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E-Commerce Inventory Challenges and Solutions

E-Commerce Inventory Challenges and Solutions

Delivering products on time is an essential part of an eCommerce business. To deliver products at the right time, there should be proper eCommerce inventory management. It is done by the warehouse. A warehouse has hundreds of thousands of products lying there. If not well managed, it would be nothing but chaos.

For an eCommerce business to survive in this competitive market, it is extremely important to offer max customer satisfaction at each and every point in the customer journey.

So, if your eCommerce stock management is messed up, its effect will be seen at all stages. To make it easier, we have explained inventory and inventory management.

What is Inventory?

Inventory means raw materials and/or finished goods a company sells or uses in producing goods. Basically, the accountants use information about the stocks to determine the correct balance sheet valuation.

What is Inventory Management?

Inventory management helps companies keep track of the present stock and what requires restocking. The inventory is tracked from purchase to sales of goods.

Inventory management aims to identify and react to trends by managing the stocks accordingly. This helps in fulfilling customers’ orders without going out of stock. With the help of the right eCommerce inventory tracking tools, business owners get data on stocks and if there is any shortage, then they ask vendors for more supplies.

Once the inventory is sold, it becomes revenue, but till then, it holds a lot of money. So, if you overstock inventories, it reduces cash flow. So, inventory management is essential for a business’s health.

Proper inventory management can save a business money, improve cash flow, and help in amplifying the customer experience.

Inventory-Based E-Commerce Challenges

E-commerce store owners usually face a lot of challenges in inventory management. Here are some of them.

1. Managing Multiple Channels & Warehouses Manually

As an ecommerce store owner, you might have a single channel for sales and a single warehouse to store all the inventories during the initial stage of business. You might use pen and paper or spreadsheets to manage the stocks, the ins and outs of products, and everything else.

As the time passes, to expand your business, you would probably increase sales channels to increase the sales. And when your sales increase, you would require more warehouses to meet the demand. If you have orders coming in from multiple channels and products lying in multiple warehouses daily, it will be difficult to manage.

How many spreadsheets can you handle at a time? Once the business scales, manually handling sales channels and warehouses is not an option. It creates confusion and lacks clarity. It can mess up your whole supply chain. Moreover, it can also lead to an unsatisfactory customer experience, which can quickly drop sales.

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2. Overselling and Overstocking Inventory

Overselling and overstocking the inventory are the two major challenges faced by ecommerce store owners. As they are handling the inventory manually, keeping track of these two is difficult.

When handling all the stats manually, it is hard to keep track of orders coming in from different channels. The chances of overselling the product increase. No customer likes to hear you are out of stock after they have ordered the product. Such a situation impacts the customer experience.

On the other hand, overstocking the product to save yourself from going out of stock in case you oversell the product is not a good practice either. Sometimes you might end up not selling most of them. And if the products have a shorter shelf life, they can go bad soon.

How can you decide how much product you would sell in the upcoming sale or on festive days when sales are usually higher? With no proper technology, businesses usually get trapped in these two problems.

3. Lacking Data Visibility

Spreadsheets lack clarity on data. It is difficult to visualize what products need faster restocking and which need immediate action (if they have an expiration date). Even when handling inventory manually, if you wish to know the product quantities, you have to calculate the sheet every time you wish to know the numbers.

If you have multiple warehouses at different locations, it gets even more difficult to visualize data. When you do not have clarity on actual data, it also impacts future strategies.

For instance, you would be unable to maintain your inventory based on the new ongoing trend. Also, getting the raw material or the product from vendors takes a certain time to deliver. Some might send the product in three days, while others take six. So, if you want to restock the materials or products, it will take a few days to reach you. This would impact your delivery process to your end customers.

So, having numbers in hand is not enough. You need proper comparisons and insights to smoothen your inventory management, which is lacking when handling data manually.

4. Difficulty in Accessing the Inventory

You would be selling numerous types of products. If you do not categorize them wisely, finding any one product would not be less than a challenge.

For example, if you sell apparel in different sizes. If you do not categorize different products with different sizes while packing the order, it will consume a lot of your time in finding the right size, or you might not find the products at all. This would surely delay the delivery process.

5. Unsellable Product

If the product is not in good condition or is a food item or medicine, you cannot sell them if they have reached their expiry date. Some products also get affected by weather, making them unusable.

All this stock can cause a loss to a company. It is extremely important to track product expiry date (if applicable), product reactivity towards weather, and physical state (when dealing with fragile goods).

Mostly, when handling inventories manually, it gets difficult to keep track of such small things. These small things turn out to be a huge factor when the number of spoiled products increases causing loss.

6. Dead Stock

It’s a fast world, and fashion and interest change even faster. Everyone wants the latest or trending products. As the fashion or trend changes, no one will buy the old products. And to keep up with competitors, you might have to discontinue selling the old products and update your stocks with the new ones.

Thus, the old products lying in your warehouse would be a deadstock. It is counted as a deadstock if you cannot sell a product for over 12 months. Understanding the latest trend and making smarter decisions to empty the available stocks is important.

You require a wiser understanding of the upcoming trends and what you should do to clear your stocks before the new trend strikes. You require a proper inventory management tool that reflects all this data, or it is impossible to figure out all these stats manually.

7. Lack of Internal Communication

When a staff is working in an organization where inventory number changes constantly, it is important to have all the employees on the same page. The workflow should be clearly stated and executed.

Usually, businesses face this issue where one of their employees follows one way of managing the inventory while the other follows some other way.

This difference in working style can mess up with the data, and as a result, you might be able to deliver the product on time, or the situations like spoilage or deadstock increase. Thus, a lack of internal communication can disturb the whole cycle of inventory management.

8. Inadequate Technology

Handling multiple warehouses and sales channels would cause many problems. Lack of technology can disrupt your shipping cycle, risks product spoilage, and incur a loss to a company.

If you cannot provide adequate service to your customers on time, it means unsatisfactory customers. Unhappy customers can be a dent in your company’s image. This factor directly impacts sales numbers.

Inventory Management Solutions

A solution to all the above challenges is inventory management software. It helps in streamlining the whole process and gives accurate inventory numbers. Some points show how you can overcome the above challenges with good inventory management software.

1. Centralized Tracking System

The inventory management software has this feature, where it tracks the inventory in real-time. When a particular product reaches a certain quantity, it automatically reorders it or alerts the admin about the same. This would save you from going out of stock and at the same time save your time of manually checking each inventory and then ordering.

2. Future Forecasts

With the help of Artificial Intelligence, this software helps predict the products’ restocking days. Based on the previous data, it alerts you with information about the upcoming festive/holiday seasons and which products should be stocked more. When you analyze all the data manually, it is extremely difficult to make such predictions. But with software, in no time you will have the predicted quantity of products that you can stock before the festive season starts!

3. Regular Stock Audits

Processes like daily stock counting become easier with digital data. With this software, conducting daily audits becomes easy. It ensures you do not overstock any product to prevent your business from blocking the cash flow. The financial and the stock data it provides are accurate and prevent a company from overstocking and overselling the products. It reduces the mismanagement that was earlier seen while handling all operations manually.

4. Managing Product Details

Naming the production a certain way can significantly impact its sales. Using SEO-friendly keywords can bring you more traffic, which means more sales.

Updating all the products’ names can look like a tedious task. But, if you use a Shopify bulk editor for your Shopify store, it can update names in seconds. It also helps manage prices, names, or any other details of products. All you need to do is to integrate such a plugin within your Shopify store or add this as a feature in your inventory management software.

5. Preventive Measures

Prevention is better than cure. Preventive measures for perishable stock and fragile products can help you sell them before they reach an unsellable state.

As one of the preventive measures, you can regularly check and maintain the products in inventory, if required. Keep the list of such products, their location in your warehouse, cost, and quantity, so that it is easier to monitor their shelf life and prevent waste.

6. Track Goods from Suppliers

If you buy raw materials and/or finished products from the suppliers, it is important to check the quality, quantity, and time of the goods received. The received quantity is not the same as the expected quantity. The goods you receive might be faulty, damaged, or defective.

Track whether the supplier sends the goods on time, or else they can disrupt the whole supply chain. The software helps keep track of all the goods. It highlights the supplier’s name when the delivery is late so you can communicate with them and fix your supply chain. You can ask your suppliers to have a fixed delivery period in order to avoid confusions.

7. Reduces Human Error

All the products in or out of the warehouse are scanned with a barcode scanner. The quantity of the scanned product is instantly updated in the software. It nullifies human error and the chances of data manipulation. This can be a major advantage for a business as it can save a business from huge losses.

8. Unified Dashboard

Early you had to manage numerous spreadsheets to maintain different kinds of data. Having data in different sheets lacks clarity. It is harder to understand and make decisions when data is discrete. But this software has a dashboard loaded with all the important information on one page. It becomes easier to visualize the status.

Wrapping Up

The right inventory management software can help you streamline your inventory. You can also add up small plugins like Shopify bulk editor to make software for resourcefulness. For a business, inventory holds up a lot of cash; until the products are sold, it is important to manage and maintain them. As your business grows, you will require more and more warehouses. A company can incur a huge loss if the inventory is not managed properly, a company can incur a huge loss. But, today’s inventory management software is loaded with many useful features. Additionally, this software is AI-driven and helpful in predicting inventory.


How to manage eCommerce inventory?

There are different resources for eCommerce inventory management.
Software: Automated software includes features like eCommerce inventory tracking, orders, sales, and shipments.

Inventory audits: Regular inventory audits identify and correct management system errors and prevent theft and shrinkage.

Optimized stock levels: Accurate tracking and monitoring of stock levels in real time can help streamline operations.

How can we overcome eCommerce inventory challenges?

Below we have shared different ways to overcome eCommerce inventory challenges.
Demand forecasting: Businesses must adapt forecasting techniques to allocate products and anticipate customer needs. It helps in overstocking or inventory shortage.

Multi-warehouse management: Multiple warehouses are crucial to meet the sales needs of different customers. It is possible through different management software which ensures a smooth supply chain.

Supply chain management: Establishing a proper communication channel and diversifying suppliers will mitigate the risk of product shortage.

What is the main purpose of eCommerce Inventory Management?

The main purpose of eCommerce inventory management is to optimize the flow of goods in an online store. It ensures you have the right amount of stock at the right time to fulfill customer orders. Different measures like warehouse management, stock control, and tracking stock levels are involved in it.

Is eCommerce inventory management beneficial?

Yes, eCommerce inventory management helps businesses in several manners. It helps in managing cost, stockout, and enhanced cash flow. As a result, eCommerce business will run in profit and meet customer’s expectations hassle-free.

The Author

Maulik Dipak Shah is the CEO of Biztech, a Magento 2 Development Company from India. Maulik likes to explore beyond his comfort zone. When it comes to writing for the blog, his contribution is priceless. No one else on the team can bring the deep industry knowledge to articles that he has. However, his door is always open and he is generous with sharing that knowledge.

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