Properly managing inventory is crucial to the success of your ecommerce store. Inventory management entails a high level of rigor and foresight. Errors in tracking, counting, forecasting, and data collection can lead to other major issues such as depreciation, wasteful purchases, insufficient stock, and order delivery delays.
Statistics reveal that ⅓ of businesses will miss a shipment deadline because they sold an item that was not in stock. Choosing the right inventory management software will help ensure that you get the right goods at the right place in the right condition. But this is easier said than done. The right inventory management software will help you succeed with order management and keep your customers happy. `
Benefits of Inventory Management Software
- More accurate inventory and order tracking
- Improved operational efficiency
- Improved customer experience
- Better decision making
- Greater visibility
Choosing An Inventory Management Software
- Determine Your Requirements
- Cost of the Software
- Customization Available
- Integration with Other Systems
Benefits of Inventory Management Software
If you are an ecommerce seller, you will need to manage inventory one way or another. Without proper inventory management, keeping track of inventory and order fulfillment can become chaotic. Research by IHL reveals that ineffective inventory management can cause online retailers $1.75 trillion in lost revenue annually. On average, the combined impact of overstocks, out of stocks, and preventable returns make up 11.7 percent of annual lost revenue for ecommerce businesses. Using inventory management software offers a wide range of benefits to your ecommerce business:
1. More accurate inventory and order tracking
Manual inventory and order tracking increase the possibility of inaccuracies in your stock and order reporting. Inventory management software automates the process so you will know what’s in stock and order only the amount of inventory you need to meet the demand. It will help you achieve accuracy in recording data and tracking the process leaving no room for errors.
2. Improved operational efficiency
An inventory management software will help you identify what items are quickly selling. It leads to better planning and management so you can minimize the number of days an item will be out of stock and avoid carrying too much inventory. Inventory management software will assist you in making more intelligent business decisions.
3. Improved customer experience
Efficient inventory management can lead to happier customers making them return for more. When customers receive their orders on time, they tend to be more loyal and become repeat customers. As a result, you can build a good image, great service, and enhance your brand.
4. Better Decision Making
Inventory management software features reporting and forecasting tools to make smarter data-based decisions. You will gain business insights on which products in your inventory are selling out quickly and which ones are not. In addition, you will gain knowledge that you can leverage in making decisions that will net you a higher income.
5. Greater visibility
Inventory management software provides you with business intelligence that can give you a competitive edge. The data generated by the software will enable you to improve transparency across teams and with customers. Aside from that, inventory management software will help you fine-tune your marketing efforts. The data you collect will not only be useful to your production team but to marketing as well.
You can’t accurately track 1,000 SKUs in 15 facilities manually but inventory management software will help you do that. More inventory is a sign of business growth. But as your business scales up, you will need to take your inventory management to the next level.
Choosing An Inventory Management Software
Choosing an inventory management software is not as easy as you think it is. There is a plethora of inventory management software to choose from. When finding an inventory management software to use for your ecommerce store, you need to take into consideration the following:
1. Determine Your Requirements
Before buying inventory management software, you first need to understand what your requirements are. Consider the type of business that you run. Different businesses have different needs so you need to choose the right inventory management software. It should be tailored to suit the needs of your target customers. Inventory management can be challenging so you need first to identify these challenges.
Are you looking to maintain a consistent inventory level across your sales channels? Do you want to track your inventory KPIs to achieve your goals or are you looking to improve tracking to know where units are at certain points? When choosing an inventory management software, you need to find one that suits your needs based on scalability, capability, and quality.
When determining your requirements, list down the problems you are trying to solve. What are the features you want the software to address such as tracking current stock levels, running restocking and sales reports, accessibility to multiple users, invoice and sales order creation, and others. If you already have software for functions like accounting, and returns and logistics, you want to make sure that the inventory management system you are planning to buy will be compatible with these programs.
2. Cost of the Software
Depending on the features that you want, the cost of inventory management software can vary significantly. When it comes to price, keep in mind that the more features you want, the more expensive the software is. While there are affordable ones, they may not have all the bells and whistles you are looking for.
Before considering the cost, you should also evaluate whether you need additional features. Paying for important features may lead to increased profitability and lower expenses in the long run. Your choice of software can have a financial impact on your company. Thus, you should not rush your decision. Set a budget and look for software providers in your price range.
In considering the price, you should also take a look at other factors such as the licensing and subscription costs. Look for a provider that is willing to adjust their offering based on your needs and specific characteristics. At the end of it all, you should always read the fine print and make sure that there are no hidden charges.
3. Customization Available
Another factor you need to consider when looking for an inventory management software provider is the available customization. If you have complex specifications, then you might want to customize your inventory tracking management system. If you have an existing inventory tracking software and want a new one with added features, make sure that the new system can be easily integrated with the new one.
Inventory management will change as your business grows. You want an inventory management software provider that scales with you as your needs grow. Customizing inventory management will help deliver maximum efficiency and performance. Your potential customers will easily find what they need when they need it.
Finally, customizing your inventory management will help boost your customer relationships. Nowadays, customers are looking for a more personalized experience with 80% of customers indicating they are more likely to do business with a company if it offers personalized experiences.
What’s the point of buying an expensive software if you would not be able to use it? Likewise, will it be worth buying if it takes several hours for your staff to learn the ins and outs of the software. Keep in mind that the reason you are buying the software is to simplify your inventory management. If the software you are planning to buy defeats that purpose, then you are better off looking for another provider that offers a more user-friendly software.
While sophistication offers some benefits to large-scale companies, it is important that your inventory management software accommodate 90% of your staff members. Choosing a user-friendly interface will help save you time in training your workers in using the platform and hiring experts. Your inventory management software may contain features like order management, barcode scanning, billing management, and detailed reporting but it means nothing if it is too complicated for your team.
Many businesses often overlook this point but easy to use software determines the effectiveness of your inventory tracking system. It is also possible that you will need some less technically-minded staff members who will use your inventory system. You need to make it easy for them to learn and understand the platform’s user interface.
5. Integration with other systems
Are you using other software systems for tracking shipping, accounting, marketplace, POS, or 3PL? If yes, you might be better off looking for an inventory management system that integrates all these systems. Create a list of must-have features that you want the new inventory system to have. For example, do you want it to ship orders and enable digital picking as well? Are you looking to integrate wholesale order management as well?
As your business grows, your team may not be able to handle using multiple systems anymore. Integrating these systems with inventory management software will help consolidate their functions and streamline data exchange. Integrating inventory management with accounting software, for example, will ensure smooth financial management.
Integrating inventory management software with other business applications will help improve customer relations, cut costs, and streamline your processes. However, it is best to carry out software integrations in phases. Identify your priorities first and analyze resource requirements before integration.
One important feature you should consider when looking for inventory management software is flexibility. This is very important if you have multiple warehouses in different locations. Find out if the software you have in mind is suitable for mobile devices. Also, consider the number of users who can implement it, whether it’s web-based, on-site, and so on.
Business processes will continuously change so you may need the software to be able to adjust to these changes. Unfortunately, scalability is often overlooked by most businesses and can come back to haunt you when your team becomes overwhelmed with high transaction volumes.
A flexible inventory management software will allow you to adapt to situations as they arise. Problems such as incorrect shipment, manufacturing issues, and theft are often unavoidable so you need to find a solution that can fix the issue as they come. With a flexible system, you will be able to analyze and solve a problem as soon as it occurs.
While your team may want to be independent and seek ways to useyour inventory management software by themselves, this may not be possible all the time. For instance, they may not be able to locate purchase transactions or set-up low-level stock notifications by themselves without proper support. For this reason, you want to ensure that the inventory management software you are considering offers complete support from training, warranty, and assistance.
While most providers will offer some kind of training and support, you also need to do your due diligence in ensuring that everything will be up and running quickly. Some companies will offer online training and others live telephone support. Whatever type of support and training is offered, you want to make sure that your team is fully equipped to become successful with the new software.
Continuous vendor support is essential if something goes wrong. Look for a partner that will offer support during working hours. Some offer free training included in the subscription while others will charge extra depending on the needed support. Determine if the support is through phone, chat, or email. The level and type of support will vary from one provider to another so do look for a provider that offers training and support you are most comfortable with.
Choosing an inventory management software is a huge business decision. At the end of the day, it all boils down to determining your needs, goals, and budget.
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