New eCommerce businesses are usually struggling to create strong relationships with their customers. Due to the fact that they are trying to keep these relationships safe, many eCommerce business owners make bad business moves. For example, some of them may think that offering discounts is a wrong idea.
What every new eCommerce brand must understand is that they have to create a good strategy that provides a unique, memorable customer experience without affecting the company’s income. This is where inventory management comes into play. This is one of the vital aspects of running a new eCommerce brand.
Even though numerous studies have proven that inventory management is crucial for every business, almost 50% of small businesses don’t track their inventory. Observing, assessing and predicting inventory must be one of your top priorities in the business process. Some say that it is more important than customer service. In case your inventory is not organized well or hard to track, you will have trouble fulfilling orders in a timely manner which will result in fewer sales.
Now let’s see what every business owner can do to handle inventory in the right way. We are sharing three inventory management rules that you should follow.
Learn more about inventory turn
In case you didn’t know the turn or velocity of inventory plays a crucial role in determining the health of your brand. This turn is calculated based on the time you need to sell every item in stock. In case you know more about the turn across every product line, you will be able to make well-informed, sound inventory moves. For instance, in case a specific product usually stays in inventory for a long time before it is sold, you should conduct a cost-benefit analysis. In this way, you will determine whether the expenses for keeping this product in stock are greater than the profit you have. So, inventory turn will help you remove unprofitable products from your offer.
By analyzing inventory turn, you will also get a chance to make decisions that can affect the future of your business in a more direct manner. For instance, very popular products often come with a greater turn, so it would be wise to use prior turn metrics to make better ordering decisions in the future.
2. Don’t rely on out of date data
Inventory data is very useful, but only if it relevant and up-to-date. An emerging eCommerce brand must take some things into account. First of all, they must know which products are offered in which inventory location. Next, they should know how much time it takes for a product to be packed and shipped. Finally, they should learn more about the delivery routes and operations.
If inventory data is recent and easily accessible, you can expect sound and effective decisions. Searching for new fulfillment vendors and partners is simpler when management can present relevant figures that will showcase the value of the company.
3. Learn more about industry standards
Finally, it doesn’t matter whether your business is focused on home goods, sports apparel or health and beauty products, you must make a comparison between your inventory management numbers and adequate industry benchmarks. In case your inventory performance is dissatisfactory, you should spend some time defining the processes, assess partners and develop a new business strategy. The world of eCommerce is a fast world where you must react quickly. Otherwise, you risk failure.
If you are developing an eCommerce brand, you should know that a good inventory management software such as Shopify, can make this process easier.
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