Your product is selling like hotcakes. Your customers are clamoring for your service. Every day orders come in, and it’s clear your e-commerce business is a success. That’s the best-case scenario, right? But are you sure you can keep up with your customers? Is your supply chain secure? Can every single purchase be satisfied? And what if the worst happens and you end up with lots of inventory that’s not moving? Can your business absorb the extra costs for storage or delays in income?
Whether you store your merchandise at home, in a warehouse, or are using a dropship service, keeping better track of your inventory is essential to your bottom line. Managing inventory is key when it comes to understanding where your company stands and what growth potential you may have.
Overstocking and Understocking
Overstocking and understocking and are two extremes that can hurt your business. Overstocking can lead to cash flow issues because you have money tied up in inventory that could be used to grow the business. Understocking can lead to lost business, and it can hurt your reputation when customers are unable to purchase your product and are left feeling unsatisfied and frustrated. Until you know how your products are behaving in the marketplace, you will not be able to seize an opportunity or plan for the future of your e-commerce business.
Tracking Inventory is Key
So how do you start tracking your inventory? There are many tools available, from manual entry on spreadsheets to automated management using a hosting platform or software solutions. When starting out, many e-commerce businesses begin with a standard manual entry approach. While this is simple and straightforward, it is not scalable and prone to errors.
When choosing an inventory management solution, you want to consider how you store your product, the cost associated with the inventory management tool you choose, and your business goals. For example, dropship inventory control will need a more comprehensive solution than local or warehouse storage. Additionally, while manual entry into a spreadsheet or ledger may be cost-effective, it could soon become unwieldy as your business grows. It’s also important to centralize your inventory management if you are using multiple e-commerce channels like Amazon and Shopify. Finally, looking at your business goals, you need to be able to forecast demand so that you can maintain optimal inventory quantity – that Goldilocks sweet spot where you have enough supply to meet demand.
For online retailer Zentail, for example, selling products through multiple channels, including Shopify and Amazon, wreaked havoc on their inventory management. With the help of AIS Solutions, Zentail was eventually able to take control of the various moving parts of its multi-channel e-commerce business. After conducting an in-depth assessment, AIS Solutions was able to implement an advanced ecosystem between Zentail’s e-commerce channels and QuickBooks Online. The result? Zentail was able to easily identify the revenue generated by each e-commerce channel and focus on those channels which produced the highest return.
When you work with the AIS Solutions’ team, our cloud-based bookkeepers provide you with accurate financial information at your fingertips. Imagine knowing just how many widgets you have, how many sold over a specific time frame, and if your supply meets demand? With this knowledge, you can adjust your product pipeline, make better decisions about resource allocation, and create a strategy moving forward that will allow you to reach the full potential of your e-commerce enterprise.
Want to be more successful in eCommerce. Grab a copy of our free eBook here with over 30 pages of insights and proven tactics.