Do you know how to manage inventory for your e-commerce business effectively?
There are so many great things about owning a business but there are also some pretty heavy challenges too. Sure, you’re your own boss, you can work from home, and you get to make your own schedule! But unfortunately, working in e-commerce also means that you need to tackle the massive job of managing inventory.
Inventory can be a monumental headache, no matter how big or small your business. But watch out! Mismanaging inventory for e-commerce can lead to serious problems.
Inventory for e-commerce is usually handled by specialty software, but many e-commerce owners try to take care of it themselves in the early days with varying degrees of success. Techniques for managing inventory can range from keeping offline records in Excel to even using a pencil and paper. Ineffective inventory management for e-commerce systems can lead to a tremendous amount of confusion (and possible disaster) if you aren't keeping on top of things 100% of the time.
Here are some of the biggest challenges you can face while doing inventory for retail and e-commerce:
Challenge #1: Keeping Track of Inventory for E-commerce
The two biggest dangers for an e-commerce store are overstocking and overselling.
Chances are that most of your inventory is going to be stored in a warehouse or off-site distribution centre. Paying to keep all of that inventory stored can be a significant drain to your coffers, possibly leading you to err on the side of understocking your products to save on storage space. Better to be cautious then, right? Wrong.
What if you suddenly get hit with a rush? If a business takes off or you’re even lucky enough to go viral, dozens upon dozens of people could start to order from your e-commerce site. That could result in overselling your inventory. This would result in you not having the stock you need to satisfy orders, hugely damaging your reputation.
The key to success here is to figure out the right balance between overstocking and overselling. That can be very tricky if not impossible to discover if you aren't using a feature-filled bookkeeping program like Xero or an inventory add-on app like Unleashed.
Related: Bookkeeping for Shopify
Challenge #2: Selling Across Multiple Channels
When you first start your e-commerce business, you're likely to be focusing on a single digital storefront for your entire enterprise. Tracking your inventory and fulfilling orders will, therefore, be reasonably simple compared to e-commerce businesses that sell across multiple channels.
Once your business and inventory start to grow, however, you're going to need to scale up to other sales channels. This can make tracking sales exponentially more difficult, especially if you're not using sophisticated inventory tracking methods.
Inventory for e-commerce spread over Amazon, eBay, Shopify, and Etsy are difficult enough to track when you're using just one storefront. When you're using many of them, you need a solution that will allow you to track sales and manage your inventory in real-time.
Learning how to manage inventory for e-commerce over different storefronts can be tricky, but not impossible. It's something we help you with at Canadian Cloud Accounting. Once you have the right piece of software in place and the training to know how to use it effectively, managing your inventory will be a snap!
Challenge #3: Lack of Data
The question of data goes hand in hand with overstocking and overselling. To learn how to manage inventory, you're going to need insights. And to have those insights, you need lots of data.
For most e-commerce stores, opportunities will arise without warning, requiring you to act on them within a day or less. The only way you can get a full handle on these opportunities is to have a solid understanding of how your inventory fluctuates over time. Without a centralized inventory system in place that pulls inventory information from all of your sources in real-time, you're not going to be able to track these trends effectively.
Learn How to Manage Inventory for E-commerce - or Outsource it to the Pros
If you're feeling entirely in over your head about managing your books and keeping on top of inventory, we can help. We are a Xero bronze partner and experts in setting up inventory for e-commerce and retail.
You could hire us to manage your books for you and free up your time to focus on growing your business. We will take care of your inventory management system and make sure that your books are in excellent order at all times. This removes the burden of inventory from your shoulders, so you can stop worrying about the little details of your e-commerce business, and instead focus on the big picture.
Contact us today to start putting inventory management systems in place that will help you drive your e-commerce business to new heights!