In order to construct a sustainable, profitable, strong eCommerce business, you must first understand the intricacies of managing your beloved nemesis, ‘inventory’. Not having a bonafide inventory management system, can give rise to complex challenges, which in-turn, can be challenging for any eCommerce entrepreneur to overcome, no matter your virtuosity or size of business.
As one tends to ‘spread oneself too thin’ when launching a new eCommerce business, the last thing on everyone's mind is approaching and optimising inventory management. Admin right, no thanks.
On the other hand, money, instant gratification, ha, yes please. That being said, focusing all your attention on ‘making money’ can make you lose it as quickly as you earned it. So don’t be fooled, making the wrong choices in managing inventory can put your business in a bit of a pickle and ultimately, be a colossal waste of your time and money.
The right choices, as only one would assume, can take your business from rags to riches.
From a Prius to a Mustang
Start your engines and brace yourself. As an eCommerce business owner, you will, unquestionably encounter inventory management challenges at any given time. Yes, there is no escape. Knowing these management challenges ahead of time and how to address them, is what will separate you from mediocrity to distinction.
Several challenges are:
• Overstocking & overselling
• Manual management that doesn't allow for scale
• Lack of visibility across multiple warehouses and multiple channels
• Lack of insights
The Seven Commandments
May these words be marked! Abiding by these ‘commandments’ below will help educate when managing and optimising inventory management processes for your biz.
1.Inventory: These are the tangible items, products, or goods that you are planning to sell to your customers.
2. SKUs (stock keeping unit): is an identification code that you use to classify and organise products.
3. Supply Chain: the processes and systems involved in producing, managing, and distributing the product.
4. Reorder Point (ROP): the pre-determined level inventory must drop before ordering additional inventory.
5. First in First Out (FIFO): the oldest merchandise is sold first, with its associated costs being used to determine profitability.
6. Just-in-Time (JIT): a fulfilment method where inventory orders are made just in Time to keep up with demand from consumers.
7. Drop shipping: a fulfilment method where you actually don't store or manage any inventory onsite. Instead, orders are fulfilled and shipped directly from a third party to the customer.
It’s all about timing
E-commerce is periodical, and spending behaviours around the festive period are always higher than any other point in the year. Where would eCommerce be without 'these' sales events.
They take advantage of particular shopping seasons such as:
- New year
It's the party philosophy, so do what you can to stay ahead of the game.
It’s only natural to keep your inventory levels low during the tedious months, don't leave it to the last moment to ramp up your supply. Near the end of a high peak season, you can promote special offers / discounts to sell off most inventories to avoid carrying ‘dead stock’.
Time to do that one to one mirror talk
Ok, time to self diagnose:
• How do you identify and approach inventory management at your business?
• What challenges have you encountered and been able to overcome?
• What lessons can you share that will inspire other entrepreneurs to be successful?
Answering these questions will inform how you champion inventory management, how your business will flourish, and how you continue to meet your clients expectations.