How Are Inventory Control Systems Beneficial for E-Commerce?


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When running an e-commerce business keeping your inventory in order is extremely important.

You need to know how much product is being shipped out to customers and how much product you need to order for your reserves. This is all a part of your inventory control system. 

Key Takeaways:

  • Knowing your inventory figures helps you learn how to keep your cost of goods low, which can help make your business more profitable.
  • Some of the common inventory control systems businesses use today are perpetual inventory systems, periodic inventory systems, and bar code inventory systems.
  • The software that works for inventory control systems varies based on the type and size of the business, compatibility with a completely online interface is paramount.

What Is an Inventory Management System for Your E-Commerce Business?

Much of inventory management is automated or streamlined with the help of technology so that you can get an accurate count of your inventory at all times. Knowing your inventory figures helps you learn how to keep your cost of goods low, which can help make your business more profitable.

An inventory control system keeps track of the products a business provides to customers at all points of distribution, including purchasing, shipping, receiving, warehousing, and returns. This technology automates what once was a highly manual process.

Some parts might still be manual, but overall, the system streamlines what was once a much more challenging method of keeping inventory in order. Functions, such as reordering low socks, are much simpler with an inventory management system.

What Are Types of Inventory Control Systems?

  • Perpetual inventory system
  • Periodic inventory system
  • Bar code inventory system

In the past, businesses kept track of their figures on spreadsheets. Today, there are many inventory management programs that can store a company’s inventory figures. However, businesses still need a system for which to count and load the numbers. 

Here are some of the common inventory control systems businesses use today:

Zoho Inventory Dashboard.
Source: Zoho
  • Perpetual inventory system: Keeps track of inventory in real-time. When a product is sold it’s removed from the inventory database as its bar code is scanned.
  • Periodic inventory system: Keeps track of inventory in specific intervals, perhaps day-to-day, week-to-week, or month-to-month. This requires members of a business to physically count the number of products that are available in an audit of inventory. 
  • Bar code inventory system: Keeps track of inventory using bar code technology. This is a system often used for products that are in transit to ensure they arrive at their proper destination. The scanning of the bar code facilitates the successful packing, shipping, picking, and receiving of a package from location to location. 

How to Use an Inventory Control System in Your E-Commerce Business

  • Build a Safety Stock
  • Keep Your Inventory Balanced
  • Use Product-kitting Strategies
  • Use Past Trends to Determine Future Stock
  • Store Your Inventory Well
Two people working in a warehouse shipping room.
Source: Pexels

An inventory control system is an ideal way to modernize your business. Even if you’re running an e-commerce business, if you don’t have your inventory managed in an easy-to-understand fashion, your business can become hard to manage quickly.

An inventory control system helps you manage when to reorder products, how much to reorder, how many more to order if stores are depleting quickly, and how long products can stay out of stock. Here are some other functions you can streamline with a well-tuned inventory control system.  

Build a Safety Stock

You should always have an inventory of extra stock on hand to be prepared for any unforeseen demand.

Keep Your Inventory Balanced

You can ensure that your inventory is just right for your business, not too much and not too little. If you have too much you might have to drop prices and offer sales when you didn’t intend to offload the unwanted stock. If you have too little stock, you might lose interested customers. 

Both scenarios affect your profits and the overall outlook of your business. A solid inventory management program can help you stay on top of your figures.  

Use Product-kitting Strategies

If you must offload inventory, you can use a strategy called product kitting. This allows you to get the maximum value for your products while customers also get a good deal. 

One kitting offer is the buy Two, get one free offer. This works because if a customer only intended to buy one product, they now get three because of the “get one free” offer. You not only sell an extra product, but you also offload two extra products from your inventory that you wouldn’t have otherwise.

Use Past Trends to Determine Future Stock

An inventory management program easily helps you look at your yearly trends to determine whether you should be boosting or reducing your stock for the coming season. Keeping regular tabs on your inventory figures is a good strategy if you do want to increase your stock in the future. You can figure out strategies to boost your businesses so you can increase your inventory when the time is right.

Store Your Inventory Well

The automated part of inventory control is relatively easy, compared to ensuring that your physical inventory is safe and stored correctly. Wherever your products are located or transported between their creation, sale, and arrival to customers is vital to their quality and customer satisfaction. Is this a location you and your employees can easily access? You should consider these issues when selecting an inventory control system to implement and how it shapes your business. 

How Does an Inventory Control System Help Your Business?

  • It Gives Your Real-time Access to Inventory Levels
  • It Optimizes Workflow Logistics
  • It’s Financially Beneficial
  • It Leads to Fewer Manual Errors
  • It Leads to Better Customer Satisfaction

Many businesses choose various levels of automation to improve their brand in some way. Introducing an inventory control system is no different, as it can decrease the time spent manually crunching numbers and can increase profits. Here are some ways an inventory control system is beneficial to an e-commerce business. 

It Gives Your Real-time Access to Inventory Levels

If you choose a perpetual inventory system, for example, your database works in real-time. This benefits your employees, or whoever is working closely with your products and inventory as they can keep on top of inventory functions, such as reordering. 

Having real-time access to inventory also allows a business to communicate with customers about product availability and any other product inquiries, which aids in overall customer satisfaction. 

It Optimizes Workflow Logistics

An inventory control system can streamline the process of getting a product from the order stage to the customer. When a customer orders a product from an e-commerce shop, the product is assigned an order number. 

This number not only allows the customer to look up the progress of the product, but it also allows the business owner to pace and update the progress of preparing the product for shipment. 

Products often get assigned several other numbers in the inventory control system before getting to a customer, including a tracking number, which customers can use to be updated on their packages whereabouts while being shipped. On a business owner’s end, once the package is delivered the transaction is complete.  

It’s Financially Beneficial

Your business reaps the financial benefits of a balanced inventory. Customers are less likely to cancel due to back-ordered products and you’ll maximize your storage. Overall, better inventory management helps your bottom line.   

It Leads to Fewer Manual Errors

An inventory control system automates certain inventory functions so there is less room for human error and fraud. All details of your inventory’s whereabouts are accounted for, from purchase order to delivery, and can be reviewed if there are discrepancies. 

It Leads to Better Customer Satisfaction

Ultimately, businesses want to make their customers happy. Inventory control systems make it easy for e-commerce businesses to provide product availability, prices, and discounts, encouraging customers to buy more products. If a business cannot manage its inventory, customers will take their business elsewhere.

Examples of E-commerce Inventory Management

The software that works for inventory control systems varies based on the type and size of the business. For e-commerce businesses, compatibility with a completely online interface is paramount. Here are some e-commerce inventory management program options to consider.

Shopify platform landing page.
Source: Shopify
  • Bluehost: A WordPress-based online shop builder with an inventory manager included
  • Shopify: An online shop builder with an inventory manager included, and businesses can test the service with a free trial
  • BigCommerce: An inventory management solution for larger e-commerce businesses or those willing to invest more money
  • EKM: A United Kingdom-based online shop builder with an inventory manager included
  • Squarespace: An online shop builder with an inventory manager included; there’s no free trial offered, but discounts are available for yearly plans

What To Do Next

It’s important to determine the best e-commerce platform that will work best for your online store over the long term. It won’t be easy to convert from one platform to another because you will have invested a lot of effort in organizing all of your merchandise online inventory. 

An inventory control system allows you to easily maintain control of the stock of your e-commerce business. With your preferred inventory management software in place, you can keep enough inventory in stock to prevent back orders, and keep balanced store levels and customer satisfaction high. Properly implementing an inventory management system in your business operations is a great way to improve workflow and profits. 

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