Inventory management is another important component of any business. Especially online businesses.
Just like other key components such as web design, marketing and optimization — your inventory management must be topnotch for your e-commerce business to succeed.
Poor inventory management will slow your business growth and potentially harm your relationship with customers.
Why is it so important you ask?
Cash is king. It’s very difficult to successfully run an e-commerce business without cash for inventory. Unless you plan to use drop-shippers for all your order fulfillments.
Buying inventory increases your order fulfilment time. It also holds up your liquidity if you don’t sell your products in time. This bottleneck often limits growth.
On the other end of the spectrum if you don’t have enough inventory, you risk experiencing late order fulfillments. You don’t want to lose potential customers to your competitors. Customer experience is key.
Below are 4 e-commerce inventory management concepts to build a solid foundation.
1. Just-In-Time Inventory Management
A Just-In-Time inventory management system allows your e-commerce business to operate with minimal inventory to just meet demand as clients place their orders. This concept requires in-depth analysis of demand and market forecasting so that you can maintain accurate and sufficient inventory levels at all times.
The main advantage of this system is that it does not hold your money in huge inventory quantities. However, you must be prepared for any risk that might come as a result of disruptions in the supply chain.
2. Just-In-Case Inventory Management
Just-In-Case inventory management system helps your e-commerce business to continue running even when there is uncertainty. Either choose to increase your inventory when you anticipate an increase in demand. Or reduce the inventory of products when the demand is low and supply is high.
3. Drop Shipping
This is where you rely on suppliers to make order fulfillments. In this case, you are not worried about managing your inventory.
There is a major disadvantage of this kind of business concept when it comes to meeting clients expectations.
You do not have access to your supplier’s inventory system. Meaning you risk having late order fulfillments when your supplier runs out of stock. This is especially true for popular products during the peak season.
Your supplier may even deliver faulty or inaccurate products. You don’t have any control of it. Picking a supplier that meets your standards is extremely important in this model. Otherwise you may end up with your online store getting negative ratings from unsatisfied customers.
That leads me to my next point. Read on.
4. Supply Chain Inventory Management
The success of your e-commerce business depends also with the commitment of your inventory suppliers. Working with unreliable suppliers leads to product delays and late order fulfillments to your customers.
Always work with reliable suppliers. Consider having additional backup suppliers in case one unexpected runs into problems.
Carefully monitor your inventory levels. Free-up cash. And maintain reliable suppliers. These strategies will undoubtedly put you and your online storefront in a good spot.
Don’t believe me?
Try it out. Or not. It’s up to you!
“There are 168 hours in a week-what you choose to do with them is up to you”