Top 5 Mistakes Made with Inventory Management for Online Stores
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1 Top 5 Mistakes Made with Inventory Management for Online Stores For any product you sell, you have an inventory. And whether that inventory fills dozens of warehouses across the country, or is simply stacked in boxes in your garage, it s important to keep very careful track of it at all times. But with all the many myriad factors that are affecting your business at any given moment and that require your attention, it s something that s easier said than done. In the olden days, keeping track of inventory was done with paper and pen, and a lot of file folders full of numbers, statistics, and product info. Now, however, you can keep track of your inventory electronically. Some companies use spreadsheets and other programs to document the products they have and the ones they need more of. But even with good records, mistakes can still be made. If your business is doing well, products come and go from your inventory all the time. A single mistake or oversight could leave you with not enough of one product or too many of another. You may even end up shipping the wrong product to the wrong person, or failing to ship the product correctly, resulting in delivery delays. No matter what your inventory issues are, it s important to be aware of them and what s causing them, in order to prevent them from developing into serious problems for your company. Here s a look at five of the top mistakes that companies make in online inventory management, and what you can do to avoid them.
2 Pricing App An inventory management system is an essential tool for running an online business. That data it provides can help to eliminate overselling and over-ordering, and can streamline your workflow, extend your reach, and ultimately help to boost sales. 1. Overselling and Over-ordering Your Products. It s one of the most important rules for building and maintaining a reputation for professionalism in any industry: you need to be able to fill the orders that people place. This is a pretty basic notion. But even so, a lot of companies make the mistake of overselling. If you don t keep a firm handle on your inventory for every product you sell, and know exactly how many you have left, and when you need to order more, you could end up going to ship an item off to someone who placed an order (and paid you money), only to find that you no longer have any in stock. And so you end up needing to postpone their order, sometimes for weeks on end. When that happens, the customer could end up canceling the order and choosing to go to another company, who can ship their product to them in a more timely manner. And not only do you lose the sale, it s also a serious blow to your reputation. They ll most likely give you a low rating and bad customer feedback, and may even tell their friends about their bad experience, or leave a poor review on Yelp or another independent site, where everyone can see it. Or your problem could be the opposite. Maybe you have too many of a particular item. You ordered an extra batch long before you were out of the first batch, and now they re not selling as well as you d anticipated. So the surplus inventory is just sitting around collecting dust, while you re out the money you paid for that second shipment. Now, any company worth its salt has records and documentation for their inventory. But if you re using Excel spreadsheets to manage your products, or, heaven forbid, if you re still depending on paper files for anything, it s easy to make mistakes. You can forget to update your numbers, or update something in the wrong column. Any number of things can go wrong, especially when you account for human error. The solution is to get a comprehensive inventory management software platform that can handle the inventory needs of today s fast-paced world. Inventory management software can help you keep your online store in order, keeping track of who s buying what, what you need more of, and much more, automatically. Not only that, it can take the raw product inventory data and turn it into charts, graphs, and other analytics that can help you get a real handle on what s going on with your products and what it means for your company, both now and in the future. It can analyze trends and let you know if it s a good idea to get that extra shipment early, or if it will just sit around. An inventory management system is an essential tool for running an online business. That data it provides can help to eliminate overselling and over-ordering, and can streamline your workflow, extend your reach, and ultimately help to boost sales. 2. Spreading Yourself Too Thin. One of the major causes of overselling is simply having too many different sales outlets to manage effectively. Or, to be more
3 precise, not having the tools to manage the sales outlets that you have. It s important to maintain a retail presence on a number of different sales platforms. From Amazon to EBay to Etsy and more, there are hundreds of different sites where people can shop for products online. And if your customers are on a particular site, it s important that you be there too, or risk losing out on potential sales. So being on too many different websites isn t the issue. But the problem becomes keeping track of your inventory over all of these different sales platforms. It can be a bit overwhelming. Say your company is selling engine parts. Customers can find selections of your parts on Amazon, on EBay, or through your own website. Each of the sites is managed separately. But the inventory is the same across the board. So if a lot of people are buying cylinder heads on Amazon, your store on EBay might not get the memo right away, and sell another cylinder head after the last one in stock has just been shipped to someone else. Even if you keep careful track of your records, online orders happen fast, and at all hours of the day and night. You can t monitor your incoming sales and update your inventory 24/7. If a few orders come in all at the same time, all to different sites, it can mean the difference between in stock and out of stock before you even realize what s happening. It s not your fault. How are you supposed to maintain that level of vigilance over that many different sales platforms? You re only human, after all. The solution is to get a system that integrates all of your different online stores into one portal that keeps track of everything, and is easy to manage at a glance. The right eamblog/category/inventorymanagement/
4 software will allow you to list a particular product on multiple online stores with a single action, then keep track of what that product is doing in each store simultaneously. So when a customer buys a cylinder head on Amazon, your inventory numbers are automatically updated across the board, so that your stores on EBay and your own website know exactly how many they still have left in stock and can avoid overselling. That way, you don t have to worry about tracking and updating every product on every site in order to adjust for changes in inventory. 3. Poor Supply Chain Management. There s a lot more to your business than simply selling a product until you run out and then ordering more. Where does your supplier get the products from? Do they have enough in THEIR inventory to fill your order right away? Or maybe you make your products yourself, out of raw materials. In that case, where do you get the materials from? Do they all come from the same place, or are there different sources for the different materials? If you order more of something you need, you have to be prepared for issues on the other end that can lead to problems for you. If you wait until you re out, or almost out, of the product or material, then unexpected delays can lead to your not being able to fill your customers orders properly or promptly. And even though it s not your fault, your customers will blame you, and your reputation will suffer. It s important, when dealing with inventory and sales, to keep track of the entire supply chain from materials to customer, and
5 Pricing App The right pricing app for your inventory management software can set prices automatically and adjust to continually changing trends, or let you set your own prices, based on the data it provides. not just your little segment of it, whatever it may be. Where does a particular product come from? What are the materials and who supplies them? Where do your suppliers get those materials from? And where is the final product ultimately going to end up? Small changes along the supply chain can lead to big changes for you and your company. Maybe you re having a run on one particular product, but further up the chain, there s a shortage of one of the materials used to make it. You need to be aware of what s going on, to make sure that both you and your customers have a good idea of when and how the product can actually be ready and shipped. You can use your inventory management software to keep track of some of these factors, and there s specific supply chain management software that can help you monitor it as well. It s important to keep a close eye on these trends in your industry and to have a plan in place well in advance to keep business running smoothly no matter what may be going on externally. It s also important to be connected with multiple suppliers for each of your products and/or materials. The more options you have, the better prepared you ll be if problems arise, to keep any one company from leaving you high and dry. 4. Pricing Problems. Economics can be a tricky concept to pin down. People make whole careers of it, and even they have trouble sometimes. But it s an important aspect of your sales process. You want to make sure that you re charging the right amount for each product. It should be enough to cover expenses and production costs and ultimately make as much profit as you can, but not so much that people will turn up their noses at what you have to sell. If you err on the side of caution, you could end up charging much less than your customers are willing to pay for an item that s high in demand. But if you raise your price too much, they may find another, cheaper vendor to sell them what they need. There are a number of factors that go into supply and demand and ultimately determine what you should charge for a particular product. What makes things even more confusing is that these factors are constantly changing and fluctuating. The biggest mistake you can make in deciding how much to charge for one of your products is to leave the price the way it is, in the midst of all of these changing factors. Whether you re undercharging and letting customers take advantage of you, or overcharging and losing your customers altogether, either way you end up losing money. The solution is to employ a pricing application with your inventory management software. A good pricing application can keep track of all of these factors for you as they fluctuate and help you figure out what they mean in terms of sales. It can analyze trends in sales and your rate of inventory movement to figure out if an item should be priced lower or higher. It can monitor your competitors prices and sales trends, to help you stay one step ahead of them. A pricing app
6 can ensure you have the lowest price on a particular product without undercutting your profits, show you how you stack up against your top competitors, and help you design a customized strategy for managing your sales and inventory. The right pricing app for your inventory management software can set prices automatically and adjust to continually changing trends, or let you set your own prices, based on the data it provides. Either way, it s an important tool for making sure your profits remain high, no matter what s going on in the complex and confusing world of economics. 5. Lack of Employee Training. So you ve got a great, a state of the art inventory management software platform, and you re poised to implement it in your company. Now all of your problems are solved, right? Not yet. Remember, it s just a software platform, not a miracle worker. Inventory management software is a tool for streamlining your company, and like any other tool, it s only as effective as the people who are using it. A good software platform can help you avoid mistakes, but only if you know what to look for, and how to use the features at hand to prevent it. If you don t know how to manage your inventory properly,
7 Communication is the Key Even after the training is completed, though, it s still necessary to keep the lines of communications open for questions and issues. you can end up causing more problems than you solve. So this is often one of the biggest mistakes that companies can make with their inventory management systems: not training their employees properly to prevent mistakes from being made. To avoid this pitfall, the first thing you need to do is to figure out exactly who in your company will need to use the new software, and make sure that every one of those people understands how it works and can use it properly. This is the most important step when implementing any new software platform, and the step that will help you avoid a whole host of mistakes down the road: making sure all of your employees are comfortable using the tools they ve been given. This means training them in the ins and outs of how the software works, how it s set up, and what to do with it with regards to tracking sales and inventory. On paper, this may seem obvious, but so many people fail to do it, or fail to do it properly. A lot of companies try to defend their lack of training by saying, But the software is so easy to use! This may be so, but no software is easy to use if the employees aren t taught how to use it. If the software is easy to figure out, then the training session can be brief, but it s still necessary, just to familiarize everyone who needs to use it with the way it s set up, where different buttons and functions are, etc. They may be able to pick it up gradually as they begin to work with the software, but until they get the hang of it, their work output will slow down, and critical mistakes can be made in the interim. And even if they do get the hang of it, they may end up missing some crucial element in the way it runs. Doing things this way, it can be weeks or even months before all of your employees are well versed in the software and how they need to operate it. And until they are, your company can still be losing money from the mistakes that are made. Formal training in some form is necessary for everyone. There are all different ways of making sure your employees are properly trained on your inventory management software. You might use an online tutorial that explains the basics of what and where everything is, or you may have someone from IT come in and explain it to everyone personally and in-depth. You can even have someone work with each employee individually, showing them the various functions and how they relate to that employee s particular job, in order to make sure they understand what they re doing and can do it properly. Even after the training is completed, though, it s still necessary to keep the lines of communications open for questions and issues. Problems arise every now and then, and it s important that someone be available to help resolve them and avoid errors. For minor issues, someone from IT should be able to field questions and talk employees through a solution. If something more critical arises, you should have a contact at the software company whom you can reach by phone or , to help you figure out what s going on
8 SellerActive selleractive.com twitter.com/selleractive facebook.com/selleractive youtube.com/user/selleractive/ and determine what to do about it quickly, before the problem gets out of hand. When all of your employees are well versed in how to use your inventory management software platform, your entire company will run much more smoothly and ultimately make more money. Conclusion Your online inventory is your company s lifeblood. It s constantly running through the veins of your system and keeping it alive. Problems with the inventory flow lead to problems with the overall health of your organization, and if the flow ever stops, then your business will die. So in order to keep your company healthy and thriving, you need to keep careful track of your online inventory at all times. Of course, no matter what size company you have, tracking your online inventory is a big and difficult job. Especially with online sales, it moves and changes very quickly. In order to track it properly and make sure that every aspect of your sale process, from receiving to shipping, is functioning properly and executed correctly, you need a comprehensive inventory management software suite. The right software can help you not just keep track of your products more efficiently, but understand them better. It can show you in clear and straightforward terms exactly what s going on with each of your products, where there might be trouble either now or down the line, and what steps you can take to prevent or to fix it. It can help you fill orders more quickly and track them better across multiple platforms, and lead to increased customer satisfaction. This will ultimately expand your company s reach and lead to more opportunities, more sales, and more money. An inventory management software platform is like a doctor, monitoring your company s vitals at all times and advising you on what actions to take based on what it finds. But it does much more than simply tend to your business when it s sick. Used properly, good inventory management is the only way to keep your company in perfect health. If you d like more information on the robust inventory management features of our software, contact SellerActive today!
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