E-Commerce and Inventory Management for Startups

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Starting a new E-Commerce store is exciting, but every time I start a new project, business owners seem to miss something essential: inventory management. No matter what platform you are looking to use (Magento, WooCommerce, custom, etc), if you are selling non-digital products you will need to manage your inventory. You could save thousands of dollars if you do this right, so below are a few things to keep in mind.

1. Number of Warehouses

If you have more than one warehouse, you will need a way to catalog which products you have in each location, as well as the individual stock count of each item at each location.

2. Inventory Update

E-CommerceIdeally you want to have inventory quantities updating in real time based on available stock. For example, if a customer buys the last item in stock, the product should start showing “out of stock” right away. If all warehouses are not using the same database or inventory system due to system restrictions, it will be necessary to update individual warehouse stock at least daily. Items that are sold out but still showing “in stock” can create a huge customer service issue, resulting in negative customer reviews, the need to process refunds, and excessive time spent by your customer service department resolving a preventable issue. Having incorrect stock quantities on your E-Commerce site can also result in losing both new and long-term customers and can create a customer-service disaster.

No matter what kind of database you are using—even if it is only Excel spreadsheets—integration is possible. There are many options available now, including shared Google Docs, connecting a MySQL database with an Oracle database or an MsSQL, and dumping a file in a server and picking it up from another. While implementing your inventory system, make sure to talk to your developer, and do not take a “not possible” answer—there is always a way.

3. Prioritize

You will need to know what parameters you will require in order to prioritize which warehouse will ship each product. Two especially important factors to consider are location and cost (especially if using vendors for drop-shipping, which can affect the cost and resulting revenue).

4. Pre-Orders

It would be easy to show every item as “in-stock” and just take pre-orders for all products, but if you want to avoid customer service issues and ensure that your customers keep coming back, you should avoid this method. When a customer buys something, they expect to receive it without any delay. Nobody likes to get an email that starts with “Sorry, but…”

Instead, be proactive and try to show as much information as possible. For example, instead of a “buy now” button, you could easily show that the item is available for pre-order and its expected shipping date. Once this is in effect, you will also need to determine at what point you will be collecting payment from the customer, at the time of pre-order or once the product is ready to ship. To avoid taking a loss on shipping costs, I recommend collecting payment once the product is ready to ship, as shipping rates can fluctuate and generally will increase over an extended period of time. Collecting an authorization for an order at the time of pre-order can also result in additional work for your customer service staff, as many payment gateways will only hold the authorization for 30 days.

This can result in issues with settling the transaction if the time from product announcement to delivery is extended. Taking all of these factors into account both before selecting and during implementation of your inventory system will result in more reliable data and will definitely give you an edge on the competition.er an extended period of time.

Meet Alejandro Sanabria

I am a Senior Web Developer with vast experience in E-commerce. I thrive on challenges, I work fast and I'm a problem solver. In my spare time I enjoy being the father of an awesome boy.