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What Is eCommerce Inventory Management?

What Is Ecommerce Inventory Management

Inventory management plays an essential role in every retail business, touching on almost every aspect of it. For small and medium businesses (SMBs), it can be quite a juggling act, handling a multitude of products, supply chains, and predicting demand.

In fact, 43% of small businesses either don’t track their inventory or use manual processes. At the same time 1/3 of businesses will miss a shipment deadline because they’ve sold an item that wasn’t actually in stock. This matters because it directly influences buyers’ decisions to buy from a competitor rather than waiting for back-ordered inventory.

Today, over half of consumers (63%) begin their shopping journey online, and 75% shop online at least once a month. Meeting these growing demands and ensuring customer satisfaction requires online retailers to efficiently handle their inventory. This directly impacts their presence and ability to cater to an ever-increasing online customer base.

Here is where eCommerce inventory management comes into play to optimize stock levels, minimize costs, and prevent stockouts.

This article covers key aspects of eCommerce inventory management, including main strategies and top inventory management software solutions for 2023.

Keep reading to discover how these can help improve inventory management, streamline operations, and boost your online retail success.

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What Is eCommerce Inventory Management?

Ecommerce inventory management is a specific subset of inventory management that focuses on online retail businesses. It deals with the products or stock that are available to sell.

Furthermore, it (ideally aided by inventory management tools) takes into account the unique challenges and requirements of selling products in the digital marketplace, such as real-time stock updates, multiple sales channels, and efficient order fulfillment.

Having an intelligent inventory management means that you have control over:

  • Supply, demand, and communication
  • Overstocked, in-stock, understocked, and out-of-stock items
  • Revenue potential
  • Business decisions

So, if you want to provide a good buying experience and build your brand successfully, inventory management is a must, especially for SMBs. It ensures not only your presence and success but also avoids chaos and frustrations, giving the time and space to grow.

10 eCommerce Inventory Management Strategies

Ecommerce inventory management strategies involve techniques such as optimizing stock levels, tracking product movement, and timely order fulfillment that meets customer demand. A well-implemented inventory management strategy is important for several reasons:

  1. Prevents stockouts and backorders, ensuring products are available when customers want them, leading to higher customer satisfaction.
  2. Minimizes storage costs by maintaining optimal stock levels, maximizing profitability.
  3. Enhances overall operational efficiency, streamlining workflows and reducing errors, enabling retailers to stay competitive in the fast-paced and ever-evolving world of online commerce.

Here are ten of the most popular eCommerce inventory management strategies:

  1. Just-in-Time (JIT) Inventory: This strategy involves ordering inventory only when it’s needed to fulfill customer orders, thus reducing the costs associated with holding excess stock.
  2. ABC Analysis. With ABC analysis, inventory items are classified into categories based on their significance to the business. Category A typically includes high-value, high-velocity items, while Category C consists of low-value, slow-moving products. Retailers can prioritize their products effectively, ensuring they have enough stock on hand to meet customer demands.
  3. Dropshipping. In dropshipping, the retailer collaborates with suppliers, who directly ship the products to customers. This approach allows online stores to offer a large range of products without the need to warehouse the products themselves. For example, an electronics store can partner with a smartphone supplier who can ship directly to customers upon purchase without the need to have the item in stock.
  4. Safety Stock. By maintaining a safety stock, businesses can prepare for unexpected fluctuations in demand or supply chain disruptions. For instance a computer parts retailer might keep an extra supply of popular components to avoid stockouts during seasonal demand peaks.
  5. Economic Order Quantity (EOQ). EOQ helps determine the optimal order quantity to minimize holding costs and ordering expenses. This strategy allows businesses to find the balance between large bulk orders and frequent small orders. For instance, a grocery store would benefit from EOQ when ordering perishable goods like fruits to avoid spoilage while maximizing profits.
  6. Cross-Docking. This approach involves transferring goods directly from incoming shipments to outbound ones, minimizing storage time and handling costs. A pharmaceutical distributor might adopt cross-docking to expedite the flow of medical supplies, ensuring timely delivery to pharmacies and hospitals.
  7. Batch Tracking. By assigning unique identifiers to product batches, businesses can trace and manage inventory more effectively. This is essential in industries like pharmaceuticals, where tracking specific batches of medication ensures accurate recalls if necessary.
  8. FIFO and LIFO. FIFO (First-In, First-Out) and LIFO (Last-In, First-Out) are inventory valuation methods. Retailers selling perishable goods like dairy products typically use FIFO to sell the oldest stock first, thus reducing waste and the risk of expired products.
  9. Demand Forecasting. This strategy utilizes historical sales data and market trends to predict future demand, allowing businesses to plan inventory levels proactively. A toy manufacturer might analyze past holiday sales to forecast production and inventory needs for the upcoming year.
  10. Multi-Channel Integration. In a multi-channel sales environment, integrating inventory data across various platforms (e.g., website, marketplaces) prevents overselling and maintains accurate stock availability. For example, an online fashion retailer must ensure that product availability remains consistent across its website, and other marketplaces it operates on.

10 Ecommerce Inventory Management Strategies

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After selecting an inventory management strategy and evaluating the current product demand, it’s time to put everything into action. Here are some tips:

  • Forecast Future Demand. You can analyze historical sales data to predict future demand for your products. Understanding customer trends and seasonality helps in making informed inventory decisions.
  • Adopt Real-time Inventory Tracking. This offers real-time tracking of stock levels. It can accurately update stock across multiple sales channels, preventing overselling or stockouts.
  • Implement a Scanning System. Scanning items helps avoid human errors, mistyped Stock Keeping Unit (SKU), and unreliable inventory data, enhancing accuracy and efficiency.
  • Set Reorder Points. Establish reorder points based on lead times and sales velocity. This triggers automatic restocking, preventing inventory shortages.
  • Conduct Regular Audits. By performing periodic physical counts and audits you ensure that your inventory records match the actual stock on hand.
  • Implement Safety Stock. Having extra inventory on hand will help prevent unexpected spikes in demand or supply chain disruptions.
  • Monitor Key Performance Indicators (KPIs). Track metrics like inventory turnover rate, sell-through rate, and days of inventory on hand to assess the effectiveness of your inventory management strategies and identify areas for improvement.

The Importance of Inventory Management Software

The Importance of Inventory Management Software

As a business owner, how do you navigate through the sea of options and choose the right inventory software for your business? There are features that you should keep an eye on when choosing:

  1. Real-time Inventory Tracking. Ensures the software provides up-to-date and accurate stock levels across all sales channels.
  2. Multi-Channel Integration. Looks for compatibility between various online platforms.
  3. Forecasting and Demand Planning. The software should offer tools to analyze historical data and predict future demand.
  4. Automation and Alerts. This automates repetitive tasks and provides alerts for low stock levels or potential stockouts.
  5. Reporting and Analytics. A robust system will offer detailed reports and insights to optimize inventory decisions.
  6. Barcode and Scanning Capabilities. barcode scanning improves the accuracy and efficiency in inventory management.
  7. Order Management. Guarantees a streamlined order processing, from purchase to fulfillment.
  8. Integration with Suppliers. By integrating with suppliers restocking becomes more efficient. Moreover it improves dropshipping capabilities.
  9. User-Friendly Interface. You should choose software that is intuitive and easy to use by everyone on your team.
  10. Cost-Effectiveness. Consider whether the pricing structure aligns with your budget and business needs.

Top 10 Inventory Management Software Solutions

Hopefully, at this point, you have already been convinced of the need for an inventory management software solution for your business. Of course “the best” software depends on your specific needs. That’s why, it’s also a good idea to consider factors like pricing, scalability, and compatibility with your existing systems before making a decision.

Here are some top options to consider:

  1. TradeGecko. Ideal for growing businesses, TradeGecko offers real-time tracking, multi-channel integration, and demand forecasting.
  2. Zoho Inventory. A user-friendly solution with powerful features, Zoho Inventory provides barcode scanning, order management, and supplier integration.
  3. Fishbowl. Suitable for small to medium-sized businesses, Fishbowl offers automation, inventory forecasting, and QuickBooks integration.
  4. Cin7. Perfect for retailers and wholesalers, Cin7 offers multi-channel management, real-time tracking, and cloud-based accessibility.
  5. SkuVault. SkuVault offers real-time tracking, accurate stock visibility, and advanced reporting tools. SkuVault’s user-friendly interface makes it easy to manage orders, stock levels, and pick-pack-ship processes efficiently.
  6. Skubana. Skubana is an all-in-one inventory management solution designed for multi-channel retailers, offering automation and efficient order fulfillment.
  7. DEAR Systems. DEAR Systems provides inventory management, order processing, and manufacturing features for businesses of all sizes.
  8. Orderhive. A cloud-based software with intuitive features, Orderhive offers order management, supplier integration, and multi-channel support.
  9. Wasp Inventory Control. Designed for small businesses, Wasp Inventory Control offers barcode scanning, stock replenishment, and reporting tools.
  10. inFlow Inventory. Suitable for small businesses and wholesalers, inFlow Inventory offers real-time tracking and customizable reporting features.

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Top 10 Inventory Management Software Solutions

Wrapping Up

n conclusion, eCommerce Inventory Management is crucial to running a successful online retail business. From optimizing stock levels to ensuring a positive customer experience, the right software solutions are essential.

By implementing effective inventory management practices, businesses can maximize profitability, streamline operations, and stay competitive in the dynamic world of eCommerce.

If you or your business ever need help choosing the inventory management system that is right for you, DevriX is always here to lend a hand.


  1. Thank you for this enlightening read! Truly valuable insights.

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