How to improve your inventory management processes

Inventory is a word for some people conjures up visions of endless aisles of boxes to count for some people.  But for others it is another word for money – because you paid money to purchase it and when you sell your stock, you will get that money back – and then some.

Holding inventory ties up cash.  That’s why good inventory management is crucial for growing a company.  Just like cash-flow, it can make or break your business.

Why does inventory management matter?

In an earlier article we highlighted the reasons why inventory management is so important to any business.

We looked to accounting experts, Xero, for some tips on how you can improve your inventory management processes.

Here are some of the key highlights:

Use online, real-time inventory software

Using online, real-time inventory software will give you accurate stock data at the press of a button.

Choose software that allocates a unique bar-code to each item in stock.

Make sure it:

  • updates your stock levels as soon as an item is taken off the shelf and the barcode is scanned by staff
  • identifies when a product is out of stock and updates your website immediately
  • tracks an item during shipping and gives you and your customers an accurate delivery time

Choosing which software is right for your business will depend on the following:

  • How many users need access to the software?
  • Which other apps does it need to integrate with?
  • how many skus do you need to track?
  • What can you realistically afford?

StarShipIT integrates with DEAR InventoryCin7TradeGecko and Unleashed as well as ShopifyXeroMagento to name a few,  so you can build out the perfect platform for your eCommerce business covering inventory management, order fulfillment and shipping, from store to door.

You can also consider other solutions such as Shoplo’s Multichannel software which works with Shopify.  Multichannel is basically simple inventory management software that syncs your central inventory over multiple channels – one of them being your Shopify web store.

For example, if someone is selling Shopify and – let’s say, eBay, they connect their Shopify store to multichannel, import all their products, and then sync their eBay store with Multichannel. From then, there entire inventory is managed from the multichannel dashboard. Get a sale in your Shopify store and your eBay stock will go down by 1 unit. Customers, orders and products are all handled within Multichannel.

The benefit is that the seller spends less time logging into multiple accounts to update inventory – they save time. Also, as we integrate with smaller, more niche marketplaces like Dawanda and Miinto, sellers are able to expand into new markets and find new customer much easier.

Respond quickly when you run low on stock

Ideally, you’ll never run out of stock – because every time a product is not in stock, it becomes a lost order and, potentially, a lost customer.

If you do run out of stock, be sure to respond quickly.


  • removing out-of-stock product from your website to prevent orders and setting up a message that says the product will be back in stock shortly, ideally with a date – furthermore, you  could implement a plug-in that notifies the customer when the product is back in stock
  • taking back-orders and fulfilling the orders when stock comes in again
  • monitoring your best-selling products very closely, and quickly replenishing stock as it gets low

Here are a few things to look at when projecting your future sales:

  • trends in the market
  • last year’s sales during the same week
  • this year’s growth rate
  • guaranteed sales from contracts and subscriptions
  • seasonality and the overall economy
  • upcoming promotions
  • planned ad spend

eCommerce inventory management is a balancing act

Managing your inventory can feel like a balancing act at times. On the one hand, you want enough stock to meet demand. On the other, you don’t want too much that it costs you.

The key lies in doing your research and using data to make informed decisions. For well-established small businesses, it’s a good idea to use historic sales figures to guide you. For new businesses, you’ll need to delve into industry trends and data to get a feel for what’s on the horizon.

Download this great checklist by Xero to see how you can improve your eCommerce inventory management.


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