10 E-Commerce Inventory Management Techniques

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10 E-Commerce Inventory Management Techniques That Maximize Your Store's Profits


10 E-Commerce Inventory Management Techniques That Maximize Your Store’s Profits

Online retail is a booming business with no end in sight. Smartphones, e-commerce apps, tablet computers, and social media are making it easy for shoppers to find the things they need and buy them wherever they happen. 

To succeed as an online seller, you’ll need to implement effective inventory management strategies that keep your shelves stocked and high profits. After all, you don’t want to run out of stock just as demand peaks. In this blog post, we will cover some of the basics of e-commerce inventory management and share effective techniques that will help you optimize your store’s profits.

What is e-commerce inventory management?

Inventory management is the science of managing the flow of goods from supplier to shelf and from shelf to customer. It’s a crucial aspect of operating a successful retail business. Inventory management is essential whether you run a physical store or an e-commerce site. 

It includes knowing what items are in stock, how many, and when they expire. It also includes knowing what items to order and when to expect them. Inventory management is as much an art as it is a science. Retailers must consider many factors when deciding how much of each item to have.

Inventory strategies for e-commerce

To effectively manage your inventory and maximize profits, you must implement e-commerce inventory strategies. So, without further ado, here are strategies to try out.

  • Conduct real-time inventory tracking

Conduct real-time inventory tracking - 10 E-Commerce Inventory Management Techniques
Conduct real-time inventory tracking


Keeping tabs on your inventory is an essential part of inventory management. At the very least, you should conduct periodic inventory counts to ensure you have the right amount of stock on hand. But why not take it further and track your inventory in real-time? 

This is one of the best eCommerce inventory management techniques. Inventory tracking software lets you monitor your stock at all times. You get alerts to tell you when you need to reorder products or if you have excess stock.

You also use tracking tools to forecast demand for products. Even inventory tracking is an important event. Don’t have a brick-and-mortar store; it envelops you to stay organized and keeps your customers happy by ensuring prompt delivery. 

In addition, you keep your costs down by anticipating demand and ordering products accordingly. To get started on inventory tracking, look at Lightspeed’s inventory management guide and have all your inventory data in one place. 

  • Don’t overstock your shelves.

One of the biggest mistakes retailers make is overstocking their shelves. Overstocking will cause you to lose money because you will have to mark down items to get rid of them, which hurts your profits. Here are a few ways to avoid overstocking:

    • Don’t Add New Products Until the Current Inventory is Gone: Add new products only when your current inventory is nearly gone. This will help you avoid purchasing too much inventory at once. You’ll also avoid having too much inventory, which can be as bad as having too little. 
    • Cut Your Inventory: If you have too much inventory, one of the best ways to reduce it is to start a sale. You can also consider donating or repurposing items that aren’t selling well. 
    • Rotate and Repurpose Your Inventory:  This will help you keep your costs down while ensuring that you are always fresh in the market. 
    • Keep an Inventory of All Your Items: One of the best ways to keep up with inventory is to keep a list of all your items. This will help you ensure you don’t run out of stock or don’t overstock your shelves. 
    • Don’t Have Overstock: One of the biggest mistakes retailers make is having too much inventory. This means that they overstock their shelves, which can cause them to lose money because they have too many items on their shelves, and as a result, they end up having to mark down items for profit. This can also hurt your profits because it will mean that you have less time for other products, making it more difficult for people to buy from you when the new models are coming out. Knowing this information will help you plan your inventory purchases and avoid overstocking or being caught short.
  • Integrate warehouse automation

Integrate warehouse automation - 10 E-Commerce Inventory Management Techniques
Integrate warehouse automation


If you operate a brick-and-mortar retail store, warehouse automation helps you manage your inventory. With warehouse automation, your stock is automatically sent to the appropriate departments and out to customers when necessary. 

This is helpful for large retailers that have multiple locations. But it’s also helpful for smaller businesses that sell online. Warehouse automation helps you track inventory and stay organized. You will also have your inventory sent to the appropriate locations, so you don’t have unorganized storage areas. 

When you operate a fully automated warehouse, you maximize profits by organizing your inventory. You send products to the right departments in your store so that they’re easily accessible to your customers.

  • Set your par levels (minimum viable stock)

Another important part of inventory management is setting par levels. Par levels, or minimum viable stock (VMS), measure how much inventory you should have on hand at any given time. 

Predicting demand is tricky, and predicting demand for every product in your store is nearly impossible. That’s why you need to set par levels for each product in your store. For example, if you sell coffee machines, you want to keep a certain amount of inventory on hand so that when customers want to purchase a coffee machine, they can. 

You don’t want to run out of coffee machines before the next shipment is due. But you also don’t want to keep too much inventory either. On the other hand, the excess stock is a waste of money. So, you have to find the sweet spot. Set par levels based on previous sales or projected demand.

  • Use data to guide your purchasing decisions.

One of the best eCommerce inventory management techniques is using data to inform purchasing decisions. You can access your data regularly if you have a sales tracking and CRM solution. 

Check your data and see how many customers are purchasing your products. If one product outsells the others, consider keeping more of that item in stock. Keep track of the products you sell often. 

Use the data to forecast future trends and know when to reorder popular items. In addition, you will track the products that don’t sell as often to determine if you should remove them from your inventory.

  • Regularly audit your supply chain.

If you’re using real-time inventory tracking and set par levels, you should be able to identify problem areas in your supply chain. It’s important to check your inventory regularly to see if you have the right amount of stock. 

Tracking your inventory identifies problems like slow-moving products that need to be removed from your inventory. You also identify products that aren’t selling well so that you can consider removing them from your store. 

Keeping tabs on your inventory can help you identify any issues in your supply chain. You let your suppliers know that you’re closely monitoring your inventory levels. This helps you avoid supply chain disruptions.

  • Lock in partners who help you manage inventory

Lock in partners who help you manage inventory
Lock in partners who help you manage inventory


Lock in partners who help you manage inventory. One of the best ways to do this is to hire a logistics company to handle shipping and warehousing for you. This type of partnership will save you time on inventory management and let you focus on growing your business. 

Logistics companies are used to managing inventory and shipping schedules, so they can suggest ways to optimize your inventory levels. They negotiate better shipping rates for you. A logistics company helps ensure your inventory is secure and protected from loss, damage, and theft.

  • Merchandising for visibility

Merchandising for visibility means doing everything you can to make your product visible on your website and in your store. This means setting up your shelves, so they are easy to navigate and using visual merchandising to increase sales. 

It also means adding features like buy buttons, customer reviews, and product descriptions to your website. These features will help your customers decide what to buy and make it easier for them to complete their purchases. 

Visibility is key to online sales because customers can’t touch or examine your products before buying them. Therefore, you need to make your products visible so customers can see if they are the right items.

  • Consolidate warehouses and dropship

Another strategy is to consolidate warehouses and dropships. Dropshipping is a retail business model in which a retailer doesn’t keep any inventory. Instead, the retailer purchases inventory from a wholesaler and then has it shipped directly to the customer. 

Some retailers have their wholesalers send their products directly to the customers. This is called dropshipping. Another way to manage inventory is to consolidate your warehouses.

Many retailers use more than one warehouse to store their products. Consolidating your warehouses means bringing them together in one place. This helps you streamline your inventory management and keep your shelves stocked.

  • Make smart investment choices.

Make smart investment choices.
Make smart investment choices.


Finally, one of the best eCommerce inventory management techniques is making smart investment choices. This includes deciding what products to sell and how much inventory to keep. 

If you sell products in high demand and are likely to sell out, you need to keep a larger inventory. On the other hand, you probably don’t need to keep as large of an inventory for products that sell slowly. Keeping too much inventory on hand can be costly. 

It’s important to keep only the number of items on hand that you can sell. But, at the same time, don’t be too quick to throw products away that you think won’t sell. You never know what product will be in high demand. 

Final words

Successful e-commerce businesses rely on effective inventory management. With the right strategies and techniques, you can keep your shelves stocked with profitable items, reduce costs, and deliver great customer service. First, the most important thing you can do is keep track of what you have in stock. Then, you can use these techniques to keep your shelves stocked and your profits high.

10 E-Commerce Inventory Management Techniques That Maximize Your Store’s Profits

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