Vendor-Managed Inventory for Your eCommerce Business
As an eCommerce business, staying ahead of customer demand for your products is no easy task. With inventory management being a vital part of any successful operation, it’s essential to stay updated on new techniques and technologies that can help optimize the process. One increasingly popular option among businesses today is eCommerce vendor-managed inventory (VMI), which offers several great advantages over traditional practices. In this blog post, we’ll explore what VMI is and how it works, explaining why you should consider making the switch in your own eCommerce business. Read on to learn more! What is vendor-managed inventory? Vendor-managed inventory (VMI) is a type of inventory management where a manufacturer or supplier manages and maintains inventory for a company (or buyer). Still, the actual stock is kept on the buyer’s premises rather than the supplier’s. In a VMI arrangement, the supplier oversees inventory replacement and storage expenses on behalf of the business while the latter retains ownership of the inventory. In contrast to a traditional supplier-buyer transaction, VMI is much tighter cooperation. The eCommerce company would need to provide the supplier access to its inventory data for VMI to function. Following that, the supplier would utilize this data to decide on order quantity and frequency for replenishment. What distinguishes VMI from other inventory management strategies? Once a product has been ordered, shipped, and received, it is often up to the eCommerce company to decide how to keep, manage, and restock inventory. A company may keep inventory at its home, workplace, or storage facility. However, inventory is typically held in a rented warehouse where they are in charge of overseeing the supply. Another strategy is collaborating with a third-party fulfillment (3PL) provider to handle order fulfillment and inventory management on the company’s behalf. Based on this model: With eCommerce vendor-managed inventory, the company keeps the goods in their warehouses while the supplier maintains it. Who should use eCommerce vendor-managed inventory? eCommerce vendor-managed inventory is an excellent alternative for a wide range of businesses and is even regarded as standard in some sectors of the retail industry. It’s a widespread technique in the consumer products and electrical sectors. However, it is best suited for internet sellers with enough physical storage space and who wish to avoid handling a large number of SKUs. Big-box retailers such as Amazon, Walmart, and Home Depot rely on VMI to avoid manually placing purchase orders. This is a suitable alternative for them because they deal with millions of SKUs and collaborate with many third-party merchants. When VMI is not the most appropriate approach While VMI is a cost-effective inventory management solution for many firms, it is not always the best option in the following cases. Jewelry, pricey industrial components, and luxury products require greater protection and are hence unsuitable for vendor-managed inventory. In most direct-to-consumer marketplaces, having total control over your inventory is critical so you have precise data on sales predictions and market developments to enable you to maintain a healthy supply chain and make quick adjustments yourself. As a result, for most direct-to-consumer firms, a vendor-managed inventory system isn’t the best solution. In a vendor-managed inventory system, the supplier may be in charge of inventory management. However, you are still in charge of inventory storage. And warehouse space may be expensive. This makes the eCommerce vendor-managed inventory system difficult for specific organizations, especially if they can’t afford to physically keep significant volumes of items frequently required to balance the expenses associated with VMI and make it worthwhile to invest. In Conclusion, eCommerce organizations are continually working for better inventory management systems and experimenting with alternative inventory models to remain competitive. eCommerce vendor-managed inventory is one option to examine for better inventory management. Try our inventory management app BackOrder today for more sensible inventory management.
Managing Consignment Stock in Your eCommerce Store
As an online business owner, managing eCommerce consignment stock can be a complicated process. Keeping track of all the details — from inventory levels to shipping timelines and trusting that everything is accounted for — are all essential factors to consider when handling consignment items. If you don’t know how to manage your inventory or understand which logistics policies apply best to these types of products, it can become quite overwhelming. In this post, we’ll discuss the basics of managing consignment stock in an online store so you can effectively maintain your operations confidently. What is an eCommerce consignment stock? Consignment means the supplier passes over their goods but does not transfer ownership or make any money until the retailer sells them to its consumers. When the retailer sells anything, the supplier makes a profit and pays the seller a commission. If the store does not market all of the goods, they can return any unsold items to the supplier. Retailers may fill their businesses more affordably by using eCommerce consignment stock. Furthermore, it allows suppliers to acquire brand awareness without investing additional money on promoting, selling, or exhibiting their own items. It may be a win-win situation if both parties understand and agree on the contract’s conditions. eCommerce consignment stock management best practices Create a win-win contact Both the consignor and the consignee must be forthright and clear about their expectations for the consignment inventory agreement to be effective. As you complete your consignment inventory agreement, be sure to give consider the following questions: Create a mutually beneficial connection with your business partner Remember when you were in elementary school and you learned about a bee’s bond with a flower? Bees consume nectar to nourish their colonies as pollen is transported from blossom to flower. The partnership benefits both parties. The same should be true for your agreement with your company partner. In the best-case situation, it exceeds your written contract. You and your partner should both be in it to win it. If you are the provider in the partnership, you should do all necessary to ensure that your product is as successful as possible. If you are a retailer, you should make every effort to sell your supplier’s items as well as possible. Use inventory management software for consignment stores Have you ever wondered how you’re going to keep track of all your items, merchants with whom you operate, consumers, and sales? Atom8 is a powerful inventory management software, and we have a guide on how to use it to manage eCommerce consignment stock. The application will assist you in keeping track of what is in stock and what is on order. You’ll know when it’s time to refill and may do so from within the software. In Conclusion, Selling on consignment may be a terrific way to generate more revenue and spread the word about your brand to a wider audience. Making a consignment agreement with a merchant may also allow you to sell wholesale to them in the future. It can only take time to cultivate your relationship and establish your reputation. Try our free eCommerce inventory management app BackOrder today to manage your eCommerce consignment stock!
