In today's retail landscape, managing inventory efficiently across multiple channels and locations is essential for meeting customer expectations and staying competitive. Shopify, a leading eCommerce platform, offers robust tools tailored to online retail. However, as businesses expand into omnichannel operations, they often face challenges with Shopify's inventory management capabilities, particularly in scaling to meet the demands of multi-channel and multi-location environments.
This blog compares Shopify inventory management with HotWax Commerce, a powerful solution that has a pre-built integration with Shopify. HotWax Commerce is designed to overcome the limitations retailers encounter as they scale, offering advanced features that enhance inventory management across various channels and locations.
We will discuss the key differences between the two platforms, providing insights into how HotWax Commerce extends Shopify’s capabilities, ensuring that retailers can meet the demands of a dynamic retail landscape while maintaining accurate and efficient inventory practices.
Inventory Management in Omnichannel Retail
Effective inventory management in an omnichannel environment goes beyond basic inventory rules. Retailers must maintain accurate stock levels across all channels to avoid the costly pitfalls of overselling and underselling.
HotWax Commerce calculates Available-to-Promise (ATP) inventory by considering critical factors such as safety stock, thresholds, orders in the brokering queue, inventory at non-participating locations, and inventory excluded at specific locations. Additionally, HotWax Commerce continuously monitors and updates inventory levels in real-time, automatically triggering an ATP update with any changes, whether from new stock arrivals, adjustments, or sales orders.
This precise inventory data is then consistently synchronized to Shopify, enabling retailers to sell exactly what they have available across their sales channels.
In contrast, Shopify inventory management features are limited in scope and designed primarily for small-scale operations. While suitable for businesses with fewer complexities, they fall short when it comes to omnichannel scalability and leads to both overselling in some scenarios and underselling in some, both of which continue adding the cost to the retailer’s business.
In the following sections, we’ll understand which critical store inventory management features are not offered by Shopify and how HotWax Commerce effectively addresses each of these gaps.
1. Apply Company-Wide Thresholds and Bulk Upload Safety Stock
Two essential components of inventory management are safety stock and thresholds. These buffers serve different yet complementary purposes in maintaining inventory accuracy and ensuring availability.
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Store-Level Safety Stock: In Shopify, retailers can create inventory transfers in Shopify to move inventory between locations. However, a significant limitation is that Shopify's native transfer order feature cannot be accessed via API. This restricts automation and integration with other systems, which can be a critical drawback for retailers with complex inventory networks.
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Network-Wide Thresholds for Inventory Accuracy: Thresholds are applied at the company level to account for inventory discrepancies across the entire network.
No Support for Thresholds in Shopify
While Shopify inventory management provides a basic safety stock feature through buffer stock, it lacks the flexibility many omnichannel retailers need for applying thresholds across different sales channels. Without this buffer, it often leads to overselling on Shopify.
No Support for Bulk Upload of Safety Stock in Shopify
Applying safety stock individually to each product in Shopify can be both impractical and time-consuming, particularly when dealing with large inventories or multiple sales channels. Retailers can bulk edit unavailable inventory using a CSV upload, but they cannot specifically designate that the unavailable inventory is for safety stock. Unavailable inventory can be categorized under different reasons such as Damaged, Quality control, Safety stock, or Other, but when bulk editing, retailers cannot specify that the unavailable inventory is exclusively for safety stock, limiting their control over inventory management.
Apply NetWork Thresholds in HotWax Commerce
HotWax Commerce offers retailers the ability to configure safety stock and thresholds based on their requirements. Retailers can configure how much inventory they want to buffer out to ensure accuracy and availability across all channels.
Let’s understand this with an example:
Consider a high-demand product, the "Amour Bracelet," which frequently sells out due to high customer demand. Retailers want to ensure this product remains available for walk-in customers while also accounting for unexpected inventory variances like damages or miscounts.
Here’s how the inventory looks across three stores:
With a company-wide threshold of 20 units applied for discrepancies, the total ATP inventory becomes:
155 - 20 = 135 units
Bulk Upload Safety Stock in HotWax Commerce
Unlike Shopify, HotWax Commerce provides the flexibility to apply safety stock in bulk across entire product categories. This capability allows retailers to efficiently update safety stock for special product categories, ensuring that inventory adjustments can be made quickly and easily.
HotWax Commerce enables retailers to configure both safety stock and thresholds across the network for each product, allowing retailers to prevent overselling and tailor their inventory management strategies based on their unique needs.
2. Configure Inventory Pools for Shopify, Amazon, Instagram, and B2B Channels
In omnichannel retail, managing inventory across various sales channels requires the ability to allocate specific inventory pools to each channel. This approach ensures that inventory commitments align with the unique requirements and constraints of each platform. For example, marketplaces like Amazon may impose fees for delayed or rejected orders, so inventory dedicated to Amazon orders cannot be compromised.
To address these needs, retail brands often allocate a unique inventory pool for each sales channel. This approach helps ensure that inventory commitments are tailored for each platform's specific demands.
Common Inventory Pool for Each Sales Channel in Shopify
Shopify inventory management follows a simplified approach by maintaining a single pool of inventory that is shared across all channels. While this common inventory pool can ease management, it lacks flexibility. For example, because Amazon imposes fees for rejected orders, retailers may want to apply a higher threshold on ATP for Amazon channel to avoid overselling at any cost. Or let’s say a retailer only wants to fulfill Instagram orders from warehouses and not from stores because they don’t want stores to participate in fulfillment of online orders placed on Instagram.
Fig 01: Multichannel Inventory in Shopify
Unique Inventory Pool for Each Sales Channel in HotWax Commerce
HotWax Commerce takes a more advanced approach to inventory management. Retailers can leverage HotWax Commerce’s Facility App to create various sales channel groups, assign facilities to specific groups, and control which locations contribute inventory to each sales channel using HotWax Commerce Available to Promise App. Here’s how this helps:
Selective Inventory Commitment: Retailers can commit inventory selectively, allocating specific portions of their stock to different sales channels. For example:
Consider a retailer with stores in Times Square, Brooklyn, Broadway, and a Central Warehouse:
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eCommerce Orders: Inventory from the Brooklyn Store, Times Square Store, Central Warehouse, and East Coast Warehouse is available for B2C sales through the retailer’s eCommerce website.
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Marketplace Orders: Inventory from the Times Square Store and Central Warehouse is allocated for Amazon orders.
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Social Media Orders: Inventory from the Central Warehouse is allocated for orders from social media platforms like Facebook and Instagram.
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B2B Orders: Inventory from the East Coast Warehouse is reserved for B2B sales, ensuring that B2C orders do not interfere with B2B fulfillment commitments.
Fig 02: Multichannel Inventory in HotWax
By segmenting inventory pools, retailers can enhance their fulfillment efficiency and ensure that inventory management aligns with the unique needs of each sales channel.
3. Manage Product Availability in Stores in Omnichannel Retail
In omnichannel retail, managing inventory effectively requires more than just balancing stock between stores and warehouses. Certain products, like fragile glassware, require special handling, while others, such as high-demand items, may be reserved exclusively for in-store sales. These product exceptions demand a tailored approach to fulfillment.
Limited Support for Disabling Store Fulfillment for Specific Products in Shopify
Shopify’s shipping profiles allow retailers to set product-based shipping rules and charge different rates based on destination and source locations. These profiles enable retailers to group products with similar shipping rates and establish shipping zones and rates for each location fulfilling those products.
Retailers can also use shipping profiles to handle certain product-shipping exceptions. For example, a retailer can create a shipping profile for a high-demand product like the “Trek Tee” and assign it to the “Central Warehouse,” ensuring it ships only from this location. This limits the shipping options from other locations and reserves in-store inventory exclusively for walk-in customers. However, this approach comes with significant limitations.
Shopify checks aggregated global inventory availability when customers add products to their cart but evaluates inventory availability at different locations considering shipping profiles at checkout. This can lead to complications.
Let’s discuss two scenarios to understand the challenges:
A retailer has set a shipping profile for the "Trek Tee," allowing it to be shipped only from the Central Warehouse. This means other locations, like the Times Square store, cannot fulfill orders for this product.
Scenario 1: Successful Checkout
In this scenario, Shopify allows customers to add the "Trek Tee" to their cart based on the aggregated global inventory availability. At checkout, Shopify verifies the shipping restrictions, and since the Central Warehouse has available inventory, the customer can successfully complete the purchase.
Scenario 2: Failed Checkout
Here, Shopify again allows customers to add the "Trek Tee" to their cart based on the aggregated global inventory availability. However, at checkout, the customer is unable to proceed because only the Central Warehouse can ship the product, and it’s out of stock there. Shopify displays an error message at checkout indicating that the product cannot be shipped, leading to customer frustration and a poor shopping experience.
Additionally, configuring shipping profiles for each product is time-consuming and does not scale well for managing multiple product exceptions.
Fig 03: Disabling Store Fulfillment for Specific Products in Shopify
Easily Disable Store Fulfillment for Specific Products in HotWax Commerce
HotWax Commerce provides a more robust and efficient solution for managing product exceptions. Recognizing that different products require different handling, HotWax Commerce allows retailers to toggle inventory availability at fulfillment locations independently for both BOPIS (Buy Online Pick Up In Store) and shipping.
When HotWax Commerce synchronizes ATP inventory of a product to Shopify, it adjusts the total available inventory by excluding stock from locations where shipping is disabled.
For example, if the inventory for the “Trek Tee” is 10 at the Times Square store and 5 at the Central Warehouse, the synchronized ATP inventory to Shopify will be 5, excluding the Times Square store. If the Central Warehouse inventory drops to 0 while the Times Square store still has 10 units, HotWax Commerce will sync 0 inventory with Shopify, indicating the product is out of stock.
This approach ensures that Shopify only displays inventory that is readily available for shipping, preventing customers from adding out-of-stock items to their cart and avoiding disappointment at checkout.
Fig 04: Disabling Store Fulfillment for Specific Products in HotWax
What’s more in the bag?
HotWax Commerce also offers retailers the flexibility to enable or disable specific products for BOPIS or Ship From Store at selected locations. For example, retailers can enable BOPIS for the “Trek Tee” at the Times Square store while disabling its shipping from the same store. Similarly, retailers can allow pick-up for fragile items like glassware or ceramics while disabling these products from shipping from certain stores.
4. Store Inventory Management
Effective store inventory management is essential for retailers to handle various functions within their stores, such as receiving inventory from transfer orders and purchase orders, as well as performing cycle counting.
Limited Support for In-Store Transfer Order and Purchase Order Receiving in Shopify
Shopify inventory management allows retailers to create Transfer Orders (TOs) and Purchase Orders (POs), but there are significant constraints when it comes to receiving inventory against these orders. Specifically, Shopify POS lacks a dedicated receiving function, meaning that store associates cannot update newly received inventory directly in the POS. To manage inventory receiving, store staff would need admin access to the Shopify backend, which poses both security risks and operational inefficiencies.
So, what’s the solution?
If a retailer wants to streamline the receiving process by integrating or extending Shopify POS to manage TOs and POs, they would require API access to these features. However, Shopify's native transfer order and purchase order functionalities cannot be accessed via API. This limitation prevents retailers from creating custom extensions in Shopify POS or building a user interface to receive TOs and POs directly in-store. The inability to access these features via API restricts automation, integration, and the overall flexibility needed for efficient inventory management.
The last resort
As a result, many retailers using Shopify prefer to manage their TOs and POs in external systems like ERPs (e.g., NetSuite) that offer greater flexibility and API access, rather than relying on Shopify's limited capabilities.
No Support for Directed Cycle Counts in Shopify
Accurate inventory management is essential for any retailer aiming to maintain smooth operations and meet customer demand. A core practice in this area is cycle counting, which involves counting specific portions of inventory on a rotating schedule to keep stock levels accurate. However, Shopify inventory management lacks native support for this critical function, presenting significant challenges for businesses managing large inventories.
Stocky App for In-Store Inventory Management
To mitigate some of these limitations, Shopify offers the Stocky App, but it’s only available to retailers using Shopify POS Pro. While Stocky provides some capabilities for inventory management, it comes with several drawbacks:
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Device Compatibility Issues: Stocky is not compatible with mobile or tablet devices, limiting its usability for store associates who need quick, on-the-go access.
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Inventory Syncing Inconsistencies: Stocky often struggles with syncing inventory counts accurately from Shopify. For example, low-stock items might not always be updated correctly, and changes made in Shopify, such as deleting a product or changing an SKU, might not be reflected in Stocky. These inconsistencies can lead to inventory discrepancies, causing challenges in maintaining accurate stock levels.
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Inventory Receiving with Stocky: Stocky is not an ideal solution for inventory receiving. Shopify POS lacks a dedicated receiving function, and while Stocky can assist, its limitations—such as poor syncing and lack of mobile support—hinder efficiency. Additionally, Stocky lacks a pre-built integration with ERP systems like NetSuite, complicating inventory data synchronization and accurate accounting.
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Cycle Counting Challenges with Stocky: The Stocktakes feature in Stocky for cycle counting is inadequate. It doesn’t support directed counts to specific locations, leading to inefficient manual processes and potential errors, especially in large inventories.
For example, a retailer managing a flagship store in Times Square would need to manually email the store manager, request a cycle count, wait for a response, and manually verify records in Shopify.
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Risks of Direct Inventory Adjustments: When store associates make direct adjustments to inventory in Shopify, it introduces another layer of risk. Any incorrect adjustments—whether an overestimation or underestimation—can disrupt operations, leading to stock discrepancies and lost sales opportunities.
Streamlined Store Inventory Management in HotWax Commerce
Unlike Shopify inventory management, HotWax Commerce offers a dedicated Store Inventory Management suite that eliminates these inefficiencies. HotWax Commerce provides retailers with up to 98% inventory accuracy through automated transfer order and purchase order management as well as directed cycle counting. Here’s how:
Inventory Receiving in Stores: Transfer Orders and Purchase Orders
HotWax Commerce integrates with ERP systems like NetSuite, allowing for the synchronization of new purchase orders and transfer orders.
HotWax Commerce’s Store Inventory Management suite includes a Receiving App that allows store associates to receive inventory directly, whether from transfer orders or purchase orders. This app eliminates the need for admin access to the backend, thereby enhancing security and operational efficiency. Inventory received through the app is immediately updated in the HotWax Commerce as well as the integrated systems like Shopify POS and NetSuite. As a result, retailers can prevent underselling and ensure that their Shopify always reflects accurate and up-to-date inventory counts.
Inventory Adjustments in Stores: Directed Cycle Counts
HotWax Commerce has a dedicated Cycle Count App that directly addresses the challenges of manual cycle counting.
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Direct Cycle Counts: The Cycle Count App allows operations teams to assign specific counts to stores. They can monitor, approve, or reject counts in real-time, significantly reducing the need for back-and-forth manual communication. Whether counting products in a single location or across multiple stores, operations can be confident that the process is precise and up-to-date.
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Perform Cycle Counts: Store associates receive directed cycle counts through a mobile interface, eliminating confusion or delays. The app provides a detailed item list for associates to scan and feed quantities on the spot, ensuring immediate data capture. Once the counts are submitted, they are automatically reconciled with existing records, creating a seamless process from start to finish.
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Approval Workflow: HotWax Commerce also provides an approval flow, preventing unauthorized or inaccurate adjustments to inventory. Operations teams can approve or reject counts before they’re updated across sales channels, offering an extra layer of protection against errors.
Imagine the Times Square store example again, but this time using HotWax Commerce. The operations team notices frequent order rejections for a popular item. Instead of emailing the store manager, they schedule a cycle count for that item directly in the app. The store associates scan the items with their mobile devices, submit the counts, and the operations team reviews and approves them—all within the same app. This process ensures accurate, real-time updates to inventory records, keeping Shopify POS and any integrated systems like NetSuite in sync.
Eliminating manual communication and ensuring timely inventory updates, the Cycle Count App significantly improves inventory accuracy and operational efficiency. This level of automation significantly reduces the time and effort required for cycle counting, helping retailers maintain accurate inventory records and reducing the risk of stock discrepancies.
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In conclusion, while Shopify inventory management offers basic capabilities suitable for smaller retailers, it falls short in several key areas when compared to HotWax Commerce. The limitations in applying company-wide thresholds, configuring inventory pools, managing product exceptions, and handling store inventory functions highlight the challenges that retailers may face as they scale their operations.
HotWax Commerce, on the other hand, provides a comprehensive and flexible solution that addresses these challenges head-on. With centralized threshold management, multiple inventory pools, robust product exception handling, and full-spectrum store inventory management, HotWax Commerce empowers retailers to optimize their inventory processes across all locations and channels.
For retailers looking to scale their operations and enhance their inventory management capabilities, HotWax Commerce offers the tools and flexibility needed to meet the demands of today's omnichannel retail environment.
