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5 Inventory Mistakes Holding Back Your E-commerce Business

Many retailers battle to keep their stock under control—in fact, a whopping 43% ranked inventory management as their biggest challenge, while almost half of growing businesses don’t even track their inventory at all.

Sound familiar?

Like most e-commerce entrepreneurs, you’ve got a million and one things to do and those pesky stock management tasks don’t always make the priority list.

But they should—because the truth is, inventory management is vital to your success in this business.

Get your stock management right, and it’ll push your brand to new growth levels. Get it wrong, and your mismanaged stock can become a heavy weight that leads to huge losses and can even sink your store.

If you’re tired of stock-related headaches and want to get your inventory management back on track, you’ve come to the right place. Join us as we dive into some painful inventory mistakes that can prevent your store from thriving, along with essential tips to rule your supply chain and keep your business on the fast track.

Inventory Mistakes: What We’ll Cover

  • What Is Inventory Management and Why Does It Matter?
  • 5 Progress-Halting Inventory Management Mistakes You’ll Wish You Never Made 

  1. You’ve entrusted your stock management to a basic forecasting tool or spreadsheets 
  2. You haven’t synchronized your supply chain 
  3.  No in-house inventory management processes in sight
  4. The buy button got the better of you; now you’re overstocked
  5. Poor communication with suppliers and customers

  • Get a Firm Handle on Your Inventory Management For Good
  • Say ‘Goodbye’ to Inventory Woes and ‘Hello’ to Stock Management Bliss

Are your inventory management problems stopping your store from reaching its potential? Explore how e-commerce funding can give you a fresh start.

What Is Inventory Management and Why Does It Matter?

Inventory management is the process you use to buy, ship, manage, and store your goods. Many stores purchase finished items, but this process can include sourcing and using raw materials if you manufacture your own goods.

Stock management is a massive deal because shoppers come to your store to buy one thing only: products. If those products aren’t in stock, your customers will move on to the next brand (70% of them to be exact), which you definitely don’t want.

5 Progress-Halting Inventory Management Mistakes You’ll Wish You Never Made 

It’s hard to find a seasoned e-commerce entrepreneur who hasn’t made an inventory management blunder or two. 

Maybe you bulk ordered a product on a hunch that it would be a hit, only to have no one buy them, or maybe you didn’t back a rising-star product with extra inventory, then went out of stock and lost momentum. 

It hurts, but these bloopers are completely normal, and you can recover from them. 

Issues only arise when you make the same mistake continuously or make too many costly errors at once. The ramifications can creep into your store and halt your progress. 

But don’t worry. Knowledge is power, so let’s expose some of the common mistakes to audit your store for:

  1. You’re running your stock management with a basic forecasting tool or (cringe) spreadsheet

When you first started in e-commerce, you could throw your stock figures into a spreadsheet and use a simple sum-all formula to work out how much inventory you had. Even your selling platform’s built-in tools did the trick. You’d make stock orders whenever you needed to, and that was it, job done.

But, when your store started to make more sales and really rake in the dough, a whole new world opened up, one with some pretty complex inventory requirements. 😳

Suddenly you now have to do things like:

  • Work out your store’s optimal inventory levels.
  • Manage multiple orders at various stages in your supply chain.
  • Develop inventory reordering thresholds.
  • Create a warehouse inventory management process.
  • Work with multiple actors in your supply chain, from manufacturers and distributors to 3PLs and fulfillment centers.

The thing with spreadsheets is, they aren’t scalable. As the data piles up, errors become more frequent and information starts to go missing. 

The answer seems simple: onboard a basic inventory management solution. 

But there’s one big problem. Many stock management tools run on 30-day moving average forecasts, which essentially set you up to replicate your last 30 days, even if you went out of stock!

Before you know it, you’re dropping the ball frequently, fighting to keep your bestsellers in stock and failing to retire aging products when you should. And you’re not alone.

Inventory problems like stockouts, overstocks, and returns cost retailers a heart-stopping $1.75 trillion globally each year. 👎🏼

Worse still, this problem can hold your business back from reaching its true potential because you dedicate the bulk of your time to admin rather than money-making tasks like marketing and sales. 

If this is the position you’re in, you’re going to need a more advanced system to manage the inventory juggling act. (We’ll go deep on this in the bottom section of this post, so stick with us!)

  1. You haven’t synchronized your supply chain  

Each contributor in your supply chain can affect your productivity. And if your network is full of silos, you’re bound to run into trouble.  

For example, if you leave product sales and marketing to go their separate ways, it’s easy for your inventory to waver.

Say you run a skincare brand, and your top-selling serum is running low, your sales stats should guide your marketing team to take their foot off the promotions peddle and tell your inventory team to increase the serum’s price to slow down sales pace. If not, you’ll soon experience a stockout and all the negative consequences that come with it, like:

  • Wasted marketing spend
  • Lost sales
  • Disappointing customer experience
  • Reputational damage

Similarly, if you have a popular product that takes 60 days to produce and another 30 days for sea shipping, these conditions will massively affect the way you manage stock, marketing, and sales so that you can avoid frequent inventory problems. 

Without this crucial info from your suppliers to help guide your inventory management, it’s all too easy to go out of stock.

Tired of inventory management issues robbing you of your hard-earned sales? Discover how we can help you fund a reset.

  1. No in-house inventory management processes in sight

If neither of the above two mistakes applies to you, you may fall into this category: e-commerce owners with ZERO inventory management process.

For obvious reasons, this can be a massive problem. It can also get worse as your product catalog, sales, and customer base grows due to all the extra moving parts to consider, such as:

  • Standard operating procedures (SOPs) for manufacturing and shipping.
  • Timelines for when to order stock and SOP for order placements (this can and should be automated).
  • Guidance on where to store inventory for your business (e.g., to the fulfillment center first).

Without proper inventory management processes, it’s nearly impossible to get everyone on the same page, which can cause costly mistakes and delays.

  1. The buy button got the better of you and now you’re overstocked

Unlike stockouts, there’s one issue many e-commerce sellers don’t pay too much attention to until it wreaks absolute havoc: 

That’s right, it’s overstocks.

Overstocks are avoidable as they often occur due to things like:

  • A lack of product research
  • Poor buying decisions
  • Product seasonality
  • Poor product-market fit

Overstocks are a painful reminder of your forecasting blunders. But what’s even more frustrating about excess inventory is they get in the way of your success in many hidden ways. 🕵🏽 

Here are a few ways overstocks can damage your e-commerce business:

  • Overstocks hold your precious capital captive: Too much stock creates an opportunity cost as you could have spent this money on marketing, product development, and other activities to grow your business.
  • Overstocks go toe-to-toe with your cash flow (and often win): One of the scariest consequences excess stock has is its ability to sap money from your working capital and cause the cash in your business to dry up.
  • Excess stock makes you pay for your mistakes repeatedly: Not only are you responsible for fees associated with storing overstocks if you decide to liquidate or destroy the stock, but you also incur even more financial setbacks. You’re essentially pouring money down the drain.

  1. Poor communication with suppliers and customers 📞

There’s no such thing as over-communication when it comes to speaking with suppliers and service providers who help produce or manage your stock, especially when it comes to things like: 

  • The stock quantities you need
  • When your supplier will manufacture your goods
  • The shipping date for your latest stock order
  • The freight type you want, e.g., by air
  • The desired end destination
  • How you would like the goods stored

Failure to get everyone on the same page can be disastrous for your business and lead to extra-long stockouts, which can strip you of your rankings, pouring your past ad spend and hard work down the drain.

And that goes for your customers, too.

Operating solely off what you think your customers want instead of what they really want is a recipe for disaster. Instead, send a simple survey or write a social media post asking customers to tell you what they want to see and buy in your store. While you wouldn’t want to 100% rely on the answers, it can serve as a helpful guide alongside your existing inventory data to reduce overstocks and increase sales. 📈

Get a Firm Handle on Your Inventory Management for Good

When you’re in the middle of an inventory management mess, it can feel like there’s no way out. Luckily, there are some things you can do to get things back on track and keep them there.

Prepare your store for the e-commerce wild west with an inventory backup plan

Want to know one of the cardinal rules in business inventory management?

Always have a disaster prevention plan (and a multi-faceted one at that). 😉

A thorough plan will keep your store’s head above water if you ever experience low stock levels. Your strategy could look like this:

  • Plan A: Your main stock order goes to your fulfillment center.
  • Plan B: Refill stock sits in a warehouse ready to be fed into your fulfillment house.
  • Plan C: You keep stock in a garage, storage unit, or with suppliers, then move into the warehouse as needed.

Other parts of this plan could include:

  • Dual sourcing popular items, so you aren’t reliant on a single supplier.
  • Sourcing locally if you experience sudden shortages due to emergencies like warehouse damage and shipping port closures.

When you use a strategy like this and move the stock up the chain (from Plan A to C), it avoids causing more costly stock issues like ending with expired or old inventory batches. An inventory management system can help you manage this stress-free (more on this in a minute).

Deploy sophisticated inventory forecasting and supply chain management tools

The problem with bog-standard inventory forecasting tools is they miss out on tons of data—and the less info you have from your supply chain, the less info you have to make inventory purchasing decisions.

Basic tools tend to use short 30-day forecasting cycles and calculate sales velocity as a constant number. These tools also don’t take into account the natural ebbs and flows of e-commerce sales. Whether your products are seasonal or not, e-commerce sales don’t run in a straight line and have peaks and troughs throughout the year. 

But with a few changes, you can get your inventory management on the straight and narrow. Here are a few tips to get you started:

  • It takes the typical store 60-90 days to make and ship their stock, impacting your inventory needs. So, it’s better to have extended analysis periods to assess and calculate your stock needs accurately. 🎯
  • A smart supply chain management tool is crucial to gain full visibility of your supply chain. For best results, seek out a solution that can help you extract data from various points in your supply chain. For instance, from your:
  • Manufacturers production cycles  
  • Freight company shipping times
  • Warehouse’s stored stock amounts and limits
  • 3PL stock distribution percentages

You can then integrate this solution with your forecasting tool to enrich your inventory data and make better predictions. (Note: It’s even better if you can find a tool that has both supply chain management and inventory forecasting capabilities).

Get a hand from inventory management professionals

Do you feel like you have loads of back and forth in your inventory management tasks but get nowhere? Perhaps you’re swamped with other work, or stock management isn’t your vibe, but you carry on because you think you have to. 😔

We get it. Many entrepreneurs pick up the ‘DIY everything’ habit in their startup days and struggle to shake it off even after they’ve made it. 

We’re here to tell you that you don’t need to prolong your suffering any longer. Get help, either from an in-house employee or an external consultant. Inventory management professionals have the experience and knowledge to optimize your inventory and push your store forward. 

Trust us, it’s worth the investment.

Secure a little extra cashflow to keep inventory on track

Luckily, timely capital injections are a great way to gain control of your inventory. For e-commerce funding, some of the best options are:

  • Working capital loans: Working capital can help maintain everyday business operations and support short-term expenses like payroll and supplies and marketing. They’re easy to secure, and the amounts can be high. For example, at SellersFi you can go from application to deposit in less than 48 hours and you can secure up to $1 million.
  • Cash advance: Unlike most e-commerce funding options, cash advances aren’t loans—instead you sell part of your future sales at a discount and pay a lump sum fee in return for capital, then the funding company takes its portion of your sales through your card payment takings. With cash advances, lengthy fixed payments won’t bind you, plus they’re super flexible in their uses and repayment options.

For example, say you bring in $20,000 per month in your e-commerce store. You want to borrow $10,000 and so you agree to a 10% lump sum charge ($1,000) and to give 10% of your sales each month until the advance is cleared. If you make $20,000 one month, the funder will get $2,000. But if disaster strikes and you make a big, fat zero, the funder won’t get anything either.

Say “Goodbye” to Inventory Mistakes and “Hello” to Stock Management Bliss

Inventory management can be a slippery slope, and one too many mistakes can have you desperately clambering to escape the mess. 

But it doesn’t have to be this way.

Be proactive in your asset inventory management, choose to embark on an inventory optimization journey, and frequently tweak your processes to get on the right track and stay there.

The next time a basic inventory management tool tries to lure you in, remember even free inventory management tools like spreadsheets have a hidden cost in sales, time, and peace of mind—which are too high a cost for your budding e-commerce store. Your tool should match your aspirations and guide you straight to the e-commerce top.

Finally, don’t forget to put the right funding in place to make key investments in inventory and expert support to help you get back on track.

You’re always one decision away from a positive shift in your business—and a lean, mean inventory management machine could be it. So, start your journey to healthier stock management today.

Does your inventory management system need a revamp? Secure funding to get things back on track


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Contact a SellersFi expert to see your growth options and get started!

By clicking on the button above, you agree to receive SellersFi marketing communications.

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