Ultimate Guide To Optimize Ecommerce Inventory Management

The nature of selling is to supply what customers demand. To sufficiently meet the customers’ demand, the quality and quality of products need to be taken into careful consideration. That’s why we need effective eCommerce inventory management.

Our article today will help you to take some steps to optimize the productivity of eCommerce inventory management

Approaches To Optimize Inventory Management

Predict The Demand Of Products

As we usually buy products from distributors and wholesalers before selling them again to final customers. To avoid goods surplus or shortages which can lead to considerable loss, we need to consider the quantities of products to optimize the inventory system. 

Forecasting the demand for products is usually based on selling records, tracking customers’ behaviors, and new trends. Moreover, the demand for products varies from season to season. To ensure accurate predictions, we need to use some automatic application to track and follow up our eCommerce business activities, then analyze and detect. 

Seasonality Inventory And Promotions

Products demand can dramatically surge in a particular season like Christmas, Black Friday, or product-favored season. To prepare for rush hours, besides fulfilled warehouses, you may take advantage of Backorder. It is inevitable to face out-of-stock status, and Backorder will allow customers to purchase products even if they are unavailable at that time. Customers can buy as a pre-order and receive the shipment on a particular day like normal.

If you are a BigCommerce merchant, be sure to try out the BackOrder App!

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Your promotion campaign will directly affect the product demand as it can drive customers’ choices. Therefore, promotion is also a crucial element that you need to pay attention to when forecasting upcoming demand and thus optimize inventory management.

Restock Plan

Whenever all the products are sold out, you need to make a restocking plan. In front of large numbers of customers, you may think the more stocks, the better.

However, the highest profit is gained at a certain level of reserves. That is why there are some concepts you need to interpret to optimize inventory before establishing a restock plan. They are service level, lead time, safety stock, reorder point, and optimum order quality. The graph below illustrates their relationship:

inventory management eoq model

Consider What Product Need To Be Priority

Depending on different seasons, customers’ tastes, and other factors, not all products are stored in the exact quantities. Therefore, you need to consider what products should be a priority over others. To have an accurate detection, you need to use some cost-benefits models.

For instance, ABC Inventory Analysis classifies inventory in terms of the extent of importance and allocates control accordingly. There are three categories to evaluate the level of products’ priority:

  • A group item: 15% to 20% of items account for 75% to 80% of annual inventory value. This group is the most important one to optimize inventory.
  • B group items: 30% to 40% of items that account for 15% of annual inventory value
  • C group items: 40% to 50% of items that account for 10% to 15% of annual inventory value

Conclusion

We have suggested some steps that you need to go through to optimize inventory management. When you can adopt them into reality, you can gain the expected revenue and desirable profits.


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