Not Just the Warehouse: How Smart Inventory Management Improves Your Ecommerce Overall
Once you start using Smart Inventory Management (SIM) in your ecommerce, you’ll notice lots of benefits mostly surrounding inventory control and workflows. But it can improve some other aspects of your business as well, like marketing, margins, and accounting.
It’s all about data, and this moves far beyond the limitations of preventing out-of-stocks by reordering goods faster. While there are software opportunities, such as using SIM to integrate your warehouse and ecommerce platform to allow customers to see what’s available and shipping times 24/7, we’re looking at bigger business processes that can have an impact on company culture, leadership, and communication.
These are some of the biggest bangs for your buck because they help you keep the business healthy.
Saving money from inexperienced purchasing decisions
One benefit of SIM technology is that you will have up-to-date access to current inventory information. This will prevent the purchase of unnecessary amounts of additional inventory. You will save money by only making purchases you will need.
You are also able to save money by being smarter about how inventory is stored. Locating goods at the proper places within your warehouses or strategically around the country in partner fulfillment locations can save you significantly on the time it takes to ship an order and the cost a shipment takes to reach your average customer.
In the warehouse, SIM helps you move inventory to shelves that reduce walking and movement, making your team faster at getting orders out the door. For partners, SIM can help you track the data you need to get a better understanding of where your customers live and how they shop. So, you’ll be able to select warehouse or fulfillment partners located near to them and provide these locations with the right mix of goods so that they can continually fulfill orders without any risk of running out of stock.
Accurately knowing your inventory, storage costs, and more data make it easier for your ecommerce store to understand its overall health. You get a complete snapshot at the expense of goods over their lifetime in your care, especially if you link up SIM with your marketing data.
You get a 360-degree view on each item, including sourcing and production, shipment to your warehouse, storage, delivery to customers, and any returns. You may be surprised to learn what the total margins on your goods are, helping you understand what to promote and sell as well as what products it might be time to phase out of your offers.
Plus, it is in these reports that many companies first acknowledge and get a complete picture of their dead-stock: what never gets sold and just slowly eats away at your overall income.
Give leadership and your accountants the ability to understand the costs of your business entirely and discover what you can best manage and change to maintain a healthy ecommerce offering.
Developing New Sales Opportunities
One reason we really like SIM tools is that they make it easier to track your overall sales and look for patterns. Plus, you can test upsell and cross-sell efforts more easily with all this new data.
Combining your products, through efforts like kitting, allows you to leverage your products for the best return both in the immediate and the long-term. You can sell multiple items together, reduce inventory levels (and related storage costs), and even get rid of things that are sitting on shelves for too long.
Customers like it because it’s convenient for them when the products work together. If you add the right set of products, kits can make your offers more useful, less costly, or start a need to reorder from you. This is common in most industries, and one of the best examples are razors that come packaged with a series of disposable heads. The customer gets the handle and heads together and then has to go back to you to get the next set.
Returns and More
Another area to consider for your smart inventory management system heads back to the warehouse but touches on many of the other elements we’ve discussed: returned goods.
Returns present a significant problem for most ecommerce businesses. You have to figure out how to approve and process the customer’s request, handle the items themselves as they come back to you, potentially repackage and resell these, and eat much of the sale cost even if you’re charging a restocking fee.
Customers returning goods tend to be unhappy and want you to automate as much of this process as possible, and they expect an email from you to include things like a shipping label.
SIM tools can integrate with your order system to generate the information the customer needs automatically. Giving your own shipping labels within an SMI also helps you out by updating your team with package tracking data, so they know what to expect and when. You’re able to manage customer expectations and prep your warehouse, minimizing the disruption.
The same system can also record information from customers about the nature of a return, giving you a feedback loop into product development and sales, helping you adjust based on price, materials, or other information.
We’re seeing a rise SIMs on their own as well as integrated with tools like ERPs because being smarter about your inventory cuts down on costs, keeps your warehouses efficient, and makes it easier to manage your business. It’s time for every ecommerce store to start considering a smarter tech stack that includes inventory controls.
Improve Customer Service
It all comes down to customer service, one of the core differentiators in the world of ecommerce. With so many drop-shipping companies, Amazon sellers, small shops, and global partners, it can be challenging to stand out on product selection alone.
So, one way companies are building a competitive advantage is by developing best-in-class customer service. Inventory management is a core part of this even though it doesn’t seem like it. Inventory management allows you to keep filling orders and even get ahead of spikes in orders that are new or seasonal by giving you smarter business analytics.
When you’re ready to ship immediately, instead of having to wait for a new restock, customers are happier. They also like it when your returns policy and other policies are clear and easy to understand. Greater knowledge of your inventory makes it easier to control those types of concerns, allowing you to simplify any steps your customers have to take.
Run a smoother business and have happier customers just by developing better control of your inventory.
Jake Rheude is the Director of Marketing for Red Stag Fulfillment, an ecommerce fulfillment warehouse that was born out of ecommerce. He has years of experience in ecommerce and business development. In his free time, Jake enjoys reading about business and sharing his own experience with others.
2019 Trends, Logistics, and Strategies