If there’s one thing retailers can agree on, it’s that the state of your inventory can make or break your business.
Many small or burgeoning e-commerce retail companies tend to rely on a standard Inventory Management System (IMS) - or even use spreadsheets to manually make sales predictions and monitor their products.
This can work in the short-term – while your team isn’t overloaded, your SKU base is simple, and sales are slow but steady. But medium/large businesses with multiple warehouse locations, complex inventory (of core items as well as trend-led and seasonal products), ever-increasing popularity, and expanding sales channels thrive when supported by a killer inventory planning tool.
At the very least, these companies will benefit from the data-led forecasting, in-depth inventory insights and automatic purchasing notifications that a simple IMS just doesn’t provide. In short, it’s the only way to scale and stay profitable while maintaining the strong customer service your brand has been built on.
Read on for 5 ways the use of inventory planning software can smash through growth obstacles and open new opportunities for an e-commerce retail business to scale up.
5 ways that inventory planning software benefits your business
1. Use inventory visibility to boost profitability
When a business gains in popularity and new stock keeps coming in, inventory management quickly grow out of control. This happens due to:
- A lack of thorough inventory forecasting.
- Dependence on ‘safety stock’ (i.e. ordering in more than needed to make up for sudden spikes in demand).
- Having too many SKU variants of your bestsellers (extra sizes, colors and styles).
- Not clearing out dead or outdated inventory until it gathers dust in the warehouse.
With the full visibility that comes with a smart inventory planning tool, you can identify which slow-selling inventory can be shifted, put on promotion, or discontinued to release cash. Furthermore, you can track which SKU variants aren’t building your profits, and which stock may be better off being moved to a different warehouse location.
Inventory is one of the most important investments for a retailer – and potentially the biggest blocker to cash flow. Having full visibility over what is in your warehouses is the first step to profitable decision-making that aids streamlining and revenue generation, allowing you to scale.
2. Eradicate manual purchasing to free up staff
Staff working in purchasing teams or sales forecasting frequently experience burnout, especially if calculating manual sales forecasts or delving into reams of spreadsheet data during unpredictable sales periods. Trustworthy inventory planning software can help boost staff satisfaction by giving them the right tools to make faster, more accurate purchasing decisions, and swiftly make custom reports with over 200 useful metrics. Not only is this great for staff retention and satisfaction; the time and money saved on formerly manual tasks can be put towards areas of the business that impact growth.
3. Use smart forecasting and optimized purchasing
We’ve seen the catastrophic impacts of widespread stockouts and excess inventory all over the retail industry in the last few years. Running out of your bestsellers during sudden spikes of demand is certain to halt business growth - as is having thousands of units trapped in piles of unsold stock (which sometimes accumulates due to blind or over-cautious purchasing). The smart features of inventory planning software – data-led forecasting based on historic sales, automatic stockout warnings and reliable purchasing recommendations – can make inventory planning an easy, error-free experience that takes the guesswork out of purchasing, ensuring you always have the exact amount of inventory that you know will sell.
Other crucial insights can also make purchasing decisions more informed; timely notifications when you’re at risk of stockouts, which suppliers are performing well, average vs actual lead times per item, and projected lost profits if you don’t replenish in time.
With data-driven, automatic insights on your side, the growth-blocking drama that comes from running out of stock - or being buried under it - becomes a thing of the past. In sum, you can quit doing inventory damage control and move towards scaling instead.
4. Integrate your inventory planning software with a retail-focused tech stack
Decent inventory planning software should easily integrate with other apps and software you use to run your business, therefore speeding up your processes multiple times over. This could involve syncing with product information apps such as Pimberly to streamline inventory, e-commerce platforms like Shopify or BigCommerce, marketing tools such as Klaviyo, or a flexible retail operations system like Brightpearl.
By connecting inventory to all departments of your business and having the means to cross-reference data in real-time, you can reduce the time and human error that comes from manually consolidating separate systems and see improvements in your business, end-to-end.
5. Use the data to serve nuance across different channels
Data is powerful when it comes to running a multichannel retail business, and how you use it can unlock big scaling opportunities. A mistake a lot of retailers make is seeing ‘inventory’ as a homogenous beast that moves through all channels in the same way. For instance, what sells brilliantly through your website won’t necessarily be your bestseller on Amazon.
With the right technological tools, inventory planning can be broken down via sales channel, demographic or location, allowing businesses to get granular with the reporting that informs their purchasing.
Once you realize the endless potential of where your sales could be amplified and plan inventory accordingly, your route to growth should be significantly boosted.