So, you’ve worked hard to place your products into a variety of shopping channels and marketplaces to reach the widest audience possible and secure the most sales. You’ve optimized your product listings and images, published blog content, sent out email campaigns and are even building a stronger social media presence. You’re convinced that your customers can find you no matter where they look – on or offline.
The thing is, there’s one aspect that many people overlook that’s dragging their multi-channel business down: inventory management.
Did you know that for retailers inventory is only accurate 63% of the time?
That alone should convince you to focus on your multi-channel inventory management procedures if you want to grow your business and continue to succeed.
Luckily, we’re here with some of the most effective tips and tricks for improving your multi-channel inventory management processes, so you can make any improvements right away.
But first, let’s take a look at what multi-channel inventory management is.
What is Multi-Channel Inventory Management?
As an online merchant, it’s important your sell your products where your target audience is. After all, consumers want to be able to buy what they want, when they want, from where they want. This means expanding your sales channels beyond your ecommerce website into marketplaces, physical stores and even social media networks.
With that also comes the challenge of managing your inventory across those channels. Reducing overhead costs, preventing inventory shrinkage and loss and syncing inventory across all channels are some of the most important parts of multi-channel inventory management.
In fact, if you want to sell your products on multiple channels, you need to be able to:
- Consolidate product data from all channels into one convenient place.
- Manage the same inventory being sold on different channels.
- Optimize communication with your suppliers.
- Have the ability to expand your products across new channels as your business scales.
By understanding what your customers want and how much you have available at all times — no matter which channel people want to buy from — you set yourself up to be able to maximize your sales and profits.
How to Manage Your Multi-Channel Inventory
1. Define Core and Non-Core Products
It’s likely you have a few select products that make up the bulk of sales for your online business. That’s why the 80/20 Rule is often applied to sales — 80 percent of your online sales likely come from 20 percent of your products.
Knowing which products generate you the most revenue year round — separating them as “core” products and managing them individually — will ensure you never run out of a popular product. It also protects your reputation with loyal and new customers or prevents losing out on predictable revenue.
2. Take up Forecasting
Multi-channel selling is a delicate balance. You don’t want to hold on to too much inventory because it’s costly, but you also don’t want to run out of something and have a customer end up buying from your competition instead.
Here are some of the best ways to invest in inventory forecasting:
- Monitor historical sales data. This way you can see how your sales fluctuate and buy according to those metrics, rather than putting in a static reorder every month.
- Calculate lead time. Understand how long it takes for inventory to arrive from your supplier and plan orders accordingly.
- Factor in safety stock. It’s better to be safe than sorry because forecasting is not always 100% accurate.
You may not be able to forecast spikes in sales every time, but doing your research lets you make better, data-driven decisions. It also helps to be able to share inventory across channels just in case one channel runs out and another still has product available.
3. Set Multi-Channel Inventory Management KPIs
There’s a lot of data to analyze while running an online business that uses multiple channels. And if you’re not careful, you can become overwhelmed with data and have no idea which metrics to track and which to ignore. To prevent wasting time analyzing useless data and improve your overall inventory stats, create a set of KPIs to monitor and focus on those above all else.
Some of the best multi-channel inventory management KPIs to watch are:
Inventory Turnover: the number of times inventory is sold within a period of time (usually a year) so you know what’s selling and what’s not.
Inventory Turnover = Cost of Goods Sold/Average Inventory
Gross Margin Percent: the percentage of selling price or sales revenue that is gross profit.
Gross Margin Percent = (Sales–The Cost of Sales)/Sales)
Customer Order Fill Rate: make sure the orders you deliver reach customers on time, every time and that you’re providing optimal customer service.
Customer Order Fill Rate = Orders that are Shipped in Full/Total Number of Orders
Cost of Carrying: the percentage that represents the cents per dollar that is spent on inventory overhead each year.
Cost of Carrying = Carrying Costs/Overall Cost
Average Days to Sell Inventory: how long it takes a company to turn inventory into sales.
Average Days To Sell Inventory = (Your Average Inventory/The Cost of Goods Sold) x 365
Putting into practice multi-channel inventory management processes isn’t enough. You have to track your progress to ensure the changes you’re making are working.
Not sure how to track your inventory management KPIs? Check out how Google Analytics tracking is one of the best ways to monitor your store’s growth and progress.
4. Centralize Inventory
You might be used to managing your inventory straight from the channel you sell from. And while this may have worked in the past, when you were selling from a single ecommerce platform, as you expand into different channels this quickly becomes time-consuming and messy.
You’ll need to find an inventory management system that can deal with the complex nature of multi-channel selling if you want to grow and succeed.
For example, Skubana — an advanced inventory management software designed to help you succeed — offers merchants features such as:
- True Inventory Counts: no matter how much you sell on any of your channels, Skubana will provide real-time inventory counts so you always know how much is on hand at all times. Enjoy master SKU product data so you can share inventory across channels where needed. In addition, get automatic inventory updates every 15 minutes.
- Bundle Kit Inventory: use core products to create packages or kits, rather than pre-packaging them. This prevents you from having to pre-allocate inventory to bundles you aren’t sure are going to sell.
- Multi-Warehouse Inventory: stop underselling or overselling inventory by managing all your warehouses from one place. Automatically import inventory when needed, exclude certain warehouse inventory and share FBA Inventory to your merchant fulfilled listings.
- Under- and Over-selling Prevention: view inventory percentages and easily decide when to buy more products, consolidate warehouse inventory and share across channels and even market your products as hot commodities by showing customers you’re low on stock, even when you’re not.
- Multiple Pick Locations: set multiple pick locations, determine minimum inventory levels and even get in on barcoding to re-stock and maintain inventory quantities.
According to a research report from BI Intelligence, shoppers engaging on multiple channels buy more often.
Don’t let one of the most common problems with multi-channel inventory management – running out of inventory on one channel and having plenty on another – hurt your business. Instead, invest in a reliable, central inventory management system and always have enough product on hand.
Multi-channel inventory management can be challenging if you don’t know how to approach it in an effective way. But with a little experience and planning, you’ll be able to coordinate all your selling channels in one place and generate more revenue than ever before. Just follow some of these best practices for inventory management and you’ll see your business grow, without all the stress.
How do you approach multi-channel inventory management? Let us know in the comments below!