How to overcome common Inventory Control challenges
August 13, 2018
While multichannel eCommerce represents an enormous opportunity for retailers, it also presents a number of challenges. It can be difficult to find the right products to sell, capture quality leads, and retain customers. However, one of the most difficult practical challenges to eCommerce is in inventory management and control. Errors in inventory management can cause problems for your business, from cost control and efficiency to creating strong customer relationships. However, tracking inventory across multiple channels and marketplaces is difficult, particularly maintaining accurate, real-time data across different systems, each with their own requirements.
An efficient, comprehensive inventory management is essential in creating a competitive, viable omnichannel eCommerce business. Some common inventory control challenges include:
Ordering too much product results in higher costs, including storage and warehousing, and losses due to obsolescence, shrinkage and deterioration of products. Tactics such as product discounts, sales, and bundling can help to move products that have been ordered in greater quantities than necessary, but this often results at selling at a loss, or at least reducing revenue from the anticipated amount.
On the other hand, not stocking enough product to meet demand can result in overselling: the situation where a customer purchases a product that is not actually available, or out-of-stock. Most often, this results from inaccurate in-stock information distributed throughout all sales channels.
A recent survey found that 70% of shoppers will go to a competitor rather than wait for an item that is out-of-stock; so in order to retain customers, a retailer must have stock on hand.
Analyzing data from sales history, trends, and order lead time can help a retailer determine the reorder point for each product. Accurate forecasting can also help in negotiating the best price, and avoiding costs associated with emergency orders and overnight shipping.
A global retail supply chain survey found that over 60% retailers plan to invest in better forecasting, as a function of inventory management. Warehousing, back-end technology, and logistics services were also considered areas for improvement and investment.
Accurate, real-time inventory management strategies are vital to creating a satisfying omnichannel experience for customers. Some of the most common customer complaints for eCommerce retailers include:
- Difficulty completing online order
- Shipping delays
- Out-of-stock notification after placing order, waitlist
- Receiving incorrect / broken item
Each of these complaints can be traced to ineffective, inaccurate inventory management processes. And this can directly affect a company’s bottom line: one study found that globally, retailers stand to lose 1.75 trillion dollars in revenue each year due to overstock, understock, and returns. These amounts can be broken down:
- Preventable returns: $642.6 billion
- Out-of-stock: $634.1 billion
- Overstocks: 471.9 billion
These losses add up the 11.7% of total annual revenue for the typical retailer.
In an increasingly competitive environment, it is vital that retailers control costs, streamline operations, and have accurate, real-time data both for business operations, like forecasting, and to provide a satisfying omnichannel customer experience. A comprehensive, omnichannel inventory control system is an important tool for achieving this, and gaining a competitive advantage.
A comprehensive, omnichannel inventory management solution, like ChannelGrabber, can help eCommerce retailers with inventory control. ChannelGrabber provides a fully-integrated system for listing stock and managing it across all outlets, including online marketplaces, and brick-and-mortar stores and warehouses. It also provides tools for forecasting, stock synchronization, and data analytics to help your company streamline, and become more efficient and effective.