Shopify Inventory Management Guide: Managing Multiple SKUs Like a Pro
Did you know that today’s retailers lose nearly $460 billion annually due to out-of-stocks? This is a troubling issue, considering stockouts lead to loss of revenue and can have a negative impact on long-term customer relationships.
A solid understanding of inventory management processes and how it works will enable you to overcome common inventory distortion issues such as understocking, overselling, and overstocking.
Keep reading to learn more about Shopify inventory management, why an inventory management tool is essential to your operations, and what to look for before integrating with an inventory management solution.
The Ins and Outs of Inventory Management
Let’s say you run an ice cream shop, and you want to track your store’s sales and revenue to project future sales and create a reliable restock schedule. First, you’ll need to know how many buckets of ice cream you have in storage, when that ice cream will expire, how much ice cream you’ll sell, and how many extra buckets of ice cream you need in the event of an emergency.
If you don’t have an inventory management system, gathering all of this data will be difficult—especially if you have several ice cream shops across the country.
Without accurate data, you’ll end up with too much ice cream and wasted money as it goes bad or buying too little and missing out on lucrative sales opportunities. Worse, you’ll tell an expectant customer that you have more ice cream in the back, only to return to report that you’re all out of their favorite flavor.
Luckily, you can avoid scenarios like this with a good inventory management process. With the right solution in place, you can track how many products you have across all locations and sales channels. This will help you predict how many more of each SKU you need to determine how often and how much you need to restock.
Tracking Inventory Across Your Supply Chain
By tracking your inventory, you’ll know exactly how much inventory you have across fulfillment sources. When running an ecommerce business, you have the option of storing your items across multiple warehouses or using suppliers to ship products from a location closer to your customer. By knowing what is available at each location, you can avoid overselling and providing your customers with a poor shopping experience.
Synchronizing Stock Levels Across Channels
Today, customers have more options than ever before when it comes to where they spend their money. For this reason, you must be omnipresent to catch—and keep—their attention. Multichannel selling is essential to remaining successful in ecommerce.
Starting to sell on Shopify, eBay, Amazon, and other channels is easy. However, tracking inventory is more difficult when you’re deciding how much to allocate to each channel, how much inventory you have left, and how often you need to restock. A robust inventory management solution allows you to synchronize your data across all of your sales channels so you can make restocking decisions based on past sales data.
Let’s return to the ice cream example and say that you sell pints of ice cream on eBay, Amazon, and your website. Instead of allocating exact quantities to each sales platform—10 pints to eBay, 12 pints to Amazon, 20 pints to your store—an inventory management system will enable you to see all of your stock across all sites in one dashboard.
Each time you make a sale, the system updates your stock quantities across all channels. If you sell a pint of ice cream on Amazon, the number of pints across all sales channels will decrease by one. This concept is simple, yet this isn’t a feature that’s included in most sales platforms.
Accurately Timing Reorder Volumes
Thirty percent of customers report that stockouts hurt their shopping experience. As the COVID-19 pandemic continues to disrupt stock predictions and buying behavior, the negative impacts of stockouts should be a primary concern of all ecommerce business owners.
Stocking issues inevitably lead to lost sales and customer loyalty. If your stockouts become a recurring issue, your customers will begin shopping elsewhere. An inventory management tool will keep track of your available inventory so that you know when it’s time to reorder before it’s too late. You can also use an inventory management app to report how much stock you have left per item. Not only does this increase urgency, but it shows your customers that you’re willing to be transparent.
How Merchants Approach Shopify Inventory Management
Shopify provides a few different ways to manage inventory within your admin panel, including:
- On the Inventory page
- On the product details page (for products with variants)
- Using an inventory CSV file
- Using the Bulk Editor
If you have a smaller catalog, the above methods may work well for you. However, if you’re managing hundreds or thousands of SKUs, you risk wasting time on manual data entry and verification. This is why many Shopify sellers turn to other methods or inventory management apps to handle inventory tracking.
Merchants of all types and sizes use Shopify—including famous brands such as Pepsi, Unilever, WaterAid, Gymshark, Tesla Motors, and Redbull. Smaller merchants can usually handle their inventory management needs using apps found within their sales channels. Enterprise merchants often have a more extensive enterprise resource planning (ERP) solution and an IT team that builds and maintains a high volume of sales and restocks.
However, mid-sized and growing businesses will use a mix of tools and integrations to balance their sales platforms with various fulfillment solutions. These systems are either manual or automated—or a combination of both.
Why You Need a Shopify Inventory Management Solution
The ideal Shopify inventory management tool will enable you to automatically manage your inventory so you can forecast trends and reallocate resources as needed. If your team isn’t spending hours manually tracking your shop’s inventory each week, you can increase team accuracy and productivity. An inventory management app might be ideal for your business if you:
- Carry a lot of SKUs and spend ample time managing inventory
- Regularly oversell products or run out of stock
- Find it challenging to track and update product stock levels across multiple sales channels
Manual vs. Automated Inventory Management Systems
Tracking inventory manually involves using Microsoft Excel, Google Sheets, or something similar to track your SKUs. Each time you make a sale, you update your sheets. Even if you’re happy with this method and meticulous enough to do it correctly, it leaves more room for human error. However, an inventory management app allows you to automate this process—with little to no effort on your part.
Choosing the proper app to manage your Shopify inventory will enable you to allocate time to more demanding aspects of your ecommerce business.
Choosing a Shopify Inventory Management App
If you’ve ever checked out the Shopify App Store, you know that the number of inventory management apps is endless. Each one has distinct functionality and features—as well as advantages and disadvantages. The best Shopify inventory management solutions integrate other apps, detailed inventory tracking, auto-generated product orders, and a complete data dashboard.
Integrations With Other Tools
Any inventory management application you choose should fit seamlessly within your tech stack. You want software that can easily integrate with your internal warehouse or supplier. Look for software options that play nicely with your website ecommerce tools, accounting solutions, and other apps you use.
Extensive Inventory Tracking
Any app you choose should enable you to track all orders and fulfillment information and adjust inventory accordingly so you know when it’s time to purchase additional stock—or pull an item off of your website if your supplier is out of stock. Even better, look for a system that intelligently marks items out of stock before you oversell.
Look for an inventory management app that generates reports and inventory analysis features that fit your business’s inventory management processes. Having access to various real-time reports allows you to customize them as you see fit to get the specific information you need to run your business.
Master Your Shopify Inventory Management With Flxpoint
By now, you understand that a sound inventory management system is critical for running a successful ecommerce business. With this knowledge, you’re ready to evaluate Shopify inventory management systems for your business so that you can keep your inventory under control and watch the sales file in.
Flxpoint combines the above must-have features and other ecommerce automation tools so that you can manage inventory levels and orders across channels in real-time. Features include stock level syncing, automated order management, kitting and bundling, purchase order generation, and more.
If you’re interested in learning more about the Flxpoint platform and how we can tailor it to fit your business, talk with an expert today.
To stay updated on the latest articles, webinars, podcasts and feature releases, subscribe today!