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Solve These 6 Inventory Mistakes for a Successful Q4
Solve These 6 Inventory Mistakes for a Successful Q4
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Solve These 6 Inventory Mistakes for a Successful Q4

Inventory distortion is a problem so big, you can literally see it from outer space.

The inventory management crisis cost retailers $1.77 trillion in lost sales in 2022. A year later, excess inventory was still plaguing retailers well into the holiday season.

Poor inventory management can lead to high carrying costs, low customer loyalty, and a bad brand rep. But with a little extra planning, it doesn’t have to be that way.

In this article, we’ll share the top six areas to address in your inventory for stronger sales during the busiest time of year.

Solid Inventory Management Means Greater Q4 Success

Strong inventory management is always important. But getting inventory right is especially critical from October into early January as holiday sales increase and the risk of supply chain issues multiplies.

With the right strategy, you can turn inventory into an advantage, bringing in more sales with fewer stockouts and fulfillment headaches. 

Let’s take a closer look at how strong inventory management can increase your Q4 results.

1. Optimizes stock levels

In an ideal world, you’d always have enough inventory to fulfill your orders on time and avoid lost sales due to stockouts. By keeping the right amount of units in stock, you also avoid unnecessary storage costs and other costs associated with carrying excess inventory. This is especially critical during the competitive holiday season, when retailers need to go heavier on promos, discounts and advertising.

2. Minimizes stockouts

Stockouts can cost your business in more ways than one. By making sure you always have enough inventory on hand, you avoid disappointing your customers (and their loved ones) with late gifts.

New tools like AI-enabled inventory planning and predictive analytics are making it easier for retailers to forecast more accurately and get better insights on when to reorder to avoid going out of stock. With the right tools and process, you can reduce the risk of being caught off-guard by a sudden increase in demand.

3. Reduces holding costs

When your inventory isn’t managed efficiently, you may need to rely on safety stock in case of sudden changes in customer demand. If you’re selling on Amazon, you can also wind up ordering way too much to avoid getting hidden or delisted in the event of an accidental stockout.

Instead of ordering all that extra stock, you can fine-tune your inventory planning so that you only order what you need, when you need it. Instead of spending a bundle on storage, you can invest in developing new best sellers, boosting your marketing efforts, or adding new sales channels.

4. Improves cash flow

Accurate demand forecasting and smart replenishment means more sales and less trapped capital in inventory. With predictable cash flow, you can invest in bigger and better holiday promotions and marketing events. The outcome is higher margins and more capital to invest in your future growth.

5. Enhances customer experience

You’ve heard it before: “stockouts cause walkouts.” Customers will gladly shop from a competitor when they can’t find the products they’re looking for in your store. By optimizing your inventory, you can elicit the opposite effect. Customers receive their orders quickly and will feel confident relying on you for future purchases.

6. Prevents wastage

With a good inventory system in place, you can manage your product portfolio from a more strategic place, reducing the sales pace on your slow movers while making room for your bestsellers. You also dramatically reduce the risk of dead stock. Last but in no way least, sustainability is important to modern shoppers. With effective inventory management, you can avoid the reputational damage associated with generating too much waste.

6 Common Inventory Management Mistakes and How to Fix Them

Now that we’re clear on how better inventory planning can impact your business, let’s dive into some of the most common inventory management mistakes e-commerce businesses make, and how to prevent them from slowing you down this Q4.

1. Insufficient forecasting and planning

According to a 2019 study, 87% of corporate retail professionals considered inaccurate inventory a more significant revenue threat than retail theft. Unfortunately, around 67% percent of supply chain managers still report using Excel to manage their inventory, leaving too much room for costly inaccuracies.


The following tips will help improve your forecasting: 

  • Clean your sales and inventory forecasting data to eliminate errors and adjust for seasonality and outliers like viral campaigns or stockouts due to extreme weather events
  • Identify products with long lead times and review your supplier network
  • If you’re selling across multiple sales channels, consider swapping your spreadsheet-based system for an automated inventory planning platform to save you time

2. Chronic overstocking or understocking

We all remember the height of lockdown when you couldn’t find a single roll of toilet paper on  grocery store shelves. After years of stockouts, many retailers miscalculated demand and are now facing the consequences of the overstocking rebound.

Stockouts and overstocks are both bad for business, here’s how to solve them:

  • Focus your forecasting on ordering just what you need, instead of counting on holiday sales to move excess inventory
  • Vet suppliers thoroughly and consider switching if chronic order delays are an issue
  • Level up your customer service and backordering processes in the event that a stockout occurs 

3. Manual and paper-based inventory tracking

According to research, over 90% of spreadsheets contain errors. Believe it or not, these errors can cost businesses millions or even billions. If you’re a multichannel seller, you can’t rely on Excel to run your inventory.

To avoid costly errors:

  • Take as much human error out of the equation as possible with automated inventory management software
  • Use a dedicated system that treats inventory planning as its principle function, not an extra add-on
  • Pick a platform that doesn’t require days or weeks of employee training, especially if you plan to implement ahead of Q4

4. Lack of real-time visibility into inventory levels

Without real-time visibility into your inventory levels, it’s virtually impossible to scale, especially during busier seasons. You could be overstocked on a product on one channel and stocked out on another. You also might unknowingly be losing customers, who increasingly expect retailers to know what they have in stock.

Here are some tips to help you get greater visibility into your inventory:

  • Choose an inventory platform that offers user-friendly reporting dashboards and real-time alerts
  • Use apps and APIs to connect inventory data across all channels
  • Use barcoding, RFID, and other physical technologies to track locations and quantities

5. Poor supplier management and delayed reordering

Poor supplier relationships can lead to a host of problems, including substandard products and order delays. These two things alone can spell disaster for your brand during the holiday season. However, nearly half of procurement teams still don’t have systems in place to manage their supplier performance.

These tips will help you improve your supplier relationships and keep your orders on time:

  • Implement effective communication channels and clear reordering processes
  • Appoint a dedicated platform and clearly assigned points of contact
  • Evaluate supplier performance metrics and KPIs
  • Consider retraining or replacing suppliers where necessary

6. Inefficient order fulfillment processes

Even the most robust inventory system can be rendered useless by inefficient order fulfillment processes. Incorrect orders, damaged items, and late arrival are just a few of the top 15 reasons for customer chargebacks and returns that could be damaging your margins.

Here are some ways to improve your fulfillment:

  • Partner with a qualified 3PL or consider switching providers if necessary
  • Optimize your warehouse layout to streamline processes and minimize travel distances
  • Consider retraining employees for more efficient picking and packing

Maximize Your Q4 Inventory

The closer you get to the Black Friday, the more your inventory decisions matter. 

With better inventory strategies, including improved forecasting, supply chain visibility and fulfillment processing, you can take the guesswork out of inventory planning and reach a whole new level of holiday season sales. 

Secure the Q4 inventory you need with help from SellersFi. Reach out today to learn more about our full suite of financial solutions tailored specifically for e-commerce.

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