Happy customers mean a happy business. It seems overly simplistic, doesn’t it? But unhappy customers often abandon their relationship with a company they’ve had a bad experience with. For many eCommerce companies, a product being out-of-stock is enough to drive customers away. That’s very costly, but also preventable.
eCommerce SMBs typically use spreadsheets, emails, and free tracking tools stitched together to manage their inventory and keep their supply chain intact. This is cost-effective in the early days, but can be ineffective as the business grows and operational complexity increases.
Accurate inventory management allows eCommerce brands and retailers to fulfill orders accurately and on-time. And as they outgrow their small warehouse space and move into larger 3PL facilities, so does their need to effectively manage inventory and customer relationships.
The Benefits of Effective Inventory Management
“Good enough” has gotten you this far, but it won’t propel you into the future. With a better inventory management system in place, you open yourself up to continued growth.
That growth comes from realizing five key benefits.
1: Increased Accuracy
Inventory management is a constant tightrope walk, with having too much of a product on one side and too little on the other. The first means paying for storage on products that aren’t selling while the second means missing out on sales when items are unavailable to customers.
Accurate inventory management means:
- Not overstocking items, reducing the potential for holding on to too many products, tying up your cashflow
- Not understocking items, having enough on hand to fulfill customer demand
You can reinvest cash from reduced storage costs and increased sales into your business. Losses due to damage or theft can also be accounted for.
2: Increased Customer Satisfaction
Marketing generates leads and attracts customers. Therefore, inventory management is responsible for making sure their experience creates loyalty and advocacy.
Inventory management impacts customer satisfaction by:
- Providing real-time inventory counts, avoiding overselling out-of-stock items and identifying overstocked items that could be discounted to spur sales
- Identifying high-demand items that should be reordered quickly to meet customer expectations and increased sales
Meeting customer expectations through effective inventory management is the first step to creating customer satisfaction. That results in increased sales, repeat business and a positive reputation that helps attract new customers.
3: Increased Efficiency
The spreadsheets and paper forms used by early-stage eCommerce businesses have two things in common: they’re time-intensive and prone to errors. As a result, both are inefficient and can negatively impact the chances for growth.
Advanced inventory management solutions increases efficiency by:
- Automating certain processes, including reducing inventory counts as soon as an order is fulfilled and calculating the value of both items on hand and what’s been sold
- Reducing time spent, especially as employees don’t have to manually count items and other labor-intensive tasks
Substantial resources become available when staff are no longer responsible for data entry and error reconciliation. You can redirect resources to other growth-oriented areas of the business.
4: Better Future Planning
Forecasting for the future and making strategic decisions is possible, but difficult, with manual inventory management solutions. The necessary data may be there, but pulling it out in a usable way takes time better spent on other activities.
Better inventory management brings the future into focus by:
- Predicting demand, showing which products need to have orders increased or decreased
- Identifying trends and patterns, including customer information and habits that may impact how marketing and promotions are run and targeted
With easy access to accurate and timely data owners can make informed decisions about the future. That’s a necessary part of growing the business instead of falling behind.
5: Growing the Business
It all comes down to this. Effective, advanced inventory management practices prime your business for growth by:
- Improving the accuracy of inventory counts by showing what’s available and what’s needed
- Increasing customer satisfaction by ensuring meeting expectations and filling orders
- Increasing efficiency by automating tasks and reducing time spent
- Providing the insights needed to accurately forecast future demand, challenges and more
An advanced inventory management solution acts as a single repository everyone in the company can access. It provides accurate, timely insights and data on all aspects, from sales and marketing channels to customer demographics and behaviors and everything in between.
It’s also crucial to partner with third-party logistics partners (3PL) that understand the importance of inventory management. A deeply experienced 3PL partner has the knowledge, experience, tools, and technological integrations with platforms (like TradeGecko) to simplify management of inventory, enhance warehouse efficiency, and customer happiness.
TradeGecko is a commerce operating platform that gives entrepreneurs, founders and independent brands the commerce superpowers they need to build an amazing business. TradeGecko integrates with Fulfillrite, so you can easily sync your data across your supply chain ecosystem.
For more information, please visit www.tradegecko.com