Tips to Improve the Way you Manage Inventory on Your Shopify Store
A retailer’s passion should be to find new ways to optimize the way their inventory is managed. As that commonly results in higher sales, better profit margins, and lower return volumes.
In this regard, companies that manage a small number of SKUs tend to struggle much less with this particular topic than those that offer a wide range of products across multiple categories.
If your Shopify store has a few dozen SKUs with decent sales volumes, you’ll probably identify with situations like oversold items, returns resulting from inadequate product descriptions, and bad reviews from customers amid a disparity between the product’s specifications and the customer’s needs.
To help you in crawling out of that time-consuming and exhausting hole, the following article shares a few crucial tips that should help you in improving the important, yet often neglected, inventory management side of your Shopify store.
Make Sure your External Sales are Synchronized
As a result of the pandemic, many physical stores migrated to Shopify to continue serving their customers by offering an ecommerce channel. However, now that stores are reopening and consumers are going back to the streets, you might find yourself overwhelmed by the number of times that you will end up overselling an item online due to increased sales volumes on your physical channel.
The best way to avoid this is to install an inventory management system that can be integrated with your physical store’s CRM, ERP, or PoS system so you can keep your Shopify inventory updated in real time as sales progressively come through your physical store.
Additionally, you should know that Shopify allows you to create draft orders by using their system, which are then converted into actual orders once payment is received. This type of order is particularly useful to complete custom or offline orders that might involve large and infrequent quantities.
By using draft orders, you can ensure that your Shopify inventory will remain properly updated to avoid complaints from customers whose orders cannot be fulfilled due to negative inventory.
Keep your Product Information up to Date – Reduces Returns
Statistics show that around a quarter of the customers that return an item do so because the product they received looks different than what they saw on the website.
However, when one digs deeper into the actual problem, inaccurate, old-dated, and poorly constructed product descriptions are often the leading cause for these returns as customers are not adequately informed of what is it that they are buying so they can make an informed decision.
Therefore, an important step to improve the way you manage your Shopify store’s inventory is to keep your product descriptions up to date. One way to do this is to perform periodical revisions of your best-selling products by following an ABC system.
In inventory management, an ABC system classifies inventory by relevance. Items classified as A get the most frequent reviews – weekly reviews, for example – while items classified as B are reviewed less frequently – once a month perhaps. For C items, these reviews are performed once a quarter as their impact on the store’s overall performance is fairly small.
Establish a Minimum Reorder Level per Product
The best store owners understand the power of data and analytics to spot trends and consumption patterns that allow them to anticipate changes in the demand for certain products so they can stock up accordingly.
The most common tool to optimize your inventory levels is to establish a reorder point for all of your best-selling products. This is the level at which you should send your supplier a purchase order based on the time it will take for that order to be delivered and the average demand the product is experiencing.
By doing this, you’ll reduce the number of unavailable SKUs, which helps you in keeping your customers happy and engaged.
Use Pre-Orders and Waitlists
Pre-orders and waiting lists are great tools that allow you to test the waters before introducing a new product. If you already have a fair volume of daily visitors and customers, you can use these two options to measure how interested your clients are in the new products you may be planning to offer.
Keep in mind that waitlists work better when you offer an incentive for those who sign up such as a discount on their purchase or a coupon code for their next order.
We hope these four tips can be valuable in your path to improve your inventory management skills. The best way to keep improving is to keep learning. Best of luck!