Ashley Brown is the Partner Marketing Manager at Skubana. She’s passionate about people, thinking outside of the box, and ecommerce!
For your ecommerce business to be sustainable, profitable, and scalable, you need to know where your stock is located, have an accurate accounting of its inventory, and know when to reorder. A poor inventory management strategy can make it impossible for a business to grow or even maintain. Having an effective inventory management system in place will prevent these inventory issues from occurring and maximize future profits.
What Is Ecommerce Inventory Management?
Ecommerce inventory management is the process of tracking every stocking item in detail. This means you know how many items you have, where they are, their pricing, and when you need to purchase more to keep stock levels optimal.
Challenges Most Ecommerce Shops Face With Their Inventory Management
Modern ecommerce business owners deal with more complexity than they ever have. They deal with multiple stocking locations, multiple sales channels, customers demanding the quickest possible shipping, and more. This complexity adds challenges that these shops must handle.
Lack of Visibility
Storing your products in multiple warehouses and selling them across multiple sales channels can add a lack of visibility to the challenges an ecommerce store already deals with. Without visibility across your entire inventory, forecasting and knowing what decisions to make and where you need to make them is difficult.
Siloed Warehouses and Channels
To grow and handle customer orders closer to their locations, adding warehouses is a necessity. And with customers using more and more sales channels and ecommerce platforms to find the products they need, having products on multiple storefronts is no longer an option. The problem with all these options is that many times they end up being siloed and managing them requires special attention which a busy ecommerce business may not have time for.
Stockouts
When sales traffic spikes, an ecommerce shop may not be prepared and could experience stockouts on exactly those items that are becoming popular. This can cause shipping delays and disappoint your customers.
Overstock and Deadstock
Overstock is another problem that online retailers run into, especially with seasonal products. Dead stock is even worse. Both can cost ecommerce business profits in the form of more storage costs and capital that is locked into products that aren’t moving.
Stock Locations
Setting up a system of stock locations is important to keep products and orders flowing smoothly. An optimal automation system will take sales frequency, size, quantity, and other factors into account when assigning stock locations. Without accurate inventory management, stock locations are just guesswork.
Missing Safety Stock
Safety stock protects an ecommerce shop from running out of products when the inevitable happens like when demand suddenly spikes or a supplier has delays. With the right supply chain formula, it is easy to calculate the safety stock you need, but the formula only works with accurate inventory counts and tracking.
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5 Benefits To Leveraging Ecommerce Inventory Management System
Tracking inventory to keep stock at optimal levels can be difficult without help. Fortunately, the right inventory management system can help in multiple ways.
1. Consistent Stock Counts
Consistent stock counts are a major key to inventory management. Real-time inventory management systems will ensure that stock counts are correct at every one of your locations increasing optimization, preventing overselling, and decreasing overstocking.
2. Safety Stock Level Monitoring and Setting
Calculating safety stock levels is important but can be tedious and time-consuming. Inventory management systems will forecast safety stock levels based on the sales of products over time and adjust those levels when sales trends change.
3. Automatic Reorder Points
Setting reorder points and automatically issuing sales orders is an important part of what ecommerce inventory management systems do. Instead of guessing when to reorder stock, you can just be sure it will be ordered when needed without any human intervention. Especially for multi-channel sellers, it’s important your Amazon, Shopify, Ebay, BigCommerce, Etsy, ect. orders all all synced in order to streamline business.
4. Accuracy Across Multi-Sku Inventory and Multi-Warehouse Storage
Accuracy in your inventory is critical to ecommerce success for many reasons. It prevents angry customers, lost sales, and extended lead times. An effective inventory management system will manage the demand across multiple locations and control your inventory levels better than manual processes ever could.
5. No Human Error
Software should be used where it functions better than a human. In the complex process of inventory management, inventory management solutions will eliminate human error.
FAQ: Ecommerce Inventory Management
Q: What is ecommerce inventory management and what does it involve?
A: Ecommerce inventory management is the process of tracking every item in your stock in detail — knowing how many units you have, where they’re located across all warehouses and sales channels, what they cost, and when to reorder to maintain optimal stock levels. Done well, it prevents stockouts, overstock, and dead stock while ensuring orders are fulfilled accurately and on time across every channel you sell through.
Q: What are the most common inventory management challenges for ecommerce businesses?
A: The six most prevalent challenges are: lack of visibility across multiple warehouse locations and sales channels, siloed warehouses and platforms that don’t communicate with each other, stockouts during demand spikes, overstock and dead stock that tie up capital and storage space, disorganized stock locations that slow picking and increase errors, and insufficient safety stock to buffer against supplier delays or unexpected demand surges. These challenges compound as a business scales — what works at 100 orders/month breaks down at 1,000.
Q: How does an inventory management system prevent stockouts and overstock?
A: A real-time inventory management system maintains accurate stock counts across all locations simultaneously, automatically updating as orders are placed and inventory is received. It calculates safety stock levels based on sales velocity and adjusts them as trends change, sets automated reorder points that trigger purchase orders without human intervention, and flags overstock situations before storage costs accumulate. The result is a self-regulating inventory system that stays within optimal bounds without constant manual oversight.
Q: Why is inventory accuracy especially important for multichannel ecommerce sellers?
A: When you sell across Amazon, Shopify, eBay, BigCommerce, and other platforms simultaneously, every sale on any channel must immediately reduce available inventory on all other channels. Without real-time synchronization, you risk overselling — accepting orders for items that are already sold out on another platform. This leads to order cancellations, negative reviews, and potential marketplace penalties. An inventory management system that syncs all channels in real time is non-negotiable for multichannel sellers.
Q: What are the five key benefits of using an inventory management system?
A: The five core benefits are: consistent, real-time stock counts across all warehouse locations; automated safety stock monitoring that adjusts to changing sales trends; automatic reorder points that eliminate manual purchase order creation; accurate inventory management across multiple SKUs and warehouse locations that prevents human error; and the elimination of the manual reconciliation work that creates discrepancies in the first place. Together these benefits reduce lost sales from stockouts, reduce wasted capital in overstock, and free up operational time for higher-value activities.
How DCL Solves the Hardest Inventory Management Challenges
The inventory management challenges this guide describes — lack of visibility across channels, siloed warehouses, stockouts during demand spikes — are exactly what DCL’s eFactory platform is built to prevent. eFactory provides real-time inventory visibility across all of DCL’s fulfillment centers, synced continuously with your Shopify, Amazon, WooCommerce, and other sales channels. Safety stock alerts, reorder point notifications, and demand forecasting reports are all built in. For multichannel brands managing inventory across DTC, Amazon, and retail simultaneously, DCL’s single-inventory-pool model means every channel draws from the same stock — no siloing, no overselling, no manual reconciliation. As Essential’s Johnny Shi put it: “eFactory gives me full, real-time visibility of my own inventory and allows me to pull any data I could want.” See how eFactory manages multichannel inventory →
Bottom Line
Managing the inventory of a multichannel online store is not easy. The challenges only grow as popular new sales channels pop up or a business expands into multiple locations. But with the right ecommerce inventory management system, retailers can bask in their success with less of the growing pains.
