Once you've set up an online store on Shopify and products are selling, your next steps will be to think about inventory management. As demand increases for your products, so will the need to track orders and inventory to ensure you have the stock available.
This can be complicated, especially if you have various vendors, multiple warehouse locations, and different sales channels to monitor. The last thing your ecommerce store needs is to run out of stock and not have any product to sell to your customers.
Let's explore what inventory management means for your Shopify store and how it can benefit your online business. We'll also run through the best apps for managing inventory on Shopify.
Inventory management is a vital backend part of running a successful ecommerce business, and Shopify's inventory management capabilities are helpful, but the ecommerce platform has its limitations. That's where using separate apps comes in use.
Inventory management allows you to accurately record your sales, forecast how much stock you'll need in the future, and track your current stock. For example, if you're an apparel company selling branded t-shirts.
If you're putting a discount on a specific design and expecting to sell a lot, you'll need to track those sales and ensure you've got enough product. You'll also want to forecast how many t-shirts you'll need in the future. A good inventory management system can help automate that process, meaning it's less strain on you as a business owner.
When you've launched an online store, you'd be forgiven for wondering: is inventory management important?
The good news is, if you are a brand new seller on Shopify and only just opened your online store, you don't need to worry about managing inventory yet. The priority for your Shopify store is to market your store well and sell products. You can do this with Google Ads and boost your customer conversion rates. However, investing in inventory management software is something to think about in the future.
The time to start focusing on tracking inventory is once you've got a loyal customer base and are selling lots of products.
Suppose you find yourself running out of stock or unable to keep track of what's in your warehouse. You should think about using a Shopify inventory management app, especially if you feel that tracking stock levels and managing inventory yourself has become too time-consuming.
Once you're established, inventory management is an essential part of running a successful ecommerce business. There are plenty of benefits to using a good app to manage inventory for your online store. Using dedicated software can provide you with automated real-time updates of your stock levels. You can get notifications when you have to order new stock and forecast future necessary inventory levels based on current demand.
Here are the key benefits of using an inventory management system.
One major issue as an online retailer is running out of stock when customers want to buy your products. 43% of online shoppers listed stock availability as one of the essential things when online shopping.
Stockout Cost = Number of Days Out of Stock x Average Number Sold Per Day x Price of Product.
So if you sell t-shirts for $25 and sell on average five per day, but it's been out of stock for seven days, the calculation would look like this.
Stockout Cost: 7 x 5 x 25 = $875
You want to keep your customers coming back to you. Investing in a Shopify inventory management app to ensure you don't run out of stock is the cheaper option. Having gaps in availability can add up quickly, especially if it's more than one product. Plus, having holes in your inventory makes it more likely a shopper will go to a competitor and purchase for them.
However, it's not just stock gaps you need to worry about. Having too much inventory can be just as costly. Storing your inventory in warehouses comes with storage fees attached, and if you have perishable goods, they might go out of date while you're storing them. Even if you sell non-perishable goods, trends change, and new fads come in. You don't want your items going stale before you've sold them all. You always want to sell your oldest stock first. Applying the FIFO method (First In, First Out) will help you move inventory and manage stock levels.
The best way to reduce inventory waste is to record how much inventory you will need; Shopify inventory management software can help predict this by tracking demand for your products.
Inventory tracking becomes even more challenging if you sell on several sales channels. You might be down to your final product, but because your store is on multiple channels, the others will still have the product available when the last item gets sold on one channel. This results in you selling products you don't have stock for.
If you've oversold an item and can't fulfill the order for the customer, they're going to be disappointed and have a poor customer experience. This could mean they leave a terrible review or don't come back for repeat business.
Inventory management software can automatically update stock levels across all your sales channels, meaning customers can purchase orders with the confidence that they'll receive the item. The software will update when an item goes out of stock, reducing the strain on your business.
One helpful tool when using inventory management software alongside detailed inventory tracking is the ability to track trends. Different items, colors, and designs come in and out of fashion. As a business owner, it can be hard to keep up with it all. They will track it for you, meaning you can accurately forecast how much stock to purchase and avoid having too much or too little inventory.
Shopify inventory management apps can also monitor inventory history, meaning they can accurately predict how many items get purchased daily on average and track whether demand is increasing or decreasing. This helps you keep stock levels accurate and provide a better customer experience.
Managing cash flow is vital to the success of your online business, and inventory management will help you organize your budget. As a business owner, you need to know your incomings and outgoings.
Using an inventory management tool gives you a real-time, accurate view of the cash flow from your ecommerce store. It allows you to make more informed decisions regarding your expenditure and reduces storage and stocking costs.
Many inventory management tools are available on the Shopify app store and other websites that can integrate with Shopify. However, there's so much there that it can be challenging to know what to pick.
A basic inventory management app should at least be able to keep accurate records of your stock levels across multiple warehouses. But there are a lot of additional features that make the Shopify inventory management apps stand out.
A good inventory management system should give you inventory control and inventory forecasting. It should be simple to track product availability and make adjustments where necessary.
We've put together a list of some of the top-rated inventory management software currently on the market.
nc has more than 850 five-star reviews on Shopify, so they must be doing something right. Thousands of stores have this inventory management software installed to help manage pricing and automatically update inventory. They are suitable for empty stores just starting, and you can have up to 35,000 products across their pricing plans.
There are several pricing tiers with Stock Sync, including a free plan. The first is entirely free and suitable for small stores. It comes with up to 2000 product options, and you can do batch inventory updates.
The pricing plans above this vary. As you only need to pay for the features you're using, there are many options to customize it. The most expensive plan will set you back an average of $49/month, but there are additional things you might add on that will be more expensive.
Shopify created Stocky, so it perfectly integrates with your Shopify store and updates automatically. It has more than 130 five-star reviews and is included in the Shopify Point of Sale (POS) Pro subscription.
Sellbrite isn't just a Shopify inventory management app. It works on other ecommerce platforms, such as Etsy, eBay, and Amazon. This dynamic software is excellent for growing brands and comes with a range of features to boost your online store.
Pricing starts with a free plan that accepts up to 30 orders monthly with unlimited product options, sales channel integrations, and lots of support. The pricing plans go up to $99 per month, covering up to 2000 orders. There are plenty of options to look through, but the good news is that the free and cheaper plans still have most of the higher plans' features.
On Shopify, Skubana brands itself as the 'the operating system of commerce'. It's got everything you need for analytical reporting, inventory management, and order fulfillment. It is an advanced and detailed inventory management app with a wide range of functions, but it does come with a hefty price tag.
Skubana's pricing starts at $1000/month, which means it's not suitable for small business owners who are just beginning. They prefer you to contact their sales team directly to get a quote from them, as Skubana will tailor it to you and the features you require.
Hundreds of users use this multi-channel inventory management app, and it has more than 120 five-star reviews on Shopify. The app provides support with shipping, inventory management, and returns. ShipHero can integrate across multiple warehouses and sales channels.
Its essential plan is priced at $499/month. It comes with two users and one store connection, unlimited product options, and access to 24/7 support. It then hikes up to $1850 for big brands. That plan includes five users and up to ten store connections. To add additional users costs an extra $150. Users of the premium plan have access to the API and multiple warehouse locations.
When choosing the right Shopify inventory management app for your store, there are many variables to consider.
You'll need to decide how much money to invest and pick a pricing plan that works for you. Each software comes with various tools and integrated options for your store.
An excellent inventory management app should prevent overstocking and overselling issues while automatically updating your stock levels across your sales channels to provide a good customer experience. This will help you manage your cash flow more accurately.
For a streamlined all-in-one finance app built for Ecommerce, use Artoh to track your finances.