends on your business’s specific needs and preferences, but there are some traits that they should all have. For example, the right inventory management software can improve your cash flow and your business’s bottom line while raising the amount of time and effort you put into it as little as possible.
Inventory tracking is one of the most valuable features of any inventory management software. It gives you a pretty accurate estimate of when your products, supplies, and raw materials will arrive. This information also helps you handle lead tracking.
Inventory management software also helps you track which products are selling, which you need to order more of, what you can order less of, and what is dead stock. With this, you can avoid wasting money on things you don’t need while making sure you don’t run out of the things that you do.
How Can Payability Help Me?
There are many options for good inventory management software like JungleScout. No matter which one you choose, you should get a decent understanding of your incoming expenses, sales, and revenue.
Still, nobody can avoid unpredictable external factors affecting their business. This can lead to drops in income, making it difficult to afford new stock. Fortunately, Payability can help you get the money you need to order ahead and get through your business’s difficult times.
Get Funding to Avoid Low Stock and Inventory Shortages
When it comes to investing in stock and inventory for your business, you will need some upfront capital to make it happen. The more products you buy now, the less you’ll have to buy later when inflation and product demand have driven up the prices.