Ecommerce Inventory Optimization 101

How is your ecommerce organizing its inventory now? Do you use pen and paper to track where everything is, or have you made the leap into online inventory management?

When it comes to inventory, the simple advice other ecommerce owners give is to be organized, seek efficiency and go digital  with an online inventory. The benefits of an optimized online inventory include higher item tracking efficiency and less time spent managing stock.

Online Inventory Optimization

What an optimal inventory that uses Software Automated Management and one that uses pen & paper manual management have in common is that they're organized and efficient. This will stand true for time beyond time. The Ancient Egyptians and Chinese were doing it. Here you are today, planning to do the same with a tablet or touch-screen apparatus of choice.  If you're the kind of person who likes paying attention to detail and good at putting things in their assigned spot, you'll probably love this! If you enjoy increasing your profits and lowering your costs, you'll probably love inventorying, too.

An Optimal Online Inventory is different to its paper counterpart in speed and simplicity. An online inventory will most likely be faster and easier to use than a physical paper binder.

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In this post, we'll explore simple answers to three questions: why have an inventory, what to inventory and how to inventory. If your ecommerce has anything to do with selling physical items online, chances are high that having an online inventory will be good for you. Maybe you already have one. In that case, I hope these tips serve as ways to optimize your already established online inventory system. You might already be following some of these tips, and maybe you’ll discover some you’re not.

In general, good inventorying is guided by common sense and these guidelines can help you keep it organized.

Why Have an Inventory?

Now is a good time to consider benefits of tracking your inventory.


To Manage Stock Levels: Having a record of items involved in delivering, ordering and storing is important if you value certain business decisions. You could save money while still delivering your products on time, cease to over-order items, and free space for other items.

To Anticipate Demand: The market behavior of some items changes based on cycles: time of year, seasons, holidays, day of the week, and so on. If you have the last cycle’s inventory record on a given item’s amount of orders, then you can make an informed decision on how much to buy this time around.

To Control Theft and Loss: Keeping track of your goods and equipment as part of regular business operations shows you're paying attention. This detracts theft and minimizes losing items. If loss or theft does happen, you'll have information on when and where it happened.

For Insurance: What would your insurance company want to know in case of misfortune? An off-site inventory list of your assets and items is solid data on what you had.

For Accounting: A record of your inventory can be used to provide an accountant with a value of your goods at the end of the fiscal year.  If this is an annual task that you're performing, it’ll be quicker and easier if you already have an inventory list.

Ease of Location: If you know exactly where your items are placed, you’ll be able to locate them faster cutting the wasted time you’d otherwise spend locating the item. You can also reorganize and optimize your item-location distribution with this data.

What are you Inventorying?

Merchandise: Probably the most obvious thing that you want to be counting in your inventory.

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Maintenance Items: Your ecommerce may haves things it uses to run the business. This is any tool or thing that is used to commercialize and fabricate merchandise that is in your control and not for sale.

Raw Materials: Any of the ingredients that will be spent to fabricate the finished merchandise. This could be relevant to your ecommerce if you participate in the fabrication process of your product. If you have your own packaging, you may keep track of that in your inventory as well.

Equipment and Furniture: These are your ecommerces hard assets. You may decide to keep track of them as well to monitor damage, theft, or usage, for accounting purposes or to keep a record in case of an unexpected disaster.

How To Organize Your Inventory

Location Names & Location Labels that are easy to read and unique

The point of labeling storage spaces with Location Names is to enable people to stock items in the right place, spend less time looking for things and give every storage area an original name. Take advantage of any open space you have to store items but be sure to name and label every space used by your ecommerce.


Item Numbers that are unique and brief

People will be better at recognizing what stock there is on an item and what items need to be organized if they have specific, original Item Numbers. This also makes it easier to find similar items or to search for item reports in an inventory system. An item’s number can be 5 to 6 characters in length, most companies typically use letters and numbers. These should be easy to distinguish at a glance. An Inventory Software is easier to use when items have unique, brief, alpha-numerical descriptions. You could also try going an extra step further and use bar codes.

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Units of Measurement

Item stock level, shipping quantities and ordering quantities are easier to interpret when Units of Measurement are used comprehensively and consistently. They fit in their own area, apart from the description provided by the Item Number. These can be units like pieces, pounds, boxes, bags, etc.


A Starting Count that’s done well

At this point, you’ll have to make a physical count of every item in your stock. If your Inventory has Location Names identified with Location Labels, its Item Numbers are clear and it also has consistent Units of Measurement, then counting every item will be much quicker, easier, and less fallible. The best way to count stock level is to lay out a counting plan and then closely following it step-by-step.


Inventory Software that tracks activity

It’ll make it easier to track your inventory, give access to your team, have statistics on activity and keep an accurate record with good Inventory Software. An online stores’ best option is to use software designed specifically for ecommerce. These are capable of automatically uploading products on your website or prefered channels, like Amazon or Ebay. They may also have the ability to automate order fulfillment and updating the stock level.


Good Policies and People who know how to follow them

The most critical element in optimizing your inventory system are the people who work with it. Writing down policies is one of the best ways to make sure they get followed. It doesn’t matter what software you use or how you organize items, if you or the people you work with aren’t consistent on how inventory is managed, the shop’s Online Inventory will fail.

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You may still find it handy to use pen and paper, or an excel sheet, before uploading data to an inventory management software. There’s always room for improvement when using physical space and labeling. There are several online inventory systems available. Choosing the optimal one for your ecommerce is also part of the optimization process.

Another way to optimize your inventory is to hire a good Third Party Logistics company (3PL). A 3PL provides inventory management, among other logistical services that are useful for an ecommerce.


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