E-commerce Start-ups: Here’s What You Need to Know About Retail Inventory Management

Starting an e-commerce business is a great way to jumpstart your entrepreneurial career while working from home. However, things can quickly go downhill without a retail inventory management strategy. 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 sales 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 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 every month. 

Next, you must determine your base stock level for every item. This is the predicted inventory level you believe you will always need to have on hand. It is frequently called “safety stock” and functions as reserve inventory to keep you in stock between orders.

Understanding and documenting the reorder cycle times for all your vendors is also essential. For example, how long does it take 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 and which 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 your inventory’s slow-moving, obsolete, and damaged items. The cash you free up will allow you to re-buy fresh and in-demand inventory.

You should look into an open-to-buy plan when you know which products are moving at what rates. This type of budget 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. Over time, notice what parts of retail inventory management become pressure points. Try to find automated ways to handle these tasks. You’ll have more accurate numbers and greater peace of mind. 

As your business grows, you will need help managing your inventory. Find a coach, a mentor, a friend, a system, or anything else you can trust to help you stay on top of your retail inventory management. 

Do you still have questions about designing a retail inventory management system? I can help. Please fill out my contact form to schedule a complimentary coaching video call, and let’s talk about store inventory management for your business. 

Coach Dave