Fulfiling and delivering orders efficiently is crucial for ecommerce success. Fortunately, with proper inventory management, orders can be delivered accurately and smoothly without any interruption.
However, the reality is slightly different from the ideal situation—inventory management is easier said than done. Once you start selling on more than one sales channel, it becomes even more difficult. In fact, Statista states that multichannel inventory management is one of the top challenges in ecommerce.
These challenges occur when brands fail to maintain optimum inventory levels. While sudden stockouts can cost you sales and ruin customer experience, overstocking can increase holding costs and increase the risk of inventory becoming obsolete. Such inventory management problems can affect your ecommerce business to a great extent. Executing strategic steps can help you master multichannel inventory management and drive your business toward success. Let’s see how.
In this blog, you will learn what are the top multichannel inventory problems, what are the best solutions for multichannel inventory management and how Eshopbox helps ecommerce brands to upgrade inventory management capabilities.
Here are the top inventory management problems that occur in multichannel selling:
In multichannel selling, it can be difficult to forecast demand and estimate how much inventory you need for each channel. Most of the time, sellers don’t have enough inventory. This can lead to a quick stockout, unhappy customers, and loss of potential sales.
In contrast, having excess inventory is equally harmful to an ecommerce business. Additional stock can take up valuable warehouse space and increase holding costs. In addition, storing inventory for a long time can increase inventory ageing and risk the inventory becoming stale, expired or obsolete sitting on warehouse shelves.
In multichannel ecommerce, the risk of overselling is also high—when you sell more than what you actually have. For instance, you receive seven orders from various channels. During order processing, you realise that you only have six products in stock. It can cause severe problems for your ecommerce brand, from losing a sale or a customer to your brand reputation. Worse of all, some sales channels like Amazon impose penalties for overselling.
It's essential to split your inventory across a network of fulfilment centres to offer your customers express, same-day and next-day delivery while reducing shipping costs. This means such a multi-warehousing strategy is essential but it’s hard to allocate inventory based on customer demand and based on the requirement per sales channel.
During order processing, errors can arise due to poor inventory management. The most common errors are picking, packing and shipping the wrong product. The main reason for picking the wrong item needs to have the correct data or system to store SKUs (stock-keeping units) in designated areas. These errors can result in high returns, which can be prevented from the get-go.
Here are some solutions and tips that can prove vital for better multichannel inventory management solutions:
You can start by investing in an Inventory Management System (IMS) to track your inventory levels at all times. It will enable you to calculate the standard inventory levels and set re-order points for each product when stock levels are low. When inventory is running low, you can restock your inventory. Such timely inventory replenishment can help you ensure uninterrupted order fulfilment and avoid stockout on each sales channel.
Overstocking can increase your inventory holding costs. Moreover, if slow-moving inventory sits in storage for a long time, it can expire or become unsellable. With an IMS, you can calculate the amount of inventory required for establishing standard inventory levels to help you avoid excess stocks for each channel and prevent unnecessary costs.
You can integrate an Inventory Management System (IMS) with every channel to ensure inventory accuracy. Most importantly, when you sell a product on one channel, the inventory level should get updated on every channel. This will help you prevent overselling. Even when products get sold in product kits, you need synchronised inventory levels across every channel in real-time.
You can start by analysing your sales data to find out the zones from where you receive the most orders. Based on your data, you can categorise zones and store your inventory according to the number of orders received from that particular zone. This will help you to maintain high stock levels from where you receive more orders and store less inventory from where you have less demand.
You can implement strategies to increase order accuracy rate during order processing. These include, using the right barcodes, optimising warehouse layout and making picking lists descriptive to improve picking accuracy. You can also incorporate automation and use powerful technology, such as barcode scanners, conveyor belts, intelligent robots, and more, to reduce human errors. You can perform a quality check during order processing to ensure that the items shipped to the customers are correct and in the proper condition.
Furthermore, you can ensure appropriate materials are used in the packaging of the product to prevent in-transit damage so that your customer doesn’t receive a damaged product. This will also help you reduce preventable returns.
Taking a systematic approach is the only way to ensure accuracy and efficiency in inventory management. If you want to stay in charge of your inventory, you must employ a robust inventory management system. You can avoid multiple business threats, such as overstocking, understocking, and overselling. For better results, you can outsource fulfilment to a 3PL like Eshopbox that can help automate and improve inventory management, which can prove vital to your success.