Importance of Inventory Management in the Marketplace

May 31, 2021 | 4 min read

Importance of Inventory Management in the Marketplace

1. QuickRead

Is it ever the case that a buyer abandons your eCommerce shop because the product they were looking for was out of stock? Have you ever had to deal with a consumer who wants to refund a product? If you replied yes to one or both of these queries, there’s a fair chance you’re underestimating the value of inventory management for your eCommerce store.
Inventory management is extremely important in the eCommerce industry. It is critical for online marketplace owners to maintain an adequate inventory to meet consumer demands.
Stock management is critical because it allows you to properly manage and monitor your inventory, allowing you to efficiently control it and warn consumers of product availability.

2. Inventory Management Process

According to research, more than 75% of online shoppers buy their items elsewhere if they are unavailable in your shop, rather than waiting for them to become accessible with you. The correct inventory control strategies will ensure that you have the right amount of products to sell without constantly running out of stock.

Single-Source Inventory

In single source inventory, retailers have a single location (warehouse) where they handle on-hand inventory and execute orders. The merchant typically has several websites (or distribution channels) selling items from the same catalogue, stock, and location.
For example, you might provide a single website or a multisite implementation of sites in the United States, Germany, France, and Brazil, all of which pull goods from a single massive warehouse. This centralised source oversees all product numbers, imports, and returns, regardless of which distribution channel receives the order.

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Multi-Source Inventory

Multi-Source Inventory (MSI) is an option where multiple stock points service either different geographies or different ordering channels. MSI has come into its own with the latest release of the Magento 2.3 version. Using MSI, sellers can deal with a specific product from various sources or areas.

Requirements for MSI?

The Multi-Source Inventory (MSI) feature is designed to empower stock management in more than one place so traders can precisely reflect their actual stock in Magento without the need for multiple extensions or customization.
Multi-inventory was previously only available through the use of third-party modules. As there was no funding in the core and the available options were complex. Having the available solutions compliant with key and third-party components was also extremely difficult.
However, in Magento 2.3, a new functionality of the multi-sourcing function is added, allowing the retailer the ability to control multiple suppliers and handle stock for each warehouse, making it a better option than the single inventory scheme

3. Bulk Inventory Management

Assume you own a large online retail store with thousands of items. Now think whether you need to upgrade them all or add another thousand to the store. You must manually add or edit the items on the store one by one, which is almost impossible in the case of online retailers because time is of the essence.
Internet business platforms like Magento, Magento 2, Opencart, Prestashop, WooCommerce have now introduced mass upload modules for adding products in bulk and to update their stock levels as well. The import and export of items can be completed through CSV/XML/XLS.
The quantity of items can be increased by a single upload of CSV/XML/XLS files, allowing the shop owner to handle inventory from multiple sources. Thus, the Mass Upload extension saves time and effort by adding each product manually one at a time.
From the backend, the administrator may also upload goods for the vendor. With the support of these add-ons, you can add and change inventory amounts for both or a single supplier at the same time, saving you the trouble of unloading one component at a time.

4. Benefits of Inventory management

Be certain that you never run out of products.

One of the most important aspects of inventory control is determining the appropriate number of commodity units (SKUs) to have in storage at any given time. If your stock volume falls below a certain threshold, you risk running out of merchandise, which can result in missing orders, backordering, and customer service problems. On the other hand, having so much inventory will result in having goods that are no longer sellable due to declining demand or being obsolete.
This is often referred to as “dead stock.” Proper order scheduling, in combination with analytics, will also aid in inventory management activities.

You will save money on storage fees.

If you have an excess of inventory, it would almost certainly cost you a lot of storage fees. That’s capital that should have been spending on branded shipping products or absorbing expedited shipping costs. The amount of physical space your items take up in a distribution centre is often used to determine how much storage space you need. Fees vary based on the number of units you need to have on hand. Through maintaining your inventory at the appropriate level depending on consumer demand, you can save money on storage costs and put it into other facets of your market.

Future Expectations

Proper inventory control may assist in inventory forecasting. You would be better able to prepare for demand if you monitor and manage your inventory stock levels and product flow. You will be able to keep up with orders if you track the inventory trends on a weekly, quarterly, or unit-to-unit basis.

Increase in Profitability

What’s the bottom line? IMS contributes to the bottom line. According to “Entrepreneur,” retailers will raise earnings by up to 50% by carefully managing inventory. Whether or not the statistic is right, there is little question that it offers a plethora of opportunities to maximise profitability.
Inventory management strategies, in addition to lowering overhead costs, help to increase the profitability of the retail market. You will make better strategic decisions and help the company prosper if you have deep insights into it. Looking at your inventory turnover ratio, average order size, and other main metrics across all of your selling platforms provides a comprehensive picture of your market. As a result, you’ll be able to predict more reliably and eliminate expensive problems like backorders and out-of-stocks.
Transparency
If a stock item is more popular, eCommerce company owners can make more educated choices about what to order. Making these sorts of choices is much simpler now that all of the information is synced around the organisation. Online product tracking systems make the warehouse more accessible. Owners and employees can both see what is going on and how the levels are doing. Information is easily exchanged and made available to a larger number of individuals who can affect various aspects of the market. Stock-outs should become less common as inventory intelligence improves, and customer loyalty should rise.

5. Wrapping up

There is a lot that goes into inventory management, and it has a huge effect on the bottom line of your business. Using an inventory management software system prevents mistakes in inventory management, making your business more effective, sustainable, and best suited to service your clients. If you still have any queries, you can contact our team to run your inventory management system smoothly in the online marketplace.

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May 31st, 2021|
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