Last Updated on October 26, 2020 by Dave Schoenbeck
Starting your own e-commerce business is a great way to jumpstart your entrepreneurial career while working from home, but if you don’t have a retail inventory management strategy in place, things can go downhill in a hurry.
Establishing retail inventory management best practices is an essential first step before you even start making sales. Here’s what you need to know about staying on top of your inventory as an e-commerce business.
How Do You Manage a Store Inventory?
One of the first things you’ll need for retail inventory management is a point of sale (POS) system to track specific item sale information. While you can do this manually at the start of your business, you’ll need a system sooner than you think.
Square, Shopify, and ShopKeep are all POS options for small businesses. Each one has unique features to help you stay on top of your sales. You will also need a cash flow projection tool to help you predict your cash availability. You can access mine by clicking here. This will help you project your cash flow on a monthly basis.
Next, you’ll need to determine your base stock level for every item. This is the predicted inventory level that you believe you will need to always have on-hand. It is frequently called “safety stock,” and functions as reserve inventory to keep you in stock between orders.
It’s also important to understand and document the reorder cycle times for all of your vendors. How long does it take for you to receive the goods once the order is sent to the vendor? This is something to consider when calculating your base stock level, as that stock will need to hold you over until you can make or acquire more products.
Ongoing Retail Inventory Management
Once your e-commerce business has made some sales and you’re a bit more well-established, there are a few ongoing retail inventory management tactics to consider.
For example, notice which products are usually in stock versus which ones sell out more quickly. Conduct regular inventory cycle counts to ensure that what you think you have is accurate.
Move quickly when you see a trend, clearing out slow-moving, obsolete, and damaged items in your inventory. The cash you free up will allow you to re-buy fresh and in-demand inventory.
When you have a good idea of which products are moving at what rates, you should look into an open-to-buy plan. This is a type of budget that weighs the demand for your products against what is available. Shopify has a great step-by-step guide to creating an open-to-buy plan. Look into this as soon as it becomes practical for your business.
It’s also important to automate what you can. Notice what parts of retail inventory management become pressure points over time. Try to find automated ways to handle these tasks. You’ll have more accurate numbers and greater peace of mind.
You will need help to manage your inventory well as time goes on. Find a coach, a mentor, a friend, a system, or anything else you can trust to stay on top of your retail inventory management as your business grows.
Do you still have questions about designing a retail inventory management system? I can help. Fill out my contact form to schedule a complimentary coaching video call and let’s talk about store inventory management for your business.