February, 5th 2017 | 6 min read

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Introduction - inventory management

Inventory management is the system that tracks and manages your products all the way from the supplier to your warehouse, keeps tabs on your stock, and extends to when it is shipped out to your customers. It’s essential for e-commerce merchants to have an easy-to-use system that gives a birds’ eye view of your inventory and the status of each item. If you don’t, you can run into all sort of costly problems, such as running out of inventory, having too much stock at hand, not knowing exactly where each item is at a given time, and so on. So having established that it’s a part of the e-commerce puzzle that you need to solve, let’s take a deeper look at what exactly an IMS is, the features you should look for, and how it all works. 

Inventory Management Demystified

Firstly, most of these e-commerce IM solutions apply primarily to those who store their own merchandise in a warehouse, including a solution such as Amazon FBA. Some IMS’s also can be quite useful for those using the dropshipping model, even if they are not actually storing their own inventory.

Inventory management is a tool to help you maintain the most profitable levels of stock at a given time. If you have too little, you run the risk of not being able to fulfil a sudden series of orders, which is one of the most costly mistakes for e-commerce sellers. Being out of stock will not only lose a sale, but customers often won’t return, and if you are using a marketplace like Amazon, your status as a merchant can even be downgraded, resulting in lower visibility. Bad karma! You need a system that will alert you to when you need to restock well in advance. Various systems can be set up to do that, including simple alerts when stock reaches a certain threshold. You will need to allow sufficient time to restock from your supplier, of course.

On the other hand, over-stocking can be equally harmful, as too much money is tied up in inventory, and storage costs can eat into your profits. A good IMS will enable you to have a clear view of whether your stock is in the healthy range.


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Features of a Good Inventory Management System

  1.  Synchronization

Any IMS worth its salt will have incorporate synchronization across all channels. That means that if you sell, for example, on both Amazon and on your own Shopify-powered website, that inventory will be tracked in a centralised fashion. Sure, a hosting platform like Shopify has its own system for inventory, but it won’t necessarily be able to incorporate different channels.


  1. Real-time Updates

Another feature to look for is automated realtime updates, where arrivals from multiple suppliers are fed into multiple channels in real time. And at the other end, you might have multiple fufilment services, for example if you have orders fulfilled by FBA as well as another solution. If you use multiple suppliers and/or multiple fulfilment providers, things can get complicated and you need a smart automated system that can handle it and provide a convenient overview for you to keep an eye on stock and orders. Look for a product with a consolidated view of stock levels and sales across all channels, as well as tracking at all points. A well-designed dashboard and alert system will take a lot of the stress from monitoring your business.


  1. E-commerce Integrations

When shopping around for the best system for you use, make sure that you are aware of the various SaaS systems that have been developed specifically for e-commerce. There are also many solutions available which are more appropriate for traditional and larger businesses, but you are best served by one that will integrate with popular marketplaces such as such as Amazon and eBay, and platforms such as Magento, Shopify, WooCommerce, etc. There are many to choose from and the best are constantly being upgraded with new integrations.


  1. Dropshipping and Other Alternate Supplier Intelligence

Depending on your business set-up, you may benefit from some sort of dropshipping integration, and some sort of “surge” back-up system. This is when additional suppliers or perhaps a dropshipper can be called into play when stock drops unexpectedly low or a supplier is unable to send goods. The more advanced software solutions can incorporate this kind of scenario.


  1. Forecasting Demand

Part of maintaining the right quantities is to forecast demand. Demand can vary according to a number of factors:

  • Time of year. Many businesses experience far higher sales in the final quarter of the year, due to the holiday season, and there may be other seasonal spikes related to the end of the financial year, the beginning of school, and so on. Know your market and the seasonal factors that influence sales.

  • Holidays/Sale days. Certain days, not only Christmas or Mother’s Day but more recently with Black Friday and Cyber Monday, strongly influence sales. Again, it depends on your particular market. 

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  • Overall growth in your market. You may be involved in a fast-growing or even a “fad” market in which you predict strong increases in sales volume.

  • New product releases. If you sell accessories or related products, such as phone cases, be prepared well in advance of important new releases.

Demand predictions can be built into your inventory management system in order that you won’t be left unprepared.



Inventory management can be a major bottleneck in your business systems. You need the right information, you need it in real time, and you need integration and accuracy across all of your channels and platforms. The good news is that there has never been a better range of SaaS apps and software solutions, and they can make business information and reporting available with a lot of convenience. Drive efficiency and lower costs with the right software solution and you will be well-placed to take advantage of e-commerce opportunities.


Appendix – List of E-commerce Inventory Management Solutions

The following is a small selection of the available options. Note that we do not endorse or have a business relationship with any of these software providers. The list is a good place to start to compare some of the differing features and pricing plans available right now.









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