Why Stock Control is Important for eCommerce Success
Online shopping has been trundling along nicely for several years. Forward-thinking businesses adopted the inevitable shift to cyberspace and tweaked their processes accordingly. However, along came the Big C, which accelerated the shift to eCommerce and triggered a global leap into the online space.
So, now that we are here and have a growing digital footprint, we may need to rethink our processes and systems to accommodate this new way of doing business.
One factor that has come under scrutiny is that of stock control.
On the surface, one would think this is one of the more basic tasks associated with eCommerce success. Yet, it has proven problematic for many who are still finding their virtual feet online.
What is the Value of eCommerce Inventory Management?
Logic dictates that you need to know what you have available to be able to fulfil orders. In addition, having too much stock on hand can end up costing you money in storage fees or damages.
Stock control has always been seen as a job title or a dull task forced into every quarter. We want to change this to understand that controlling your stock, or stock management, is not a task as much as it is an essential business process.
Another factor to throw into the mix is how customers now engage online. Omni-channel marketing means that sales can come from several different platforms, and these need to tie seamlessly together.
With this in mind, the necessary steps to smart stock systems and effective inventory control systems become clearer.
Planning and Budgeting for Success
Effective stock management is not only about what you have in the storeroom. A critical element for business success lies in knowing what you have sold, over what period, and what is still gathering dust.
This takes us out of the realm of counting widgets and places us firmly in the world of knowing our customers and making smart purchasing decisions.
Anyone who has to balance the notoriously tricky task of planning and ordering stock with trying to accurately predict customer demand knows the struggle. Seasonal shopping habits are easier to predict after a year or two in business. But understanding buyer behaviour and how it relates to economic, political, and social elements is a science on its own.
Stock and Storage Costs
A warehouse or storage unit is a necessary part of eCommerce life but these costs can add up quietly over time. Carrying too much unnecessary inventory may eventually require a larger unit at higher costs, increasing security requirements, maintenance costs, and the added possibility of damages and theft.
If your products have a short shelf-life, such as fast-moving electronic goods, then you will find that the longer they sit in their boxes, the less valuable they become. This ongoing battle against depreciation is another matter that requires careful attention.
Finding the balance between storing what you need and having fast-moving stock readily available is key. And of course, this comes from analysing your eCommerce stats.
Enhanced Customer Experience
Our customers are more demanding now than ever before. They are more savvy and aware of the available technologies that keep the world turning. This means that they want it all, and they want it now, and there is very little wiggle room.
What does this look like as it relates to stock control and your eCommerce store?
Online shoppers are familiar with an Out of Stock sticker on a product. It’s frustrating, yes, but not a deal-breaker. Things tend to go south, though, when they place an order, pay for it, schedule delivery… and then get an email two days later saying that there is no stock. Now we’re dealing with refunds and trying to put out fires with an irate customer whose expectations weren’t met.
This is an excellent way to lose a customer.
It shows them that you are not on top of your business, that you aren’t aligned with your customers, and maybe erring on the side of unprofessional.
Poor inventory management can cost you sales and customers.
Effective Systems for Happy Customers
Having the correct stock procedures in place from the start of your eCommerce journey, and tying them into your CRM and accounting packages will save you so much time and significantly reduce your headaches. Automating essential systems just makes sense.
These systems do far more than just churning through the donkey work. Those of us who have had a brilliant online shopping experience know that what made us happy (besides the product itself) was that we were confident in the company.
Their website was professional and easy to navigate. Their checkout was simple and secure. Their communication was fast and accurate, and they kept us up to date with the entire order right up to delivery to our door. The complex array of automated inventory control linked into their accounting and banking system and integrated into their CRM tool, which all served to keep us apprised of our order.
Inventory Control Techniques for eCommerce
How can we best get a handle on the ebb and flow of our stock? As our eCommerce business starts to grow and we make use of different platforms and affiliates, how can we scale effectively so as not to drop the ball?
There are several techniques that you can choose from depending on your product. It’s worth exploring these to see what makes sense for you.
ABC Analysis
This inventory control technique focuses attention on understanding the value of your products as they relate to your business. While some items may be worth more than others in monetary terms if you only sell one every quarter. They aren’t as valuable to you as the faster moving low ticket items.
This technique is loosely based on the Pareto Principle (80/20 rule), which, in commerce, translates into 20% of your products accounting for 80% of your income. Analysing your products carefully will allow you to divide your entire stock into three main segments, highlighting which products affect your business the most.
This gives you the information you need to focus your attention on what needs constant restocking, what to keep a close eye on, and what you may want to discontinue.
Set Par Levels
Setting par levels is a simpler technique and is usually based on sales history. Essentially this system entails setting a minimum stock level for a particular product, at which point it needs reordering.
The beauty of this process is that it provides a straightforward structure that anyone can follow when the need arises. There is no complex hierarchy; orders can be placed immediately on high-priority items by anyone in the organization without requiring them to adhere to an ordering procedure.
It’s wise to regularly re-evaluate this to ensure that your information is still current and relevant to your upcoming business goals.
What About Inventory Optimisers?
We love tech, and with the advent of AI, it seems that nothing is impossible. Several software tools are available to assist you in finding that elusive balance between over and understocking.
For example, certain systems will analyse your historical data, taking into account your lead times, budget, and safety stock levels. These insights allow it to spit out useful information on the best time to order products, volume suggestions, and seasonal factors.
Other enhancements could include discount recommendations based on time of year or stock levels. This information can aid in moving older stock before it depreciates and clearing our valuable warehouse space.
Now, wouldn’t that be useful to you?
The Simple Necessity of Stock Control Systems
The purpose of being in business is to make money and create a stable income that can withstand the economic pendulum of our current world. Growing your business is one thing, but ensuring that your stock control systems are up to the task of scaling with the rest of your business needs to come under the spotlight.
With the right inventory management plan, you will quickly see when you are understocked and cannot fulfil orders or when you’re overstocked and haemorrhaging money on storage and depreciation.
With the best automated systems, you are well on the way to a seamless and accurate system that allows you to keep your finger firmly on the pulse of your business and ensure that nothing falls through the cracks.
This plan, linked with your smart accounting and CRM systems, creates an eCommerce success story. Contact our team for more information.
