How to Optimize D2C Inventory Management: Strategies and Tactics

by | Feb 8, 2023 | D2C E-commerce, E-commerce Industry, Inventory Management

Home > Blog > How to Optimize D2C Inventory Management: Strategies and Tactics

Today’s customer retail habits are transforming from traditional shopping to online platforms. As the online shopping landscape continues to evolve, customers want to shop in the comfort of their homes while retaining a traditional shopping experience. Brands are dedicated to creating a more personalized and immersive shopping experience for their customers through their own websites. An experience that other online marketplaces struggle to offer. A study by CII tells us that the Indian D2C market is growing at a CAGR of 40 percent (FY22-27P). 

More and more brands are shifting towards the D2C model of selling, where they want more customers to engage with their brand website. As brands make this leap into the D2C realm, a common challenge emerges—the need to streamline inventory. 

In order to achieve that, it is crucial that your D2C brand needs comprehensive strategies and tactics to manage your inventory efficiently. In this blog, you’ll learn about the contemporary art of inventory management and build the brand that you seek to build, ensuring a competitive edge in the market.

Strategies and Tactics to Optimize Your D2C Inventory

In your pursuit of a seamless D2C experience, you’ll encounter various challenges that necessitate tailored strategies and tactics. Let’s delve deep into the strategies and tactics that will empower you to conquer the intricacies of webstore inventory management, ultimately setting your brand on a path to success.

how to optimize d2c inventory management

1. FIFO, FEFO

FIFO (First-In, First-Out) and FEFO (First-Expired, First-Out) are inventory management methods crucial for industries dealing with perishable or time-sensitive products.

FIFO (First-In, First-Out): This method ensures that the oldest inventory is sold before the newer ones. It prevents products from becoming obsolete, reducing the risk of waste. For D2C brands, especially in the fashion, footwear, home furnishing, and electronics industries, FIFO helps maintain compliance with quality and regulatory standards. 

FEFO (First-Expired, First-Out): In industries where product expiration is a critical concern, FEFO is paramount. It prioritizes products with earlier expiration dates, ensuring that they are sold before newer ones, preventing dead inventory in the warehouse. This maintains product quality and compliance and is critical in the FMCG Industry, Healthcare, and Beauty & Personal Care industry. 

The pioneering pet-care brand, Supertails, exponentially reduced the occurrence of expiration and wastage of products by implementing the FEFO strategy, which enabled them to sell their products efficiently and achieve an 18% reduction in returns.

2. Barcode Scanning

Barcode scanning is an essential technology for optimal inventory management in the D2C space. It involves assigning unique barcodes to each product, allowing for accurate tracking and identification. This is particularly beneficial for brands dealing with products that have minor variations.

Furthermore, Barcode scanning streamlines order processing, reduces the likelihood of errors, and enhances inventory accuracy along with the picking process in the warehouse. It enables quick and precise identification of products, facilitating smooth operations from warehouse to customer doorstep.

Many brands, including a leading men’s shoe brand Attitudist, used advanced item traceability at the SKU level to empower their ability to track different aspects of inventory, such as cost, expiry, manufacturing details, etc., and gained complete visibility into the lifecycle of their products, allowing for efficient inventory management and informed decision-making.

3. Real-time inventory management 

In the dynamic landscape of D2C, real-time inventory management emerges as a pivotal strategy. This approach provides brands with instantaneous insights into stock levels, order status, and product movement across various marketplaces and brand websites. For brands navigating the swiftly changing preferences of consumers, real-time inventory management serves as a game-changer.

With this robust system, your brand can consolidate its entire inventory onto a single dashboard, offering a comprehensive overview. This centralized control allows for immediate decision-making, minimizes the risk of stockouts or overstocks, and significantly reduces customer returns. Picture having the ability to track product availability, sales trends, and order fulfillment in real time—all at your fingertips.

Leading D2C players, such as Mamaearth, embraced real-time inventory management to get a  centralized automated system. The result? A streamlined process, optimized inventory levels, inventory allocation for bulk orders, and a 300% reduction in returns, positioning them for sustained growth in the competitive D2C landscape.

4. Demand Forecasting

Demand forecasting involves predicting future customer demand for products based on historical data, market trends, and other relevant factors. It is a crucial aspect of inventory management, enabling brands to align their stock levels with anticipated demand.

For D2C brands with ever-changing trends, accurate demand forecasting is invaluable. It helps prevent stockouts, excess inventory, and missed sales opportunities. By understanding customer preferences and market trends, brands can optimize their inventory levels, keeping inventory slim and ensuring that products are available when and where they are needed. Adopting Demand Forecasting as a strategy can help predict future trends, ensuring that inventory remains relevant and in demand.

The Significance of Optimizing Webstore Inventory

  • Gain Deeper Customer Insights
  • Improve Operational Efficiency
  • Enhance Customer Experience
  • Minimize Stockouts and Overstocking

significance of optimizing webstore inventory

A D2C brand’s evident goal is to strengthen customer relationships and understand what customers expect from a brand. Having delved into Strategies and Tactics to Optimize your D2C Inventory, let’s see why all this planning and execution is crucial. Here are four solid reasons that make streamlined webstore inventory management an absolute game-changer:

    1. Gain Deeper Customer Insights: An advanced inventory management tool that can provide detailed sales reports and inventory snapshots in real-time. This comprehensive data allows your brand to understand customer preferences better—filter them from specific SKU’s geographical locations to track product success in the area. Further, you can also get a deeper understanding of your top-selling and slow-moving SKUs, aiding in product development and marketing strategies.
    2. Improve Operational Efficiency: Streamlining inventory processes reduces errors and delays in fulfilling customer orders by empowering the picking process and tracking the flow of the product in real-time. This results in minimal O2S time and fewer customer-initiated returns (CIR), thus enhancing operational efficiency.
    3. Enhance Customer Experience: Seamless inventory management minimizes stockouts and ensures product pricing remains constant across different marketplaces and your D2C website. This ensures customers find exactly what they are looking for. Moreover, automating inventory prevents delays and disruptions in processing orders efficiently, ultimately leading to higher customer satisfaction and greater brand loyalty. 
    4. Minimize Stockouts and Overstocking: Well-managed inventory significantly lowers warehousing expenses by reducing overstocking of slow-moving SKUs and stockouts of fast-selling SKUs. This allows for a more optimal use of your company’s resources while maximizing revenue. The strategic alignment of inventory with actual demand not only ensures resource efficiency but also captures every sales opportunity while avoiding revenue loss from dead stock or missed sales due to stockouts.

By employing a sophisticated Inventory Management System tailored to D2C operations, your brands can effectively address these crucial aspects, ensuring a competitive edge in the market.

Conclusion 

Optimizing webstore  inventory management is a critical endeavor for brands looking to thrive in the competitive e-commerce landscape. By understanding the unique challenges associated with D2C operations and implementing tailored strategies and tactics, brands can streamline their inventory processes, enhance customer satisfaction, and ultimately drive business growth. Embracing the contemporary art of inventory management is not just a strategy; it’s a pathway to building a resilient and customer-centric brand in the D2C era.

Tags: