Tips For Shopify Inventory Management
Our Best Tips For
Shopify Inventory Management
E-commerce has become a major industry in the past few years, with platforms like Shopify, it’s now easier and simpler to set up. Most online stores starting out typically choose Shopify as their go-to e-commerce platform.
Currently, the online marketplace contributes to about 10% of global commerce sales (and with the current environment, ecommerce is growing more than ever).
Shopify gives anyone the ability to create their own online store by just picking a theme, uploading products and writing their own branded copy. However, if you want to increase efficiency and manage costs for your store, you’ll have to master inventory management.
Typically, you pay for inventory with the intention of recouping those costs when you sell it. During the time it takes to sell something though, your cash is tied up. That’s why inventory management is crucial to help grow your store. If you have too much inventory of a certain product and you cannot finance additional products, your shop will be stagnant.
The Shopify track inventory basic function is alright, but today we’ll discuss our best tips for Shopify Inventory Management that you can try on top of just the basics.
Tip #1 For Shopify Inventory Management - Forecasting to Set Minimum Levels
Utilizing previous sales data will be very beneficial to predict how much a certain product may sell month to month. This is difficult to do, but over time you will begin to see certain trends - if certain products are seasonal, or if there’s steady demand every day/week. Something like last year’s sales the same week, or this year’s sales the previous month could help you plan this.
Once you know an approximate number of sales you might realistically hit for each month, you’ll know how much to order when planning for the next while.
Although this will take some upfront research, it will allow you to better plan inventory, ad spend and marketing towards that product.
Tip #2 For Shopify Inventory Management - Plan for What-Ifs
Planning for the unexpected can seem daunting and stressful. What are you supposed to do if your manufacturer is having issues? Or what if you have unexpected sales spikes? Or sudden sales lulls?
Being prepared for all the worst-case scenarios can save a lot of headache for the few times that it can happen. Preparing a list of similar suppliers, shipping options, and other contingency plans can come very handy. Your future self will thank you for it.
Tip #3 For Shopify Inventory Management - Prioritizing with the 80/20 Rule
After assessing your best sellers and forecasting your sales volumes, you may also want to have some safety stock of your most profitable products.
Some products bring in more profit than others, and while you don’t want to miss out on any sales, you definitely don’t want to miss out on those SPECIFIC sales.
Most profitable products = % of inventory that represents 80% of your profits
Less profitable products = % of inventory that represents 20% of your profits
Keep in mind that profit doesn’t mean revenues, you have to calculate how much, after expenses, each product is generating and compare between them. Stocking up on the most profitable items will ensure that those will never be low in inventory.
Importance of Shopify Inventory Management
With effective inventory management you can help reduce costs, reduce product shortages or save on storage space for too much product. In the process of inventory management, you’re also analyzing sales, producing forecasts and contingency plans. With all of these steps, your business will have a much better chance at not only surviving, but thriving.
Shopify Services for eCommerce
For more than three decades, TransAction Heroes have been providing Customer Care & Order Fulfillment Services to some of the worlds most successful technology companies. At Transaction Heroes, we provide a hassle-free way to manage inventory, ship products, and keep your customers in the loop. If you are ready to take action, get in touch today.
That's because, when you work with TransAction Heroes, your brand and our deep commitment to customer service, is all your customer will ever see. And, our identity will remain our little secret.
