With the pandemic hitting hard, we see many brick-and-mortar stores vanishing around us and businesses shifting towards an enhanced focus on e-commerce. As per UNCTAD (UN Conference on Conference Trade and Development), e-commerce grew from a 16% market share in 2019 to 19% in 2020.
While the growth is phenomenal, it also threw online retailers in a fix. The rise in orders meant many struggled to handle their inventory efficiently. It took a toll on their order deliveries.
Weak stock-taking abilities can affect e-commerce players adversely. Therefore, organizations need to ensure that they do not jeopardize their orders due to poor directory handling. They should adopt an inventory management system throughout their value chain.
An inventory management system combines multiple processes throughout the supply chain. It requires organizations to adopt a robust inventory management software capable of handling the intricacies and setting up an environment for efficient reporting and inventory level management. This blog discusses the benefits of inventory management software for an e-commerce business.
Why do e-commerce businesses need Inventory Management Software?
Most e-commerce businesses deal in finished goods. Hence, they have to source from multiple vendors. Even before the pandemic struck, multichannel inventory management was one of the top challenges in e-commerce and cost 12% of sales per annum. They need a dedicated inventory management solution to escape the USD 2 trillion costs associated with stock mismanagement.
In addition, if your e-commerce business revolves around perishables, it is difficult to organize it all manually. Hence, e-commerce inventory management software is a must in such cases. Here are the advantages of inventory management software:
1. Augments real-time inventory management
A robust inventory management software can be a crucial enabler for e-commerce businesses to undertake real-time inventory tracking. It is vital for brands that deal with a multitude of items online.
The software allows them to track product sales, develop patterns, and understand the target customer’s reaction.
In addition, inventory management software can also inform your audience about the availability or unavailability of items they are interested in. In the case of the latter, it can also inform them of the expected time slot at which the same will be back for ordering.
2. Builds a balance between supply and demand
Some brands practice the JIT (Just-in-Time) method, where they need to coordinate supply and production schedules closely. Hence, it is critical to developing an inventory module that is in sync with demand and allows you to manage a sustainable balance.
For example, you can tweak the inventory management software to inform about dead stock or even reorder necessary items on its own. In addition, it also lets e-commerce brands track outdated items, enables them to remove such items, and instead increases the quantity of those in demand.
3. Brings about transparency
Another vital benefit of an inventory management system is its ability for transparency throughout the supply chain. Given that it can generate real-time data, it gives you an extra leeway to manage your inventory and make more informed decisions concerning your warehouse.
Information is easily accessible and shareable to all the requisite people, ensuring that everyone part of the process gets more time to react. It enables the team to improve overall efficiency and customer satisfaction.
If your people know about stock levels in real-time, it would reduce the chances of human error and improve decision-making. So every time you ask someone the reason behind their decisions, you are assured of greater transparency and improved data access because of a robust inventory system.
4. Reduces the instances of stock-outs
Remember the days when you would continually juggle between running out of stock for one item and having too much of another? We all do, but things have gotten a lot better now.
Another vital benefit of the inventory management system is identifying the correct number of SKUs. It sends alerts of a possible stock-out in advance to requisite people or places the order itself. It enables curb back-orders or excess inventory levels and contributes to faster customer complaint redressal while managing stock levels and lead time issues.
5. Improves business forecasting
Forecasting is one of the most vital e-commerce functions for a business owner. To be successful, you have to be proactive, gauge what is to come, and adjust your stock accordingly to meet customer demand with ease.
Having solutions like inventory management software allows you to draw key analytics that employs historical data and AI to predict upcoming trends and future demand. It allows you to skip stockpiling unnecessarily and save time and cost by ordering critical items in advance.
Unicommerce’s Dashboard and Reports is an intuitive e-commerce KPI dashboard that enables you to keep track of sales, returns, fulfillment, and inventory in real-time. The integration also allows you to draw key analytics that augments decision-making.
The benefits of an inventory management system are many, making it integral for every online e-commerce business. The right software can improve stock management, reduce inventory turnover, give you granular inventory control, and its advantages seep down to other functions too. But be careful to choose one that is in sync with your e-commerce goals and contributes towards achieving them.
Schedule a FREE demo with Unicommerce Inventory Management consultants.