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What is E-commerce Inventory Management

To help you get started, we’ve compiled a list of everything you need to know about planning, maintaining, and reporting on eCommerce inventory.


Brand Partnership Manager at Qikink


Brand Partnership Manager at Qikink

E-commerce Inventory Management -qikink

eCommerce inventory management is essential to build a profitable, scalable, sustainable business. 

You always need your stock details like quantity, storage place, and shelf life handy. A sound inventory management system may save a lot of time and money. 

To help you get started, we’ve compiled a list of everything you need to know about planning, maintaining, and reporting on eCommerce inventory. 

Let’s begin!

What is eCommerce inventory management?

E-commerce Inventory Management

Starting a business is not just about selling. It requires an organized sourcing, storing, tracking, and shipping approach. 

It knows how to stock it, where to store it, and how long it can be safe. 

Some goods have an expiry date, also known for low shelf life. E.g., Food, beverages and medicines

Some goods have a long storage life, including valuables and antiques. 

Hence, every product needs specific planning to store and track.

Challenges in eCommerce inventory management website

Because of the worldwide nature of e-commerce, inventory management is a primary focus at every level of the supply chain process. Whether you’re a new online retailer, a small business, or an experienced online retailer, it’s critical to identify the pain spots in your inventory management process.

The following are some of the most common inventory management issues that e-commerce companies face.

1. Inadequate inventory

If your company is seeing high demand but simultaneously experiencing recurrent stockouts, you may have a severe problem. 

Not having adequate stock to meet sales orders will inevitably result in inevitable consequences, such as delivery delays or upsetting your consumer base.

2. Having an excessive amount of inventory

Overstocking is one of the most typical issues that online companies confront. Too much stock in your warehouse might result from seasonality, particular varieties selling better than others, or something else entirely. 

Overstocking, for whatever cause, is a considerable danger to your bottom line, given how much it costs to hold unsold items.

3. Having stock in the incorrect location

Is your organization using several warehouses or fulfillment centers? If so, how convinced are you that the inventory counts are constant and accurate? 

If so, how convinced are you that the inventory counts are constant and accurate? When stock is misplaced, it can disrupt the supply chain by creating a bottleneck and slowing down the entire fulfillment process. 

When an inventory footprint is not optimized to meet regions of solid demand, transporting items to your end user costs more time and money.

4. Having irregular safety stock

Safety stock is appropriately named since it protects your firm in the case of a significant surge in demand. If your safety stock is inconsistent (or you don’t have any), it may be time to rethink your e-commerce inventory management plan.

Advantages of eCommerce inventory management

1. Increases accuracy

Real-time inventory tracking improves inventory management and guarantees you’ll have enough stock to complete orders. However, most retail businesses have an inventory accuracy of only 63%. 

With proper inventory control, you can eliminate overstocking, lowering the cost and physical labor necessary to keep it.

There are several methods for increasing inventory efficiency. Among the most tried and authentic ways are:

  • You are using inventory management solutions that can assist you in improving inventory management and streamlining supply chain management by shutting down warehouse sites (if your organization can run without them) and lowering related expenses.
  • Implementing a just-in-time or lean inventory strategy to reduce inventory holding costs while meeting order fulfillment deadlines.

Simply put, the advantages of inventory management practices and investing in sophisticated software are that they increase agility and save expenses.

2. It saves time

By integrating robots and AI, you can automate your inventory management process, saving time in inventory forecasting and optimizing the pick-pack process. 

Automating these operations frees workers’ time to focus on other vital duties and develop corporate growth ideas.

3. Saves money

Improving inventory management efficiency reduces the likelihood of errors, and fewer errors necessitate fewer resources spent on error correction.

Furthermore, organized inventory management prevents overstocking and saves money on holding costs. The inventory management system alerts warehouse managers to refill goods on time and avoid stockouts.  

In summary, good inventory management reduces the need for vast working capital, increases cash flow, and provides the funds you need to support payroll, product development, or any other company activity.

4. Enhances business planning

Using an in-house inventory management approach will assist you in gaining the business insights needed to expand your organization or enhance operations.

Implementing features such as barcode scanning and a central data warehouse allows you to transfer data and monitor your business’s activities quickly.

It will assist you in answering queries such as:

  • What is the flow of your inventory, and who are your customers?
  • How might agile inventory improve your business processes?
  • What do customers expect from your company, and how can you incorporate it into your marketing and operations?

With quick access to business analytics, you can create more robust marketing and outreach tactics to improve conversions and drive business profitability.  

“From whatever angle, inventory tracking and management advantages are limitless. They have a lot to offer a company that wants to expand steadily. The goal is to choose a solution that meets your company’s needs. There is no limit to what you may do with your resources if you do.”

Delivering a satisfactory purchasing experience to your clients in today’s competitive eCommerce sector is critical. Happy customers not only boost the likelihood of repeat purchases, but they may also help you generate more conversions through positive reviews and word-of-mouth advertising.

You can promptly fulfill correct and complete client orders with good inventory management.

To reap the benefits of inventory management outlined above, contemporary organizations must invest in an Inventory Management System (IMS).

What are e-commerce inventory management strategies?

There is no such thing as a one-size-fits-all e-commerce inventory management system. Each firm has distinct requirements that necessitate using different inventory tracking techniques. Examine the following choices to see whether one would be a suitable fit for your company strategy.

1. ABC analysis to prioritize products

Take the time to prioritize products using the ABC analysis to increase efficiency and save money. The ABC analysis uses three criteria to prioritize your existing inventory:

  1.  High-value items with a low sales frequency. For example, large-ticket purchases such as exercise and athletic equipment.
  2. Products of low value with a moderate frequency of sales. Electronics and losing customers with jewelry are two examples.
  3. Low-value items with a high sales frequency. Clothing and food, for example.

ABC analysis uses the Pareto Principle, which states that 20% of your consumers may account for 80% of your sales.

These clients purchase category A items, which provide the vast bulk of your income. As a result, losing these clients is more costly to your bottom line than buying category B and C items.

Your objective here should be to determine which items require the most excellent attention in terms of inventory management. For example, you may need to buy items in your A category (the best-selling products) more frequently than products in your C category (the worst-selling things).

2. Just-in-time inventory

The just-in-time inventory system, or JIT, is ideal if your company does not require massive inventory. Businesses that only need to stock orders when purchased by customers use this method. The volume of stock is usually equal to the number of orders filled. 

Companies that offer seasonal items are perfect examples of JIT. As demand for their products grows, they only order enough to fill orders. As the season draws to a close, they can clear the shelves without fear of losing money on dead stock. 

If your business relies on buyer trends, this technique is for someone else. Unexpected jumps in demand, such as those seen in numerous industries in 2020 during COVID-19, can result in costly stockouts.

3. Dropshipping

Dropshipping is a popular and straightforward inventory management solution. However, because business owners do not touch the product, it is not a short inventory practice. Instead, when a consumer puts in an order, you, the company owner, fulfill it straight from the manufacturer and ship it to them. 

You don’t even touch the inventory. First-time e-commerce merchants who want to develop their business quickly but need the funds for a storage facility or warehouse typically use this method.

Although drop shipping may appear a breeze, the disadvantage is that you need more control over the customer experience. Because the manufacturer does most of the work following a customer’s purchase, they control how the product is stored and shipped. Customers will ask you for assistance if they receive a faulty or incorrect product.

4. first in, first out

The first in, first out method is preferred by retailers who sell items with expiry dates. “First in, first out” or FIFO refers to fulfilling orders for consumers with the first items that arrived at the warehouse.

It is not limited to industries that sell perishable items. If you want to get rid of a product quickly, use this inventory management method. However, pay close attention to the price patterns of your goods and materials. 

If prices vary often, the gap between the cost of products received and the cost of items sold might result in overstated earnings. 

Other inventory strategies shops use to sell perishable items are first expired, first out (FEFO), and last in, first off (LIFO).

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5. Prepare for seasonality

If you own an e-commerce site that will benefit from a specific shopping season, such as the holidays or time of year, such as summer, do everything you can to be ready.

During slow months, keep inventory levels low. To avoid carrying too much dead stock after a busy season, advertise special deals to sell off most inventory.

Keep your operational expenses as low as possible for as long as possible, and utilize the downtime to ensure you have all the pieces in place — such as partners, tools, warehouse storage, personnel resources, and so on — to ensure a smooth and profitable sales period.

6. Put inventory management software in place

Invest in inventory management software today to create and expand an online business. You can make some of the above suggestions manually, but employing software will help you maintain accuracy while saving you time and money.

The following are some of the advantages of inventory management software:

Keeping an eye on inventory and ensuring you’re never overstocked or understocked

Syncing inventory tracking across all of your selling channels

Compiling real-time inventory data into a single user-friendly system. Taking use of critical information.

With more time and data in your business, you can capitalize on new product opportunities, increase sales, and effectively build your e-commerce business.

7. Safety stock

Another frequent inventory management approach businesses employ is to have additional products on hand in case demand suddenly spikes. Unlike the JIT technique, safety stock allows you to cover unanticipated delays and changes in order while maintaining constant output. 

Retailers use safety stock to plan for risks such as inaccurate forecasting, customer demand fluctuations, and varying raw supply lead times. You can overcome these obstacles because you have extra inventory on hand when you keep safety stock inventory.

Inventory management using standard IMS can be a time-consuming, repetitive, and complicated procedure prone to human mistakes. Cloud-based technology lets you track inventory movement and optimize operations in real-time.

The following are the primary reasons for moving to a cloud-based IMS:

  • It is constantly updating stock information. As previously said, this provides several advantages, such as enhancing inventory accuracy, maintaining optimal product availability, lowering costs, and simplifying processes.
  • This feature ensures the safeguarding of data protection and safety. This feature ensures that your data is securely stored in the cloud and promptly updated whenever changes are made.
  • It assists you in avoiding mistakes. A cloud-based program that continually refreshes data removes the possibility of duplicate or missing sales orders. Fewer errors imply more efficient business operations and long-term profitability.
  • It simplifies the entire procedure. Cloud-based software combines all backend systems, ensuring that all business units, such as the Finance Team, Purchase Team, Warehouse Team, Sales Team, and so on, have easy access to corporate information.
  • It allows you to access current inventory and historical data as needed quickly.
  • It includes rich data and analysis to enable you to quickly manage inventory information, cost details, product trends, and so on, ultimately assisting you in developing better business plans.

5 Advantages of using eCommerce inventory management software

Running an effective inventory management business may be complicated; however, various technologies are available to help you. 

Inventory management software allows small firms to compete while supporting giant corporations with more sophisticated backend procedures such as new channel growth, packaging and kitting, managing perishables, and minimizing fulfillment and delivery times.

These are just five advantages e-commerce merchants may get by incorporating management software into their daily operations.

1. Regular stock counts

Regular stock counts are crucial to e-commerce success since they are proven to raise gross profit, reduce loss, improve allowance management, and minimize waste. 

Furthermore, e-commerce inventory management software can perform regular, real-time counts to aid in the detection of potential theft, the improvement of your stock ordering process, the detection of flaws in your pricing strategies, and assure that your company is meeting its ongoing goals or targets.

2. Monitoring and adjustment of safety stock levels

Maintaining adequate safety stock quantities is a significant benefit to any online business. Safety stock helps to manage risks and guarantees that even after your cycle stock has run out, you are still prepared to meet requests if supply and demand shift unexpectedly. 

Furthermore, by using e-commerce inventory management software to monitor your safety stock, you can better compensate for forecasting errors, avoid disruptions in manufacturing or deliveries, and avoid stockouts to maintain high customer satisfaction. 

You can include automation rules to generate a new purchase order when safety stock runs out.

3. Points for automatic reordering

Another fantastic advantage of utilizing e-commerce inventory management systems is automatic reorder points. Retailers may easily avoid applying the reorder point formula, receiving items too early, lowering inventory costs, and optimizing warehouse areas using reorder point automation.

In addition, this feature enables the replacement of subjective feelings with concrete facts and data, which saves your team a significant amount of time that can be used for value-added activities.

4. Inventory accuracy across several SKUs and warehouses

Where would your firm be if its SKUs and storage needed to be more accurate? Although accuracy is essential to your online business, it must be noticed and appreciated.

Maintaining accuracy across multi-sku inventory and multi-warehouse storage has always been challenging owing to e-commerce inventory management software. 

Compared to manual programs or Excel inventory management protocols, these systems help manage demand across multiple spaces and can control inventory levels better (and simpler).

5. There is no room for human mistakes

Regarding boosting accuracy and transitioning away from manual procedures, e-commerce management software is the most excellent option to eliminate human mistakes in your operations.

If your team’s inventory management blunders persist, they can quickly build up and lose your organization’s income in the long term. Automated methods, on the other hand, provide exact and consistent outcomes while requiring less time and energy from your staff.


A sound inventory management system may make your life so much simpler. Using a combination of the correct software and these tactics can ensure that you maintain track of your inventory, resulting in more significant profit for you. In the end, it means a pleased consumer who will return.

Frequently Asked Questions


You may set up wholesale pricing to sell extra items in the warehouse.

You always address the needs of your customers.

Order fulfillment on time


Increased Storage Costs

Higher probability of inventory loss and damage


Inventory management is essential for streamlining your day-to-day operations. Keeping track of your inventory and orders helps you avoid losses. You can only concentrate on business expansion without concern about lists. While you may be able to ignore it in the early stages of your smaller business, as you grow more extensive, you will incur losses if you do not have efficient inventory management.

Still, do you require inventory management software? If you’re still on the fence, consider the following advantages of adopting this sort of software:

  • A more efficient stocking procedure
  • Enhanced productivity
  • enhanced client service
  • increased profitability
  • Current inventory counts
  • Monitoring numerous warehouses from a single interface
  • The capacity to automate critical jobs
  • Inventory optimization techniques for detecting old stock
  • Purchase and sales order management tools
  • Analytics for prediction

As an online store, E-commerce Inventory Management’s primary goal is to ensure the availability of the right products in the correct quantity and at the right time to meet customer demand while minimizing costs associated with overstocking and understocking.

When e-commerce businesses have poor inventory management, they risk stockouts, overstocking, increased holding costs, order delays, dissatisfied customers, and wasted resources, ultimately leading to lost sales, decreased revenue, and damage to brand reputation.

The key components to having an effective inventory management system for e-commerce businesses include accurate demand forecasting, real-time inventory tracking, safety stock management, efficient order fulfillment processes, and data analytics for informed decision-making.

E-commerce Inventory Management is different from traditional inventory management for brick-and-mortar stores because it requires real-time tracking and monitoring of inventory levels across multiple channels and locations and the ability to manage and fulfill orders from anywhere at any time.

Real-time tracking is crucial in Ecommerce Inventory Management, providing accurate and up-to-date information on inventory levels, order status, and shipping details. It enables businesses to make informed decisions about inventory replenishment, safety stock management, and order fulfillment, ultimately improving customer satisfaction and increasing revenue.


With over 6+ years of experience in the industry, Ayushi excels in building strong customer relationships and guiding clients toward growth as a Brand Partnership Manager. She enjoys sharing her experience in her content.

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About the author

With over 6+ years of experience in the industry, Ayushi excels in building strong customer relationships and guiding clients toward growth as a Brand Partnership Manager. She enjoys sharing her experience in her content.
With over 6+ years of experience in the industry, Ayushi excels in building strong customer relationships and guiding clients toward growth as a Brand Partnership Manager. She enjoys sharing her experience in her content.
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