The current state of inventory risks and compliance
A 2020 study shows that 66% of products tested from various eCommerce stores failed safety compliance tests. Many small retailers with low-cost items completely neglect inventory managing risks and compliance. Whether your business is out of your basement or using a third-party warehouse like FBM or dropshipping, you’ll want to comply with safety guidelines as soon as possible.
At its core, inventory managing risks and compliance ensures your business runs according to safety protocols to prevent disasters for your store and customers. If you’re scratching your head right now not knowing if your BigCommerce store complies with guidelines, keep reading. Now we will explain everything you need to know about inventory management risks and compliance.
Can I ignore inventory risks and compliance?
Simply stated, you cannot turn a blind eye to inventory risks and compliance. The consequences of neglecting proper inventory management are high and could lead to fines or unwanted store shutdowns. Here are the risks if you miss inventory management compliances:
- Spoilage of perishable goods – Products with limited expiration dates must be sold on a First In, First Out (FIFO) basis. You risk sending customers spoiled goods without proper stock allocation or contaminating your inventory space.
- Risk pooling – One of the biggest concerns in inventory management is understocking and overstocking products. When you spread your inventory across multiple locations, you’ll have more uncertainty over the quality of the product. More prominent retailers consolidate their vast inventory into one controlled space.
- Missed orders & shipping – Without data accuracy, the chances of missing shipments rise exponentially. Not only are you jeopardizing customers’ fulfillments, but you’ll be paying extra for every missed shipment on refunds, transportation, and customer support.
- Loss of revenue from out-of-stock items – Forgetting to restock items will have customers moving to competitors – 70% of Shoppers faced with Out-of-Stock Products switch retailers.
- Fines and fees from non-compliance – Some local guidelines dictate you must commercially register your inventory space upon reaching specific thresholds. In the U.S., for example, you’ll need to log inventory according to the IRS’s tax guidelines, even if you’re running your business from home.
See immediate benefits with accurate reporting
On the other hand, correctly handle your inventory, managing risks and compliance, and you’ll see immediate improvements:
- Easier day-to-day operations – An inventory management plan means less time reviewing item reserves, restocking, and supply shortages.
- Accurate inventory information – Integrating your labels and SKUs into your Point of Sale system prevents headaches crosschecking outgoing orders and stock numbers.
- Prevent unforeseen costs – Circumventing missing shipments and replacing lost and damaged stocks mean less operational costs to your business. Stores that stay proactive in preventing inventory scams and theft must follow strict compliance.
- Better revenue forecast – Deciding your business future will surely be less stressful when you have accurate inventory data and a production workflow that takes care of unexpected mishaps.
- Returning Customers – Ensuring shipments arrive on time with non-damaged goods creates a winning combination that will sure bring in happy and loyal customers.
How can my BigCommerce store follow inventory compliances?
- Accurate and detailed inventory reports – If you manually enter inventory updates at the end of the workday, you could risk inaccurate data or duplications. You’ll want to spend as little time as possible doing data entry while getting the most accurate reports. To prevent human errors in stock management, use Atom8’s inventory automation workflows. BigCommerce stores are using automation to change product availability, stock numbers, and order creation within a fraction of the time.
- Labels and SKU naming standard – Start simple by labeling your products correctly – SKU naming is essential to your business. Create a naming format for SKU that you can read and remember. Combine using RFID or NFC scanners to eliminate human errors in stock entry. By doing the hard work earlier, you can use SKU-level research to enhance profits later in business.
- Real-time risk management – To stay alert to threats on inventory, your team needs to be notified immediately of suspicious activities. Atom8 can send notification emails when an abnormally large order is placed or if customers use an unverifiable email domain.
- Centralized storage space – Risk pooling is an open industry secret, but you start with Atom8’s Google Sheet integration. By creating workflows for all your inventories. By consolidating data into one centralized Google Sheet workbook, you can check for updates across multiple channels. Your store won’t have to compromise on the number of inventory spaces and still receive accurate and updated information.
- For Drop Shippers – Choose reputable suppliers who comply with FDA or local CDC guidelines. While it’s tempting to go with the lowest bidder, there’s no point in selling dangerous and outdated products.
No more unnecessary risks; start inventory compliance today for your BigCommerce store
Don’t fall into the trap of negligence when it comes to inventory management. Stores that fail safety compliances or don’t take the time to report inventory data accurately will eventually pay the high cost. Be better prepared than your competitors and delivery better, faster, safer products to your customers by following this guide on inventory managing risks and compliance. Learn more about inventory automation with Atom8, BigCommerce’s premiere automation software.