Inventory Optimization: Why Is It Important for Your Online Store?

Simply put, ecommerce inventory optimization is “the process of maintaining the right amount of inventory required to meet demand, keep logistics costs low, and avoid common inventory issues such as stockouts, overstocking, deadstock, and backorders” for an online store.

In short, it’s about staying on top of your goods and ensuring they are easily orderable, available to send out, and best reflect what your online customer wants.

With some current supply chain delivery times at record highs, your online business needs as much help as possible to keep your customers happy and your profits as high as possible. So how can it work for your online business?

Here are some tips to help you get ready:

Be organized – There’s no point in inventory optimization if your inventory’s all over the place. Ensure everything is put in a place that makes sense – like with like, category with category. It will ease things when you implement your plan.

Make the plunge to software – Optimization doesn’t work well with analog communication. Paper gets lost. People have terrible handwriting. You’ll need a good setup for cutting-edge software. Some popular choices include Skubana, EasyStock, and TRXio.

Upgrade your scanning equipment – Consider both one and two dimensional barcodes for scanning so that you can cut down the incidents of error, sync up with your buying process, and get your data in a split second. Scanning apps help too – some of the most popular include Wasp Barcode, Shopventory, and Vend Scanner.

Once you understand the reasons why optimizing your inventory will work for you, it’s a lot easier to put it in motion. You probably already know the importance of acing the basics of managing ecommerce inventory, but what are the benefits of optimizing your inventory? Here are six of the top reasons:

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• Catalog Management in Ecommerce: Learn the basics and review our top catalog management tools

When you implement ecommerce inventory optimization, your processes become more streamlined.

Communication improves throughout the supply chain – from the suppliers to your warehousing or storage and distribution. Improved communication means that you can be faster, cheaper, and more responsive than competitors who will inevitably face inventory and fulfillment problems which turn off their customer base.

For a business, reputation is everything. Customer satisfaction needs to be at the heart of every business, especially in this age of online reviews. You need every bit of help possible, and fortunately inventory optimization can radically improve customer satisfaction.

You’ll get faster delivery times because you’re more likely to have the required items in stock. The more efficient you are, the better your prices. And for customers who like to see how many pairs of those shoes you’ve got left before they’re gone, they know exactly when they have to take action!

Find Out More

• Check out our guide on How To Handle Out Of Stock for our 5 top methods for dealing with out of stock issues in your inventory.

We can all use as many money-saving practices as possible – especially those of us with an online business. Fortunately, there are many ways that inventory optimization can reduce your costs, such as:

• Automatic reorder points for your most popular items
• Strategically dropshipping some of your items with companies like Vida Dropshipping XL
• Finding manufacturers who operate “just in time” manufacturing

Adopting these practices means you’ll need less storage because you’ll be storing fewer items over smaller periods of time. That open communication is also less time spent on management tasks like chasing and clarification, which frees up time to further improve your business. Saving money is especially important given the current rate of inflation, which is having an impact on businesses.

Low turnover is a common problem for business owners. They can get caught out when under marketing and over-ordering. And an increase in competition forces them to sell items at a loss.

But ecommerce inventory optimization keeps track of all your inventory. It prioritizes best selling items and tells you which items need extra digital marketing on your channels. It also processes your orders faster and predicts upcoming trends so that you know what will be hot in the future.

Who wouldn’t want to know what they’ve got in stock at any time? When you see problems, you can do something about them.

Low inventory notifications are a great example of visibility. Rather than send someone to manually check inventory, you get automatic notifications and re-orders. Inventory optimization brings you better overall control. Apps like Sortly help you keep on top of everything. In addition to this, setting up back in stock notifications for you clients will optimize this strategy.

No matter how small your online business, there’s never just one person involved in it. You’re still in a supply chain with other people. And with so many external factors like transport challenges, strikes, inflation, and shortages, supply chains can go wrong very fast. Though it’s not necessarily anyone’s fault, the impacts of supply challenges are the same.

Clear information and communication is key to supply chain success (and damage control). Inventory optimization can help you notify your suppliers of your upcoming needs and last-minute adjustments faster and more accurately. This gives them more time to respond and fulfill your requirements. It also saves you money because there are fewer mistakes and relays between you.

Find Out More

• Discover how AI could help you manage your supply chain in our full AI In Logistics guide!

With all these advantages, it’s easy to see why ecommerce inventory optimization for your online store would be an attractive prospect. With a clear idea of what you want to sell, and the commitment to put the right optimization plan into place, you will save money and time, improve your customer relationships, strengthen your supply chain, and basically make things much easier for yourself.

Sounds great, doesn’t it?

Need more help? Find out about hiring an ecommerce expert.