The 3 Dreaded Words of eCommerce and How to Avoid Using Them

Out of Stock – those three words not only disappoint the consumer, it hurts the bottom line of eCommerce companies.

In a perfect world, every item would be in stock every time a consumer orders it, but in reality, that is not always the case.

The pandemic has taught us that keeping our warehouses full of inventory can sometimes be out of our control. However being proactive helps you to avoid these the dreaded words, Out of Stock.

Here are some tips for taking a proactive approach to managing your inventory.

Understand Your Product Sales

You should know which are your hottest selling and lowest volume products and create a product ranking. If you are a new eCommerce company, you should have a good idea of which products you think will sell best.  You can also do some research on Google Trends to make sure that your assumptions are correct. Consider installing Google Analytics on your site because it will provide you a wealth of information about your site traffic.

Do your best to always have your hottest and good selling products in stock, so prioritize them in the ordering process.

Forecast Sales

One of the easiest ways to forecast future demand is to look at past sales and determine when demand and interest were highest and the quantities sold. Be sure to make note of any seasonal demand.  Then look ahead to find major selling opportunities throughout the year and plan for increased demand based on past sales and your research.

Next, order and store inventory to prevent any items from going out of stock during peak demand times. If you are a new eCommerce company or uncertain about your historical sales information spend some researching on Google Trends and Google Analytics.

Order Inventory

Now that you know which products produce the most sales and revenue, you can prioritize ordering your inventory. 

Think about your inventory in the three groups listed below and assign a quantity to each.

Minimum Viable Stock: the minimum amount of product you need to have on hand in order to keep up with consumer demand and fulfill orders without delay.

Re-order Point (ROP): the pre-determined level inventory must drop to before ordering additional inventory.

Buffer Stock: the amount of extra stock on hand that’s used to limit risk if supply and demand are uncertain.

Keeping a good handle on your inventory will minimize your risk of being Out of Stock.

Understand that good inventory management is real-time and should keep up with orders and returns as they happen.  Be sure that the inventory management platform that you use integrates with your online store across all facets of the supply, order management, and shipping chain.

One final tip is to stay up-to-date with the technology that is available in the industry.  New solutions come to market all the time that solve problems or improve efficiency.  Using old, outdated software and platforms means that you will miss out on industry innovation that can leave your business behind.

 

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