Shopify has established itself as a preferred platform for retailers in the dynamic world of e-commerce, thanks to its user-friendly interface and robust features. It stands as an ideal solution for businesses venturing into online sales. However, beneath the surface of seamless transactions and digital storefronts lies a hidden challenge that every successful retailer must tackle: mastering Shopify inventory management.
A recent report indicates that almost 63% of retailers grapple with inaccurate inventory records, leading to two principal issues: understocking and overstocking. Understocking occurs when the demand for a product surpasses the available inventory, resulting in lost sales and customer dissatisfaction. Conversely, overstocking leads to an accumulation of excess inventory, escalating costs, and the potential risk of spoilage or dead stock.
Mastering Shopify inventory management is the key to success in online retail. The essence lies in striking the right balance between maintaining sufficient stock to meet demand and avoiding excess inventory. Without this balance, retailers may encounter challenges such as fulfillment delays, lost sales, elevated costs, and ensuing customer dissatisfaction.
Improving Shopify inventory management demands the synchronization of inventory across different platforms and granular monitoring of key performance indicators. Our previous blog highlighted the inventory synchronization strategies for improved inventory management on Shopify. In this blog, we will tackle practical strategies that provide retailers with actionable insights to navigate Shopify inventory management.
Let us take a closer look at how retailers can achieve the goal of optimizing the inventory management process, from receiving to holding and selling inventory, maximizing efficiency and profitability.
Optimizing Inventory Receiving
Stores receive inventory through transfer orders from different facilities, purchase orders from vendors, or returns from customers. Store associates must then verify the received inventory, record it, and organize it on the shelves for fulfillment. This entire process is time intensive, which can negatively impact a store associate’s productivity. To streamline this process, Shopify retailers can refine their inventory-receiving procedures by employing software to track and reconcile received items against purchase orders, transfer orders, and returns in order to balance time and store operations.
Moreover, it is essential for store associates to have access to Shopify inventory management software equipped with features like barcode scanning, enlarged product images, and a user-friendly interface. This enables the swift and accurate reception of items. Retailers also necessitate the flexibility to decide when the received inventory should be made available for online sales, granting store associates ample time to inspect and verify merchandise.
Managing Transfer Orders
Relocating inventory between stores is essential for retailers managing multiple locations for their Shopify inventory management strategy. This practice serves several purposes, like optimizing stock levels, reducing costs, and aligning inventory with high-demand regions. Transfer orders play a crucial role in facilitating this process.
Managing transfer orders separately from regular sales orders can pose challenges in tracking pending orders, thereby increasing the risk of errors and oversights. Additionally, utilizing multiple systems for fulfillment necessitates extra training, which team members might be reluctant to undertake.
Furthermore, acknowledging received transfer orders at stores can be challenging if POS systems lack inventory management capabilities, often leading retailers to rely on blind receipts. To mitigate this, retailers need a system or app that can scan transfer order items at the time of receiving, thereby minimizing the likelihood of discrepancies between expected and actual inventory counts.
Performing Inventory Cycle Counting
In handling Shopify inventory management, storage managers must frequently deal with discrepancies between recorded inventory in the system and the actual inventory on hand. Here, performing regular inventory cycle counts is necessary for identifying and remediating these discrepancies.
Implementing inventory cycle counting not only enhances the accuracy of a retailer's inventory records but also brings to light any inconsistencies. For effective execution of inventory cycle counts, retailers need a dedicated cycle count application. This application should facilitate inventory adjustments and empower store associates to document the reasons behind any inventory variances.
The application should feature barcode scanning to allow store associates to perform counts quickly and accurately, thereby minimizing the risk of human errors. Enlarged product images are also essential to assist stock associates in verifying the correct products. Additionally, the application should afford stock associates the capability to log inventory variances in real-time, ensuring the maintenance of accurate inventory counts. Upon completion of the counting process, the results can be submitted to the store’s inventory management system for approval.
Pushing Real-time and Accurate Inventory
Inventory levels at retail locations are subject to rapid changes owing to continuous fulfillment activities and the receiving of new stock in retail stores or warehouses. Hence, it is imperative for retailers to ensure that their inventory across various locations is accurately calculated and synchronized in real-time for effective Shopify order management. To compute online sellable inventory, retailers need a system adept at taking into account various factors such as safety stock, threshold levels, and the ability to temporarily exclude fulfillment centers. Once the sellable inventory is accurately calculated, it necessitates automatic synchronization with Shopify.
For those utilizing Shopify POS, managing multiple locations becomes an intrinsic part of the Shopify system. Consequently, the system must possess the capability to manage inventory across diverse locations in alignment with Shopify locations and synchronize the inventory count of each location accordingly. This is essential for maintaining accuracy and efficiency in Shopify order management.
Leveraging Business Reports and Analytics
Effective Shopify inventory management requires retailers to track historical demand and assess sales performance. This enables retailers to determine which products are best suited for specific regions and determine the requisite quantity for each SKU. Shopify’s built-in sales reports serve as a valuable initial resource for delving into inventory analytics. For a more comprehensive analysis, retailers can utilize third-party analytical software, offering insights through daily, monthly, and yearly reports on inventory demand and sales performance. This also provides an overview of region-wise inventory movement, aiding retailers in identifying best-selling products. Such insights are pivotal in optimizing inventory and averting both underselling and overselling scenarios.
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Shopify inventory management across multiple stores and warehouses can be challenging. Retailers need a robust Omnichannel Order Management System to centralize inventory control and manage stock effectively in various locations. HotWax Commerce offers a solution for managing inventory across all locations, preventing overstocking and understocking, and synchronizing inventory with Shopify. The platform also includes tools like an Inventory Receiving App, Inventory Cycle Count App, and comprehensive BI Reports and Analytics software to enhance inventory management.
To get started with HotWax Commerce, contact an expert today!