It is debatable whether acquiring products or fulfilling customer orders is the hardest part of running an eCommerce store. However, what is clear is that successful inventory management is key to running a profitable online store. You can get all the traffic in the world, but if you do not have the stock, then your efforts could be in vain. Implementing certain concepts in your business can accelerate growth and boost profits.
What do people actually want to buy?
Asking what people actually want to buy may seem like we’re going off the inventory management topic, but stay with me. The Holy Grail of online commerce is to find niche products that your competition isn’t retailing but you can monetise.
Utilise tools like Google’s keyword planner as well as paid options such as SEMRush and Sistrix to explore related search terms. This enables you to discover niche products not widely offered by competitors but with monetisation potential. Testing a range of related products is key to finding lucrative opportunities and increasing long-term profits.
While conventional wisdom suggests focusing on a specific product niche, staying open to new opportunities is crucial, especially for newer eCommerce businesses lacking unwavering confidence in a single niche. Allocate 80% of your product range to core products and use the remaining 20% to explore new opportunities.
Deciding on what to stock – and how much
Determining how much stock to carry is a complex calculation influenced by various factors, including seasonality and competitive price pressures. Consider potential fluctuations in conversion rates, especially during peak seasons like the weeks leading up to Christmas. Anticipate a drop in prices during events like Black Friday, and plan your stock levels accordingly. If your competitors are doing this and you’re not, then you might have a harder job shifting stock. If you don’t have any historical knowledge of how your competitors will behave then anticipate a 10%-20% drop in prices around the first week of December and plan accordingly. Also, when deciding how much stock to purchase consider whether you will be offering any loss-leaders to increase footfall.
When deciding on stock quantities, factor in any promotional activities, and tie-ins with other products, and be mindful of best-before dates, particularly for perishable items. Think beyond major holidays and consider the impact of seasons, school holidays, and sports seasons on demand.
Promotional Contract Packing
Will you be tying the purchase of those products to any other stock? Have a think as early as you can if you’ll be doing any promotional work on a specific product or category of products. You obviously think it’ll work, or you wouldn’t be doing it, so ensure you have enough stock early on to supply that demand. If you are creating promotional product bundles as part of a seasonal campaign, do you require contract packing? It is best to get this work booked in with your fulfilment provider earlier so your product bundles are ready to go out the door. This will ensure you keep your customer satisfaction over this busy period.
Sourcing the right products at the right time
When dealing with suppliers, maintain a comprehensive spreadsheet detailing each supplier’s country, VAT rate, delivery terms, and lead time. Familiarize yourself with the business culture of different suppliers, especially when dealing with international partners.
Receiving stock can be a complex process, impacting your ability to fulfil orders. It is advisable not to offer products for sale until they have been received and processed correctly. Be prepared for variations in delivery times and track shipments to stay informed. Create temporary product listings but leave them unpublished until stock arrives.
For new ranges, have as much information ready as possible. Load up, but leave unpublished your product listings. Get temporary product imagery sorted using the product samples. Make sure you have all the product specifics to hand (size, weight, colours, bar codes, “suitable for”, etc.). If you can create product descriptions for products that you’ve not even received yet, then you will be at an advantage. After receiving and reviewing the products, you can always enhance the descriptions and photography.
When stock does arrive, it is absolutely vital that you have the products checked over for damage and accuracy. Avoid assuming that you will receive what you have ordered – this could cause major issues when you incorrectly set stock levels.
Monitoring Stock and Sales
Products will sell at different rates, and steady sellers may be complemented by sporadic, high-demand items. Estimate whether restocking certain items immediately is worthwhile or if waiting for a full range to reach the reorder point is more cost-effective. Consider this as an opportunity to expand your product range.
Pro tip: Time to think a bit laterally. When you get products back in stock, wouldn’t it be great if you could monetise all that missed opportunity when they were out of stock? This is where you can get your website setup to allow people to register for notifications when stock returns.
By having this setup, as soon as your products show as instock on your website they will be automatically notified.
As your business grows, the time and effort required for packing orders, responding to customer emails, and sourcing new stock can become overwhelming. Recognise the pain points and inefficiencies, and consider outsourcing fulfilment functions to maintain professionalism and accuracy.
There comes a time…
At a certain time, and this will be unique for every eCommerce business owner, when the pain points become too painful. When mundane tasks become overwhelming. When you lose passion for packing orders and fulfilling them.
At this stage in your company’s development, it is absolutely essential to outsource those functions and concentrate on what you get excitement from and what adds value to your business. Not loving part of your business will show. Customers will pick up on it and they will respond.
The tips above have all been about improving efficiency, profitability, and meeting customer expectations – and there is nothing more fundamental in that philosophy than the accurate and timely fulfilment of orders.
Of course, this is the Cloud Fulfilment blog; our objective is to raise awareness of our own solution. It is important to recognise, however, that the reason we’ve invested a significant amount in our technology and logistics infrastructure is that we know all too well the problems online retailers face and that a robust, flexible, and complete solution can be developed to ease the problems you face.
Implementing effective inventory management practices is vital for the success of an eCommerce store. Whether exploring new products, managing stock quantities, or streamlining fulfilment processes, each step contributes to overall efficiency and customer satisfaction.
For a comprehensive understanding of Cloud Fulfilment’s solution and to explore 3PL costs, you can request a free quote using our e-fulfilment pricing calculator. The tool is user-friendly, transparent, and requires no sign-up or registration. If you prefer personalised assistance, our in-house experts are ready to help – contact us today.