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  August 29th, 2022 | Written by

5 Ways Ecommerce Sellers Can Overcome the Top Inventory Management Challenges

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Inventory management can make or break an eCommerce business’ success.

With efficient inventory practices in place, eCommerce businesses can identify which and how much inventory to order at what time, helping to ensure smooth operations and happy customers. 

However, there are a number of factors involved in managing inventory properly, and if not executed correctly, they can pose major challenges for eCommerce businesses. The following factors all influence eCommerce inventory management and need to be paid attention to:

  1. Supplier relationships: Inefficient inventory management can lead to strained relationships with suppliers and cause your business to be moved to the bottom of your supplier’s priority list when they send the next batch of products.
  2.  Funding: Maintaining necessary cash flow is crucial in order to manage inventory. As the market continues to become more and more competitive, eCommerce sellers may struggle to raise capital that helps maintain inventory.
  3. Process automation: An increased reliance on manual processes increases the probability of errors in managing inventory.
  4. Data-backed insights: To make informed, data-driven decisions, you need to accurately forecast your inventory needs by tracking and crunching historical sales data.
  5. Volatile demand: You need to be able to inform your suppliers to increase or decrease the order quantity accurately to keep up with fluctuating demand. 

With this in mind, below are five ways to help you overcome the challenges associated with inventory management and set your eCommerce business up for success.

1. Maintaining relationships with suppliers

It will be difficult to keep up with the demands of your customers if you cannot restock your inventory as fast as it runs out.

This is where having a good relationship with your suppliers and manufacturers pays off. You need to be in their good books to be on top of their priority list.

Paying your suppliers timely, maintaining transparency, and establishing a personal rapport is crucial in strengthening your relationship with your supplier.

To ensure you are managing relationships with your suppliers as is necessary, consider using supplier management software. With such a tool, you can manage supplier payments, check invoice status in real-time, promote supplier self-service, and increase transparency.

2. Adopting revenue-based financing

Maintaining cash flow to keep up with operational expenses when scaling can be difficult for eCommerce sellers. One of the main reasons for this is that the financial requirements of eCommerce sellers depend on their revenue which, in turn, depends on multiple factors like seasonal demand, supply chain roadblocks, and so on.

This poses a potentially detrimental challenge to budding eCommerce sellers who have a promising business strategy but lack the necessary cash on hand to keep up. 

8fig, an eCommerce funding platform, can help solve this challenge by providing equity-free capital injections based on supply chain analysis. The platform helps sellers forecast their inventory’s lifecycle in the supply chain in order to help allocate funds accordingly. Based on a business’ projected needs and unique requirements, it can receive the appropriate funds to get over the hump, setting them up for rapid growth.

For example, Glitch Energy, an energy supplement brand, scaled to 7-figure revenue with the help of 8fig’s growth plan while retaining complete ownership.

3. Using AI-based automation and warehouse management

The warehouse marks the beginning of the fulfillment process. Proper warehouse management is important for many reasons, such as:

  1. Ensuring your inventory is updated.
  2. Reducing fulfillment mistakes and do-overs.

Now, global eCommerce sales are predicted to increase to $7.783 trillion by 2025 from $5.545 trillion in 2022. This increases the pressure on warehouse managers to keep up with the rising demand while ensuring smooth operations in warehousing processes.

Luckily, modern software tools help you automate the entire process. By leveraging data, artificial intelligence (AI) can guide robots to perform warehouse tasks with greater precision.

For instance, Newegg, an online computer store, has automated its warehouse to keep up with its increased customer demands while minimizing errors.

4. Leveraging predictive analytics for demand forecasting

Understanding parameters such as current product demand, customer segments, and product categories, among others, will help you map which products need restocking. This can be done using predictive analytics.

The roadblock here for budding eCommerce businesses is that they might not know where to begin or what data to track.

Here too, there is software that can help. In this case, Glew, an eCommerce analytics software, would be a great option. Its platform will help you track over 300 KPIs (including inventory analytics KPIs such as inventory velocity, sell-through rate, depletion days, holding cost, etc.) on a custom dashboard, helping you optimize your inventory better.

5. Planning inventory to stay on top of the demand curve

Just like many other facets of an eCommerce business (such as website traffic, conversions, etc.), inventory also needs real-time monitoring. That’s because inventory changes with every order, and to give customers the right information about their desired product, it needs to be up-to-date.

But inventory planning can be tricky because it is connected with other eCommerce processes such as fulfillment, warehousing, and returns, among others. Those eCommerce processes deal with a mix of customers, suppliers, and delivery partners — the seller being at the center — making inventory planning complex.

In 2017, 34% of businesses shipped a product late because their inventory wasn’t accurately updated, and this continues to remain a challenge today. As of 2022, the ratio of inventory to sales is around 1.25, suggesting that there is still room for improvement.

One way to overcome this challenge is to invest in inventory management software that can help you stay on top of the demand curve. A great example is Mountain Top Leather, a company that makes quality leather goods, which increased sales by 91% after adopting the inventory management tool from ecomdash.


To recap, as an eCommerce seller, you will likely encounter many inventory management challenges with regards to:

  1. Maintaining healthy relationships with suppliers
  2. Securing adequate funding
  3. Automation of warehouse
  4. Leveraging data for market analysis
  5. Updating inventory as per demand

Fortunately, you can overcome these challenges by using the right services and software as we have explained above.

We hope this article assists you in taking the right steps towards better eCommerce inventory management.