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It can be extremely challenging for e-commerce businesses to efficiently manage and monitor all the different types of products moving in and out. It is an incredibly fast-moving space, and thus, you need to keep tight control over your inventory.

If you want to improve your warehouse operations, eliminate avoidable errors, increase sales, significantly reduce costs, and boost customer satisfaction, then inventory control is one of the most important aspects of your e-commerce venture, and there are four key ways to achieve it.

What is inventory control?

Inventory control refers to managing and maintaining, at any given time, an amount of stock for your business that is optimal or “just right.” An inventory amount that is too low or too high can invite a host of troubles. Low stock levels, for example, can lead to lost sales and, thus, dissatisfied customers. On the other hand, you don’t want too much inventory on hand either because it disrupts cash flow and increases stock costs.

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So, how do you decide what the ideal level of inventory is for your e-commerce business? It depends on a variety of factors, such as demand trends, seasonality, lead times, and your relationships with your suppliers.

Besides the two obvious reasons – avoiding stockouts and excess inventory – inventory control can also help you in many other ways, including

  • Saving money by cutting unnecessary storage and handling costs
  • Increasing profitability
  • Improving efficiency
  • Making better purchasing decisions
  • Negotiating better prices with suppliers
  • Speeding up order fulfillment
  • Improving customer satisfaction

What is inventory accuracy?

In a nutshell, inventory accuracy refers to how well your actual, physically verified inventory levels match up with the stock levels recorded in your system.

Why is it important? Because you don’t want to have a false impression of your inventory levels. If your system has an underreported or overreported quantity of inventory, it could lead to several major problems, such as stockouts, excessive backorders, unhappy customers, overstocking, high holding or operational costs, and lost sales.

Accurate inventory tracking also allows you to identify slow-moving inventory, get realistic forecast numbers for future demand, enhance customer experience, and make better business decisions in general.

Achieving high inventory accuracy starts with implementing reliable inventory management systems and processes, such as carrying out regular cycle counts, embracing technology such as barcode and RFID, and real-time tracking and updates. It is also essential to have a team that is properly trained in inventory handling, record-keeping, management, and clear inter-departmental communication.


4 actionable inventory management tips for e-commerce businesses

Use appropriate inventory tracking methods

As we mentioned earlier, if you want your e-commerce business to gain high levels of inventory control and accuracy, it’s essential to implement proper inventory tracking. But what does that mean, exactly?

Inventory tracking is the practice of monitoring your inventory and keeping as close an eye as needed on where each item in stock is and how much of it you have in your possession. It’s a continuous process that aims to give you the most recent, freshly updated information about your inventory. With the right tracking tools, methods, and practices, you can make sure that your records are always up to date and obtain 24×7 real-time visibility into your inventory levels.

One effective method, real-time inventory tracking, uses special software to maintain the most current data on inventory levels. It allows you to respond quickly to evolving demand and avoid stocking issues.

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Real-time tracking is closely related to the perpetual inventory management system. This involves keeping continuous track of inventory levels as raw materials and finished products move through the supply chain. It helps maintain accurate records and pick up inaccuracies between physical stock and digitally recorded values.

Regular audits are also key to ensuring that your inventory records are accurate. By conducting physical counts of your inventory on a regular basis as often as you see fit, you can identify any discrepancies and take corrective action as quickly and efficiently as possible.

By choosing the right inventory tracking method(s), you will be able to get a better understanding of where everything is and whether you have enough. It will allow you to make better business decisions, such as when to reorder products and how much inventory to carry, and helps avoid costly inventory mistakes such as overordering, overselling, and stockouts.

Optimize your floor plan

A well-planned warehouse can help you maximize your space and make it easier and more convenient to store, access, and thus accurately track every single item that you have in stock.

A warehouse floor plan is a carefully thought-out layout of your warehouse space. It takes several factors into consideration, such as product size, storage requirements, and flow of inventory, to maximize space, optimize traffic, and make storage easier and safer.

One great tip for optimizing your warehouse layout is grouping products based on similarity or common features. Another technique is to organize items based on how fast they are moving in or out of the warehouse, i.e., their velocity.

You can also consider implementing automation technology to improve storage, stacking, and arrangement of inventory. For example, using automated storage and retrieval systems (AS/RS) can help you make better use of vertical space in your warehouse and push aisles closer together without impeding accessibility or safety.

Warehouse optimization can help improve your picking, packing, and dispatching processes, consequently improving inventory accuracy. It will create a streamlined process that minimizes errors and ensures that orders are fulfilled accurately and timely. Technology such as barcode and RFID scanning, and, more recently, Internet-of-Things (IOT), can further improve accuracy and efficiency at this stage.

Stay in close contact with suppliers

No matter how sophisticated your inventory tracking methods are or what next-level technology you have adopted for optimizing your e-commerce operations, the human element is too important to ignore.

Working on developing strong relationships with suppliers is pivotal for e-commerce businesses aiming to have a higher level of control over their inventory. It ensures that you have a reliable source of inventory whom you can trust to deliver top-notch products right on time.

When you have a good relationship with your suppliers, you can be more flexible with your orders. You know you can manage to fulfill urgent or unique orders if it comes to that. If you know that your supplier can deliver last minute, you can take the risk of cutting it too close by keeping smaller quantities of stock on hand to keep holding costs low. For this reason, it is also wise to have alternative vendors ready in case of any unforeseen circumstances cause a delay or cancellation with your original supplier(s).

Additionally, maintaining good terms with your suppliers can also help reduce lead times and improve coordination and communication. You can discuss any inventory-related issues with them in real time, ensuring any problems that arise are swiftly resolved before they turn into bigger, more serious issues.

Pick an excellent inventory management software

The right inventory management software can make your life easier by taking care of the tedious and time-consuming aspects of it. Alongside the many benefits it offers, most importantly, it allows you to focus your time, energy, and money on growing your business.

Look for a solution that is tailored to your business type and size instead of going for a cheap generic one. As an e-commerce business, here are some factors you might want to take into account during your search for the perfect software.

  • Shipping management
  • Drop shipment management
  • SKU management
  • Returns management
  • Ecommerce platform integrations (such as Shopify or WooCommerce)
  • User-friendly interface
  • Analytics
  • Subscription charges or pricing packages

Investing in good inventory management software will streamline and automate a lot of your repetitive tasks, reducing any chances of errors. Furthermore, it can help you consolidate data from multiple sources, digitally track stock levels, monitor sales data in real time, identify inventory trends, and provide advanced data analytics and reporting. Some advanced software even makes use of artificial intelligence and machine learning-powered predictive analytics to forecast demand, ensuring that you never end up with stock-related issues.

End results: What will you achieve?

By following the above suggestions, you can take your e-commerce business to new levels of operational efficiency. The benefits that you gain will work together to help your business evolve and flourish.

You will have all the necessary information at hand at all times, and it will be easy to fetch this up-to-date and accurate data too. Thus, you will be able to accurately track your inventory and make informed decisions in time-critical scenarios.

Optimizing inventory control will lower costs, save time, and enable your team members to focus on other areas of the business. You will also be able to minimize stock issues such as overstocking, understocking, dead stock, wastage, and spoilage. This will not only cut logistics costs and lead to higher inventory turnover but also result in healthier cash flow.

Ultimately, your efforts will lead to happier customers who are more than satisfied with the superior quality of service, fewer errors, and better response times you provide them with, and will come back for more!

You need to have a system in place to help you manage cash-on-delivery orders, including verifying customer information, tracking deliveries, and processing payments. This may involve using specialized software or working with a third-party logistics provider.

Make sure you create clear communication with your customers. Inform them of the terms and conditions including any applicable commissions or restrictions. This can help you manage customer expectations and reduce the risk of any disputes or complaints.


About the author

Konstantin Sadekov is an accomplished digital marketing expert with over 9 years of experience in the industry. He is currently the content manager of Katana. With a passion for innovative marketing techniques, Konstantin is always on the lookout for new and exciting ways to enhance brand visibility and engagement.