Future-Proofing: How to Manage Inventory for Online Store in Australia

What is inventory management for an online store?

Inventory management for an online store is the process of overseeing and controlling the flow of goods within the business. It involves tracking the movement of products, monitoring inventory turnover, and optimizing replenishment to ensure products are always available. 

The goal of inventory management is to minimize the cost of holding inventory by determining the optimal times to replenish products or purchase more materials for manufacturing. 

Effective management techniques on how to manage inventory for online store include leveraging technology for real-time tracking, implementing demand forecasting methods, and integrating sales data to make informed decisions on inventory levels and replenishment strategies.

Benefits of inventory management

Whether you’re a small business or a large company, inventory management helps your business achieve several important goals:

• Avoid Spoilage: If you’re selling products with expiry dates, managing inventory helps you avoid unnecessary spoilage by optimizing inventory control and ensuring products are sold before they expire.
• Avoid Dead Stock: Deadstock refers to items that won’t sell because they’ve gone out of season, out of style, or become otherwise irrelevant. By adopting a diligent inventory strategy, you can minimize dead stock and reduce losses. Additionally, monitoring inventory levels helps prevent overselling or accounting for phantom inventory, which can lead to customer dissatisfaction and lost sales.
• Save on Storage Costs: Warehousing costs fluctuate based on the amount of storage you require. Storing too many products at once or holding onto items that are difficult to sell increases these costs. Effective inventory management helps you avoid excess storage costs, saving money.
• Improve Cash Flow: Inventory affects sales (by determining what you can sell) and expenses (by dictating what you need to buy). Both of these factors influence your business’s cash flow. Better inventory management leads to improved cash flow management, ensuring you have the necessary funds available for other business needs.
• Optimize Fulfillment Good inventory management improves order fulfillment by ensuring products are available and ready for shipping. Techniques like inventory distribution, holding stock in multiple locations, placing products closer to customers, speeding up delivery times, and reducing shipping costs. It also ensures a seamless return process, with usable inventory quickly reentered into circulation.

Implementing these practices on how to manage inventory for online stores can lead to significant benefits for online stores in Australia, helping businesses reduce costs, improve efficiency, and enhance customer satisfaction.

Watch more: Elevate Your Business: Top-Tier eCommerce Solutions in Australia

How to Manage Inventory for Online Store in Australia – Step-by-step Guide

Effective inventory management for an online store in Australia involves several key steps to ensure you have accurate records, optimize stock levels, and meet customer demands efficiently. Here’s a step-by-step guide:

Create a Centralized Record of All Products

Start by listing all your products in a single, organized system. This record should include:

• Product name
• Stock-keeping unit (SKU)
• Brand
• Variables such as size, retail price, product category, lot number, location, and expiration date.
• Vendor and vendor SKU
• Wholesale cost
• Minimum reorder amount
• Economic order quantity (EOQ)
• Case quantity amount
• Inventory on hand
• Reorder lead time

Include product images and descriptions to assist staff in identifying items, which is especially crucial for ecommerce. When adding new products, immediately enter them into your inventory record. Update details like vendor information or wholesale costs as they change. 

Establish clear policies for entering inventory, specifying who is responsible and when updates should be made. Rich, detailed data is the best strategy on how to manage inventory for online store to enhance the effectiveness of your retail inventory management system.

Identify Stock Location

In Australia’s retail industry, geographic vastness presents a significant challenge. Customers can be found in bustling cities like Sydney or remote Outback areas.

For small businesses operating a single store, inventory location recording is straightforward, typically involving display areas or a stockroom. However, retail chains with multiple locations and omnichannel sellers manage inventory across warehouses, distribution centers, transit, stockrooms, and store shelves.

These locations often include specific sections, shelves, and racks. Effective practices on  how to manage inventory for online store are crucial to avoid misplaced or overlooked products, which can lead to missed sales and revenue loss. Utilizing technologies like radio frequency identification (RFID) tags, barcodes, and labeled categories and department codes helps automate and streamline inventory mapping processes.

Conduct regular and accurate stock counts to maintain inventory accuracy

Periodic counts should consider factors like shrinkage, damage, defects, and returns to prevent discrepancies. A retail inventory management system simplifies this process by allowing you to verify existing data, focusing primarily on identifying deviations. 

The frequency of counts depends on the complexity and scale of your business, as well as the type of inventory management system employed. Experts generally advise conducting inventory counts at least once a quarter, with some businesses opting for daily counts of specific stock parts. Techniques such as physical counting and cycle counting are commonly used for this purpose.

Integrate sales and inventory data within your retail management system. 

This integration provides insights into sales velocity—how quickly products are moving—and identifies slower-moving items. Utilize this information to optimize inventory levels, determine reorder points, and strategize promotions or discounts effectively.

Moreover, integrating sales and inventory data facilitates strategic decision-making in promotional activities, which is essential for how to manage inventory for online store. You can identify opportunities to run targeted promotions or discounts on slow-moving items to stimulate sales and clear excess inventory. Conversely, for high-demand products, you can strategize pricing strategies or bundle offers to maximize revenue.

Create a Purchasing Process

In Australia, seasonal trends differ, necessitating a structured purchasing process. Schedule regular reviews of sales and inventory data to proactively manage stock levels. Electronic systems can automate alerts for reorder points, ensuring continuous sales without stockouts. 

For manual systems, track sold-out or low-stock items and prioritize purchases based on profitability, popularity, and lead times. Generate purchase orders accordingly to maintain seamless operations.

Establishing a Markdown and Promotion Process

Establishing a robust markdown and promotion process is essential for managing product sales effectively, especially in response to changing trends, obsolescence, or seasonal variations. Markdowns should be implemented strategically to liquidate slow-moving inventory, generate cash flow, and create space for more profitable items. 

Planning promotions in advance is crucial to ensure you have ample stock to meet customer demand while maximizing the impact of your marketing efforts. This proactive approach not only helps in maintaining inventory balance but also enhances sales performance and overall profitability.

Creating a Stock Receiving Procedure

During the receiving process of how to manage inventory for an online store, it’s essential to accurately verify incoming orders and update inventory records promptly. Without a clear procedure, errors from suppliers or transit damage can lead to issues such as stock shortages, overpayments, or dead inventory. 

Verify each delivery against the purchase order, count cartons and pallets, and document any discrepancies or damages. Address any issues with suppliers promptly. Update inventory counts immediately upon receiving goods, and if needed, apply price tags or barcodes. Consider adopting perpetual inventory management for real-time inventory updates upon receipt.

Watch more: Top 5 Implementation Services Excellence in Australia

Creating a Returns Procedure

Without a clear process for handling customer returns, businesses risk holding unsellable stock or missing opportunities to reintroduce items for sale. When a customer initiates a return, assess the item for damage or defects. 

Depending on its condition, determine whether to repair it, write it off, or return it to the vendor. If the item is in a sellable condition, update inventory records accordingly and return it to its designated location (whether physical store shelves or eCommerce inventory). Understanding how to manage inventory for an online store includes establishing efficient return processes to optimize inventory levels and ensure smooth operations.

Establishing a Dead Stock Procedure

Excess inventory can tie up capital and impact profitability, especially dead stock like damaged goods, incorrect deliveries, or seasonal leftovers. Begin by categorizing these items and removing them from active inventory. 

Designate a specific area to store dead stock and establish a regular schedule for review and management (e.g., weekly, monthly). Promptly initiate return processes for items eligible for vendor credits. For damaged or defective goods, adhere to supplier policies for returns or notifications. Depending on the product, consider selling excess stock through outlets, donating, recycling, or responsibly disposing of it.

Selecting Inventory KPIs

To measure the effectiveness of methods on how to manage inventory for online store, identify and monitor key performance indicators (KPIs). Essential metrics include profitability, total inventory value, sell-through rate (how quickly inventory sells), and turnover rate (how often inventory is replaced). 

Understanding how to calculate and interpret these KPIs is crucial for optimizing inventory strategies. For detailed examples and further guidance, refer to comprehensive resources on inventory management KPIs.

Why should I choose SmartOSC for strategies on how to manage inventory for online store? 

Choosing SmartOSC for strategies on how to manage inventory for online store can be beneficial for several reasons:

• Expertise and Experience: With over 15 years in the industry and a team of over 1000 IT experts globally, our deep expertise and extensive experience in eCommerce and inventory management solutions set us apart.
• Tailored Solutions: We offer customized strategies that align with your specific business needs and goals. Whether you’re dealing with multi-channel selling, complex inventory structures, or seasonal fluctuations, we can provide tailored solutions to optimize your inventory management processes.
• Scalability: Our solutions are designed to scale with your business growth. Whether you’re a startup or a large enterprise, we can adapt our strategies to accommodate your evolving inventory management requirements.
• Global Presence and Support: With offices in 9 countries, we offer global support and insights into international eCommerce trends and best practices. Our global presence ensures we can provide localized strategies and support as needed.
• Proven Success: At SmartOSC, we have a track record of successful eCommerce implementations for leading global organizations. Our ability to deliver measurable results and drive business growth through effective inventory management strategies is well-documented.

Choosing SmartOSC means gaining access to industry-leading expertise, innovative solutions, and dedicated support to optimize your online store’s inventory management, ultimately enhancing your business’s efficiency and competitiveness in the digital marketplace.

Conclusion

For Australian businesses, mastering inventory management goes beyond mere logistics—it’s a critical strategic imperative. By adeptly employing methods on how to manage inventory for online store such as demand forecasting, setting service level benchmarks, and conducting constraint analysis, businesses can finely tune their inventory levels. This ensures they meet customer demands efficiently while effectively managing costs. 

This strategic approach not only enhances customer satisfaction but also cultivates business growth and long-term sustainability. If you seek more than just advice, explore the distinctive solutions that SmartOSC provides to expedite effective inventory management and enhance eCommerce capabilities. Contact us now!