This is a guest post by Albert Ong. Albert leads content at Jazva, an all-in-one eCommerce management platform for multi-channel sellers. His works have appeared on several publications, including Retail TouchPoints, Independent Retailer, Aftermarket Business World, and The Savvy Shipper.
If you're running an eCommerce business, you might think that investing in inventory management software is too expensive or time consuming. After all, inventory management directly affects your operations, and the last thing you want is for a new product to disrupt your workflow.
While it’s true that sellers in their early stages can make do without a dedicated IMS (inventory management system), all serious retailers will need to make the investment in this technology at some point. The fear of risk will limit growth, and as Amazon’s CEO Jeff Bezos put it, “In business, what’s dangerous is not to evolve.”
In this article, we’ll cover the top signs that will help inform you when it’s time to switch to a centralized inventory management system.
When you first start your online business, it makes sense to do things as cheaply as possible. Perhaps you’re using Excel spreadsheets to keep track of inventory. Maybe you have an assistant crunching the numbers for you.
However, as you grow and begin to offer more products, inventory control becomes more and more challenging. Your team might even consider moving to a new warehouse, and this will require a tool that’s more sophisticated and a system that can automate your inventory tracking process.
If you continue to use spreadsheets and someone inputs a wrong amount in the file, then your operations can get disrupted, costing you money, a backlog of orders, and a lot of angry customers. By contrast, an IMS can help you be on top of your receiving and shipping operations, in addition to any returns and mis-ships that can happen during peak season.
For most retailers, growing their business often involves sourcing new products and vendors. As you add more SKUs to your product line, you might even consider partnering with drop shippers or third-party logistics providers (3PLs).
With this much complexity, manual processes like emails and spreadsheets will severely limit your ability to grow. The alternative is to use automation. An inventory management system can keep your records clean with FTP feeds and EDI integrations. An IMS lets you take on new suppliers to expand product assortment.
Data is also more manageable, and reporting tools should help you determine which products are best to keep during certain seasons.
While it may be annoying to misplace your sunglasses or your car keys, losing an order or inventory can really hurt your bottom line. Theft in the warehouse is more common than you think, and people mis-ship orders occasionally. That’s human nature. Everyone makes mistakes and it only gets worse when you reach high volume.
A better solution? Implement automation in your business. A warehouse or inventory management system will eliminate the risk of human error and give you peace of mind. With barcode scanning and a centralized system, you will always know where your inventory is. You will also be aware when something goes missing, especially if returns are involved.
With a proper software in place, you will also find that managing vendor data and purchase orders becomes much easier and more convenient. Your marketplace performance should get a boost from timely reorders and less backorders. A great option for you would be Jazva.
If you purchase a lot of stock but it doesn’t sell, then you may run into cash flow issues. Reduced working capital will be very painful for growth. At the very least, excess inventory will limit your warehouse space, and you may be forced to liquidate dead inventory.
Overstocking is a clear sign that you need an IMS. Forecasting tools will help you make informed business decisions, so you’ll know which items you should always have on had and which ones you should avoid reordering too often. With an IMS in place, you can assess what products are considered top sellers and when you need to reorder certain items. This will help ensure you can meet demand and that your customers remain satisfied.
In the long run, this will free up more of your capital.
Companies that employ several outdated or legacy systems will find employee training to be quite challenging. This is especially true for multi-channel sellers, who would have to train their staff on how to use Amazon Seller Central, the shopping cart backend, Excel spreadsheets, and shipping sites.
Why not centralize your operations, so your new employees can learn only one software instead of juggling several sites? A modern IMS with a simple and intuitive UI can help you efficiently train new employee. This also reduces risk of error.
In growing eCommerce businesses, there’s usually an operational divide between frontend and backend departments. You might have employees handling the product listings and the copywriting, while you have another team on the warehouse floor. Add in your accounting team and you may encounter a lot of problems during their audit.
Data inconsistency will be inevitable if your departments are not in sync. And mistakes such as double entry will become more frequent. Instead, consider using a centralized system streamline data and communication, to ensure the numbers are correct and accounted for.
In business, the devil is in the details. If you want to grow your business, you’ll need a robust system to keep track of all your data.
You might also like: 10 Reasons to Integrate your eCommerce and Inventory Management Solutions