How Inventory Management Makes Retail Business Successful

Online retailers are selling their products online via marketplaces like Shopify, eBay, Amazon, or their websites. For retailers to be successful in the market, they should hold enough stock to meet customer demands without holding too much inventory. If your stock is in the right quantity, you will minimize costs. What are some of the challenges that inventory management faces?

Shopify inventory management

The amount of a particular product that is available for sale is the inventory.  Inventory saves you the trouble of selling a product that is out of stock and helps you know which products you need to produce or order. The process of managing and organizing stock across the supply chain is known as inventory management.

You can use the Shopify inventory management app to do the following:

      View your inventory.

      Set up inventory tracking.

      Adjust inventory levels.

The goal of Shopify inventory management is to ensure your clients get products faster and the cost of inventory holding is reduced. Avoid overstocking your warehouse because storing inventory is expensive. It helps boost profit and reach more customers, but it can be tough to control the fulfillment process and inventory since e-commerce is a fast-moving business.

The types of inventory management

  1. Multi-location inventory management.

It is the management of inventory for multiple warehouses, stores, or sales channels. To ensure all your inventory is done and the available stock is enough to sell everywhere, you will need management at the location level. 

  1. Retail inventory management.

It is the management of the stock that you plan to sell to your customers. A good retailer will ensure they have enough stock to fulfill customers’ demands and orders.

Challenges of inventory management

There are many benefits to effective inventory management. However, there are also challenges that you need to overcome to achieve efficiency. These challenges can result in costly problems such as less inventory, too much inventory, and lost inventory. These challenges include the following:

a)     Change in demand.

When demand changes, inventory management is affected. 

b)     Disorganized stockrooms.

It will be difficult for your associates to find the inventory that a customer needs in a messy stockroom. When the customer’s experience isn’t good, it will lead to inventory shrinkage. 

c)     Phantom inventory.

When your point-of-sale systems report inventory as available while it doesn’t exist in your store, it is known as phantom inventory. This situation results in inaccurate stock levels, which is costly in the long run. 

d)     Difficult counting process.

It is a time-consuming and difficult task to count inventory. To count inventory, you will ask your staff to work extra hours or close the store for a day. Manual inventory counts are susceptible to errors, which leads to further issues. 

e)     Supply chain issues.

The global supply chain affects inventory management. If you lack enough safety stores on hand, supply chain constraints can lead to stockouts.

Elements of inventory management

1)     Stock levels.

When you manage the stock level of each product, your business will have enough stock. It helps you avoid stockouts and meet customer demand. 

2)     Inventory control.

Implementing processes such as barcode scanning, cycle counting, and inventory tracking ensures:

        The inventory is in good condition.

        Accurate entry level.

        Organized such that cost is minimized. 

3)     Purchasing and ordering.

It involves the following:

      Negotiating with suppliers.

      Ordering new stock.

      Manage the delivery process. 

4)     Demand forecasting.

To meet future customer demands, the amount of stock needed is estimated. It helps the retailer determine the appropriate quantity and time for restocking their inventory. Information from various sources, like market trends, past sales history, and customer behavior, is analyzed. 

5)     Inventory cost.

The costs associated with inventory include holding costs, the cost of selling goods and ordering costs. This information will help retailers make better-informed decisions when buying new stock.

Pros of inventory management

  1. More organized warehouse.

You can easily organize your warehouse using a good inventory management system. Managing your inventory can be very difficult if the warehouse is disorganized. An optimized warehouse; allows you to put highest selling items together in one place to increase accessibility. Customers will be happy when their order fulfillment is sped up. 

  1. Maintaining the right amount of stock.

Inventory management helps to maintain an equilibrium such that you don’t have too much stock or too few stocks at any time. The accuracy of inventory orders is improved with the help of an efficient inventory management strategy. 

  1. It helps to avoid regulatory fines and lawsuits.

When your warehouse is well organized, you will avoid lawsuits and fines for not following regulatory rules and guidelines. In case of an undesirable situation, proper inventory management will document your actions during the event. 

  1. It saves money and time.

Keeping track of the goods you have at hand saves you the struggle of inventory recounting to ensure stock accuracy. You will save money used to buy slow-moving products. 

  1. Productivity and efficiency are improved.

Business productivity and efficiency are improved when inventory management devices like inventory management software and barcode scanners are used. Employees can focus on more important things for the business when the manual way of doing things is eliminated. 

  1. Flexibility.

It is difficult to predict when problems such as manufacturing issues, incorrect shipments, theft, or warehouse accidents occur. If a problem arises, the manager is informed at once to rectify the issue. 

  1. Information transparency has improved.

There is a transparent flow of information, which includes when items were packed, received, picked, manufactured, shipped, etc. Depending on the amount of stock available, you will know the items to order


Inventory management is very critical in e-commerce. Shopify inventory management app helps view your inventory, set up inventory tracking, and adjust inventory levels. Multilocation and retail are the two types of inventory management. The challenges of inventory management include a change in demand, disorganized stock room, phantom inventory, difficult counting processes, and supply chain issues. Stock levels, inventory control, purchasing and ordering, inventory cost, and demand forecasting are the various elements of inventory management. There are many advantages of implementing inventory management for your business.


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