Inventory management is a major challenge for e-tailers. Discover 5 automation strategies to avoid stock-outs, optimize your profitability and maximize your profits. An effective approach to save time and boost your performance!
- Switching to automated management: why and how?
- Create stock alerts
- Adopt intelligent distribution rules
- Anticipate replenishment needs
- Optimize your inventory management now
Inventory management is a key driver of profitability for e-tailers. Yet, according to a recent study, between 8% and 9% of sales are lost due to stock-outs. A lack of product availability not only leads to an immediate loss of revenue, but also impacts customer satisfaction and vendor scoring. Conversely, effective automation of inventory management can optimize flows and increase productivity by up to 20%.
That’s why today we’re going to explore the best strategies for automating inventory management and maximizing your profits through smoother organization, real-time updates and better anticipation of needs.
Switching to automated management: why and how?
In an increasingly demanding e-commerce environment, inventory management represents a real challenge for merchants. To meet these challenges, automated inventory management is an essential solution.
Why is automating your inventory management crucial?
Inventory management is a major challenge for e-tailers and logistics specialists. Many spend considerable time on manual tasks such as extracting and importing files between different sales platforms (e-commerce site, marketplaces, ERP). These processes are a source oferrors, leading to stock discrepancies, out-of-stock sales and lower seller scoring.
The absence of real-time updates has a direct impact on merchants’ reactivity, resulting in cancelled orders, a damaged brand image and lost sales opportunities. Ultimately, this hampers growth and profitability.
Benefits of automation
Automated inventory management makes it possible to :
- Eliminate human error: eliminate input errors and oversights.
- Save time: updates are made continuously, without manual intervention.
- Optimize profitability: all available stock is put online immediately.
- Improving the customer experience: greater transparency on product availability, fewer disappointments linked to out-of-stock situations.
- Avoid overstocking: by dynamically adjusting supply to demand.
Thanks to a synchronized system, e-tailers have real-time visibility and can anticipate fluctuations in their business.
How does it work?
Automated inventory management is based on an Order Management System(OMS) connected in real time to the various sales channels via APIs. This system makes it possible to centralize and synchronize inventory instantly across all e-commerce platforms, marketplaces and private sales. In concrete terms, when a merchant has 100 units of a product in stock, OMS automatically broadcasts this availability to all sales channels.
As soon as an order is placed, for example on Amazon for 2 units, OMS immediately detects the transaction, updates the stock to 98 units and transmits this new value in real time to all other platforms. This fully automated operation eliminates manual errors, reduces the risk of out-of-stock sales and guarantees perfect synchronization between supply and demand.
At the same time, OMS facilitates logistics orchestration by seamlessly retrieving and processing orders, optimizing shipping and returns management. Thanks to this approach, e-tailers can manage their inventories with optimum precision, while improving their operational efficiency and profitability.
Create stock alerts
Effective inventory management involves more than just updating stock levels in real time. It is just as essential to anticipate replenishment needs in order to avoid stock-outs and guarantee the availability of products for sale. To this end, setting up stock alerts enables e-tailers and logisticians to react quickly and optimize their supplier order management.
Thanks to OMS such as Shippingbo, it is possible to define critical thresholds for each product. These thresholds can be configured globally for all SKUs, or individually, depending on the specific features of each item. As soon as a product reaches this threshold, an alert is automatically generated in the application and can be sent by e-mail. This feature enables merchants to monitor stock levels in real time , and to anticipate replenishments from their suppliers before an out-of-stock situation occurs.
Automating stock alerts contributes directly to customer satisfaction by ensuring sales continuity. It also avoids lost sales due to unavailable products, and limits the negative impact on vendors’ brand image. By facilitating supplier order planning, this approach optimizes inventory management while reducing the risk of overstocking or shortages.
Adopt intelligent distribution rules
Optimized inventory management involves more than just real-time synchronization. To maximize sales and avoid stock-outs, it is essential to adopt intelligent distribution rules. These make it possible to modulate the stock displayed on different platforms according to strategic objectives.
Understanding the concept of virtual inventory
Physical stock corresponds to the quantities actually available in the warehouse. From this stock, an available-for-sale stock is deducted, which takes into account current orders and reservations (e.g. commercial operations or private sale commitments). Finally, it is this available stock that feeds a virtual stock, dynamically adjusted according to specific rules to optimize product distribution on the various platforms.
Level stock: blocking sales when stock is low
The stop stock rule blocks the sale of a product when it falls below a defined threshold. This rule makes it possible to give priority to a sales channel (e.g. to keep the last units for one’s own site rather than on a marketplace) or to prevent stock errors. So, if a product is subject to frequent stock deviations, it can be displayed as unavailable as soon as stock becomes critical.
Half-stock: anticipating sales peaks
Half-stock limits the quantity displayed to 50% of the actual stock. This parameter is useful during strong sales (sales, promotions) to avoid overselling due to pending baskets or simultaneous orders. By displaying a reduced quantity, you secure your stock and limit the risk of out-of-stock situations.
Maximum stock: encouraging purchases while controlling sales
With maximum stock, a merchant can voluntarily limit the number of units displayed, even if the actual stock is higher. This approach creates a sense of urgency (“Only a few pieces left!”), encouraging customers to place orders more quickly. It also makes it possible to strategically distribute sales across different channels without running the risk of depleting stock too quickly.
Anticipate replenishment needs
Anticipating replenishments helps avoid stock-outs and limit overstocking. To do this, it’s essential to analyze inventory by classifying products into ABC categories: best-sellers (A), products with average turnover (B) and references in low demand (C). The aim is to adjust supplier orders according to past sales and available stock coverage.
Another key point concerns dormant stocks (D), products that are stocked but not sold. These references occupy space unnecessarily, and may be due to problems with the on-line catalogue, or to an unsuitable offer. Identifying them enables corrective action to be taken.
To facilitate this process, Shippingbo is developing a purchasing module that will automate needs analysis and propose optimal order quantities based on sales and supplier lead times. Efficient management guarantees smooth replenishment and increased profitability.
Optimize your inventory management now
Automating inventory management is no longer an option, but a necessity for e-tailers who want to maximize profitability and avoid losses due to stock-outs. Thanks to the strategies discussed in this article, you can increase productivity, improve responsiveness and guarantee an optimal customer experience.
However, there’s a fifth essential strategy that will take you even further in optimizing your inventory and logistics. To find out, watch our exclusive webinar and gain access to all the keys to high-performance inventory management !
