Benefits of inventory management for your e-commerce store

Published: Fri 24 Feb 2023, 9:48 AM

Last updated: Fri 24 Feb 2023, 9:50 AM

Online presence and social media of course matter for modern-day businesses. But your e-commerce inventory management system plays an equally vital part.

By Deepak Jain

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Now, what is inventory management?

Inventory management aims to maximise product availability and cut production costs, and it lets businesses keep tabs on inventory levels so they can make sound production decisions. Once you know where each product is, you can also keep an eye on the levels at a granular level.

What is the importance of inventory management?

Managing inventory is one of the most challenging aspects of running an e-commerce business, but it is critical to its success.

● It makes sure you always have the right products available. It can help you avoid stockouts, costing you sales and making customers mad.

● Managing your inventory well can help you control your costs. It keeps you from overstocking, which can tie up your capital.

● Inventory management can help you make better product mix decisions. You can use it to figure out which products are selling well.

● Good inventory management can improve your customer service. Consequently, you'll get more customers, and they'll tell their friends and family.

Seven benefits of inventory management systems

Increased visibility

A reliable inventory management system will give you a clear picture of your entire inventory at any time and help you spot emerging supply chain issues in real-time.

Manage orders instantly from any place you're selling online with real-time insights and comprehensive analytics. Take advantage of trends, spikes in demand, and data-driven forecasts.

Extend customer visibility

Sound inventory management systems make tracking orders easy for customers so that they can track them in real time. It turns out that 72 per cent of consumers abandon their shopping carts due to shipping info.

Fewer errors and discrepancies

An inventory management system can reduce errors and discrepancies. Manual inventory tracking methods, such as spreadsheets, are prone to human error. A lack of accurate inventory counts can lead to excess inventory and stockouts. Customer service errors and delivery errors can also lead to excess inventory.

Having fewer stockouts

The more accurate your inventory is, the less likely you are to oversell, which leads to stockouts. Stockouts are more than just annoying; they're expensive.

You won't have stockouts or backorders anymore with centralized inventory management. You'll know when to replenish stock and what to do in case of supply chain disruptions.

Analytics from an inventory management system can also help you make better decisions (such as turnover rates and ABC analyses).

Operational efficiency

It would be helpful if your staff spent fewer hours every week doing manual work. With automated inventory management systems, you save time, avoid human error, and improve accuracy.

Real-time warehouse data systems can help you maximise your warehouse space if you have bulky, difficult-to-store items. You can pick, pack, and ship items more efficiently with an inventory management system. You can also figure out sales trends, so you don't overstock.

Check if your inventory management vendor integrates with your other e-commerce tools, for example, sales channels, CRM, POS, customer service software, and 3PL.

Accurately plan and forecast inventory

You need accurate reporting to run a successful online business. Historical and seasonal data will help you figure out sales patterns, and inventory management will ensure you have the right products.

You'll make better business decisions through better forecasting and planning. Use inventory management software to improve marketing, budgeting, and demand forecasting. Integrate your marketplaces with shipping and third-party logistics (3PLs). It'll be easier for your team to switch between paid and organic if they know what to promote.

Improved supply chain predictability

Supply chains have become unpredictable, but a good inventory management system can help retailers diversify their suppliers and improve their supply chains.

Multi-supplier systems minimise unexpectedly long waiting times for finished products if one supplier can't deliver. Automated inventory systems also account for known variables, like peak season fluctuation.

A supply chain automation system makes it easier to fill orders faster, at a lower cost, and more accurately. An inventory management system lets you track your suppliers' performance to find cheaper suppliers with better quality.


Managing inventory can help you gain visibility, save money, increase profitability, and improve efficiency. It's easier to focus on marketing when you automate inventory management. Make sure you have the right tools and systems in place.

Deepak Jain is a freelancer content writer,

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