If you’re new to the e-commerce industry, you may have some concerns regarding setting up an effective web site, finding your target customers, meeting your customers’ needs with your products or services, and providing quality customer service. Among these concerns, the most important aspect is solving inventory management challenges. Inventory management is so important because it affects every other area of your business. Managing inventory can be challenging for well-established businesses, so ensuring your startup is prepared to avoid inventory management mistakes is key to your success. Here are the most common inventory management mistakes by e-commerce startups and how you can get help to prevent these mistakes.
Stocking Too Much Inventory
It may seem like a good idea to have lots of inventory on-hand in case customers want more of your products at a particular time, but since warehousing costs are so high, this can be very expensive. Depending on where your warehouses are located, you could end up paying over $,1,000 a month for a small space. The larger your operations, the more resources and money you need to invest towards storage space. E-commerce retailers need to consider these costs and find a way to properly manage their inventory. An inventory management software is one of these tools. They provide you with the visibility to know which items need more on-hand, and which items don’t, so you can provide what your customers need without taking up excess and unnecessary storage space.
Stocking Too Little Inventory
Too little inventory on-hand can also be a problem. You cannot sell items you don’t have, and if customers are seeking products from your online store, the last thing you want is to have them on backorder and make them wait too long. Over 70% of online shoppers say they would rather buy the same product somewhere else than wait for it to return to stock. If your customers are ditching their carts and going to your competitors to get what they want faster, your reputation and profits will be in deep trouble.
No Defined KPIs
Without key performance indicators (KPIs) it is impossible to know exactly how well your business and your team is doing. Defining KPIs is another solution to reducing mistakes with inventory management. KPIs may include aspects like the number of web site visitors, the conversion rate, or the percentage of direct vs. organic traffic. These statistics are vital to helping you manage your team more effectively. It shows which aspects of your business or personnel are underperforming, so you can address these issues and optimize them.
Irregular Inventory Checks
Manual inventory checks are a nightmare. To do this, members of your team need to stop processing orders in your warehouse to count every single item and ensure that number matches the figures in the system. If your business sells thousands of products, manual inventory checks can be near impossible and can waste valuable time. However, they must be done, which is why implementing technology and inventory management software is your best course of action. Barcode scanners and real-time inventory visibility are two ways to speed up the process and ensure better accuracy rather than using pen and paper.
Hiring the Wrong People
The people you hire will either make or break your business, whether you are hiring for marketing, purchasing, sales, or warehousing. The right team will have the following traits:
- Physical strength and energy
- Strong hand-eye coordination
- Clear sense of integrity and honesty
- Able to follow instructions and take direction
- Focused on good customer service
- Attentive to details
Not Checking Sales Trends
Regularly reviewing your sales data allows you to make more optimized strategies as you move forward. Trends also allow you to predict inventory needs so you stock the right products and make the best use of your warehouse space. Your sales records will show you how often certain items need to be reordered (bestsellers), and when your seasonal spikes are.
Not Updating Inventory Immediately
If your customers often complain that the items they order are out of stock, you may not be updating your inventory as quickly and accurately as you could be. Backordered items are frustrating for customers and you risk cart abandonment. Although it may be difficult to completely prevent backorders, you need to do the best you can to make sure you know which items are low so you can order more and provide for your customers. This is part of offering excellent customer service. Real-time inventory updates help your customers know what you have in stock before they order.
Hire a 3PL Service
Inventory management is essential to a successful business, especially in e-commerce, but it can often be overlooked by startups who may choose to focus more on sales and marketing. Finding the right inventory management system to prevent these mistakes from happening will ensure you avoid major losses in customers and revenue. By teaming up with a third-party logistics company, you can gain access to robust warehouse and inventory management software. These companies are equipped with the tools you need to manage your inventory, get your products shipped out on time, and keep your customers happy.
APS Fulfillment, Inc. cares about our clients’ success. Our professionals will bring you solutions to your fulfillment challenges. We provide services such as real-time inventory management, e-commerce fulfillment, fulfillment solutions, and fulfillment markets. There are endless benefits to working with a third-party logistics company that uses the best quality software systems to manage your warehouse, so if you’re looking for the right company, look no further than APS Fulfillment, Inc. You can contact us by e-mail at [email protected] or by phone at (954) 582-7450.