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3 Expert Tips to Master Inventory Management for E-commerce 

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Two employees holding boxes in a warehouse.

Do you know of any retailer who has never had trouble keeping track of e-commerce inventory?

With 59% of the world having access to the internet, online shopping is often the more convenient option and it’s expected that by 2040 more than 95% of all purchases will be conducted via e-commerce.

Therefore, it’s especially important for leading retailers with tens of thousands of SKUs, to effectively manage their e-commerce inventory.

However, the truth is, that inventory management has never been an easy feat and is only made more challenging in today’s strained supply chain and the influx of overseas products.

That’s why understanding what the current best practices, strategies, and solutions are for inventory management for e-commerce will make your efforts more successful.

Let’s start by examining what is unique about inventory management for e-commerce.

What is e-commerce inventory management?

Inventory management is all about keeping track of the stock or inventory that a retailer has on hand.

When retailers sell that stock online it’s called e-commerce inventory management.

It’s similar to regular inventory management, but it has a few extra tasks. For example, with e-commerce, you’ll need to:

    • Keep track of inventory across multiple websites or sales channels
    • Automate inventory updates
    • Make sure inventory levels are accurate in real time.

And if you’re using a fulfillment service, like dropshipping, you’ll need to keep an eye on the inventory levels of your suppliers.

So overall, e-commerce inventory management systems have added complexity, but it’s still all about making sure that you have the right amount of products on hand so you’re ready to sell to your customers.

depiction of shipping of e-commerce inventory

The goal is simple, but while getting there you’re bound to encounter some challenges. 

Challenges managing e-commerce inventory

With the added complexities of e-commerce inventory management, omnichannel and e-commerce retailers will want to avoid certain pitfalls. They include:

The burden of overstock

Financial loss

Money is tied up in stock that isn’t selling; making it difficult for e-commerce retailers to pay monies owed and/or invest in other areas of the business.

Excess Storage costs

It’s costly to keep overstock in warehouses. Essentially, you’re using up expensive real estate for a product that is not yielding a return.

Reduced profitability

When stock isn’t selling, e-commerce retailers have to mark down inventory in order to move it and ultimately shrink profit margins.

Outdated products

When inventory is no longer in demand or in season, you’ll have a hard time trying to sell them later on.

employees discussing common issues with e-commerce inventory

Then there’s the pitfalls of overstock’s brother–understock.

Understock: Same coin, different side

Lost sales

Lack of stock means missing out on potential sales. This can be especially frustrating for your customers who visit your online channels multiple times only to see “out of stock” posted on items they want.

Reduced customer loyalty

When customers can’t find what they’re looking for, it’s too easy for them to click on a competitor’s website. With the ease of getting what customers want elsewhere, they are quick to move on.

In fact, 88% of consumers say it takes three or more purchases to build brand loyalty. So, there is a good chance you’ll first-time customers will never return if they don’t see what they want the first time around.


You can’t sell what you don’t have. When you stop selling, it’s lost revenue.

If you have multiple warehouse locations, there are additional challenges.

Managing multiple inventory locations

Keeping track

When there is e-commerce inventory at multiple warehouse locations, it is difficult to maintain accurate and up-to-date inventory counts.

Managing stock transfers

Moving inventory from one location to another is time-consuming and oftentimes complex to coordinate while trying to ensure that inventory levels are updated correctly and accurately.

Multiple suppliers

Multiple and different suppliers are hard to manage, especially when their inventory is going to multiple locations.

Meeting compliance requirements 

Depending on the location, there may be different compliance requirements that need to be met, such as taxes or import/export regulations, which can add complexity to the inventory management process.

employees discussing common issues with e-commerce inventory

So, what are leading e-commerce retailers doing to address the challenges and come out ahead in 2023? They’re applying best practices and seeing great returns.

Let’s see what those best practices are.

3 expert tips for e-commerce inventory management

So now we’re clear that you’re not alone in your experience of e-commerce warehouse management issues–too much inventory, not enough inventory–or even worse, selling products that are out of stock.

This scenario indicates that you have to get a better grasp on how to manage e-commerce inventory for your business.

Here are some of the best practices experts in retail are using.

1. Automate reorders

Automating the reordering process will also save you precious time and reduce your risk of stockouts.

Using AI-driven analytics will improve the efficiency and accuracy of the re-ordering process.

For example, AI-based analytics can be used to predict future inventory needs based on past sales data and adjust reorder points accordingly.

Additionally, if you employ advanced analytics it can analyze data from the real-time syncing process and identify patterns or potential issues and black swan events, that may need to be addressed–giving you the ability to make time-sensitive, important decisions.

Applying AI-based analytics gives you clear visibility to create inventory optimization and remove labour-intensive manual processes.

2. Pull truth from your data

Good data reveal truths, and facts, that can not be denied. If you can track and analyze your data with the highest accuracy, you are way ahead of the game.

AI-based analytics can be a real game-changer in this area too as it allows you to better:

Forecast and plan

By analyzing data on past sales and customer demand, businesses can make more accurate predictions about future demand and plan accordingly–avoiding both excess and lack of inventory. 

depiction of inventory management for e-commerce

Improve customer service 

Using advanced analytics to optimize your e-commerce inventory levels ensures that you have the products customers want in stock by identifying patterns and trends. You’ll give customers a better experience and increase loyalty.

Increased efficiency

When AI-based analytics identifies data points that indicate areas to improve your inventory management processes by tracking inventory levels, you won’t be overstocking or understocking, so you’ll benefit from greater efficiency and cost savings.

3. Sync inventory in real-time

This method makes sure that your inventory is accurate and up-to-date across all e-commerce sales platforms such as your website and other marketplaces. This can help prevent stockouts and overstocking, leading to lost sales and unhappy customers.

You would need to invest in an e-commerce warehouse management system (WMS) that uses software to manage and control warehouse operations automatically to update and track inventory levels in real-time

Then connect that system to inventory management software using tools like barcode scanners, RFID technology, or other data collection methods to track inventory movements.

Applying your expert tips

Inventory management for your e-commerce business is a critical aspect of being successful. By understanding the best practices, managing inventory across multiple channels, and addressing common challenges, an e-commerce retailer will improve the bottom line and increase customer satisfaction.

Apply expert tips by:

    • Using advanced technology tools like AI-based analytics and inventory management software specific to e-commerce
    • Regularly monitor and update inventory management processes
    • Leverage your data to guide your inventory decisions.

When you do these things, you’ll optimize your inventory management, better predict future demand, identify slow-moving products, and prevent stockouts.

If you are ready to master your e-commerce inventory, contact our Team for more information and a Demo.

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