Why Should Online Sellers Use Ecommerce Inventory Management Software?
Here’s why online sellers should use ecommerce inventory management software. To start with, are you an ecommerce seller? Do you have your own website or do you sell on e-commerce marketplaces like Amazon or Flipkart? Chances are high that you are doing both and may be even having an offline store. Any online seller wants to grow his business and increase his revenues manifold.
However, with growth comes complexities. Growth means arranging for and storing large quantities of inventory. If you are currently managing your business on multiple channels using an excel sheet- there might be a lot going wrong in your business. Human errors, managing multiple ecommerce sites, inventory stock-outs, or leakages are just some of the issues. An ecommerce inventory management software can solve all this & more. First, let’s explore the inventory management challenges in online selling.
Challenges of ecommerce Inventory Management
Many ecommerce business owners are unable to estimate the correct amount of stock required. When there are multiple ecommerce sites involved and each has its own customer base, it becomes difficult. There might be spike in sales due to positive economic sentiments or due to the festive season. Overseeing this, many sellers tend to stock up.
- Overstocking is expensive as you need to spend cash on ordering the inventory. Storage costs for the inventory add to this expense. If you are a manufacturer who also sells directly on e-commerce; you will have even more working capital pressures.
- Deadstock at hand is another challenge. This is especially true for products with expiry dates such as food, beverages, and nutraceuticals. Even products such as paints, lubricants, shoes, handbags tend to get damaged over time. Sometimes just a shift in fashion, for example, a move away from bell-bottoms to slim-fit jeans can leave you with inventory you don’t need. An ecommerce inventory management software can easily help prevent this.
2. Growing Business v/s Excel Sheet Bases Manual Management
When you manually manage everything, it is very difficult to grow your business. This applies to manual inventory management too. In the initial period when you start your business, this may seem simple. However, to grow your business you need to expand. As you keep adding new channels, such as Flipkart, Amazon, Myntra etc., it becomes tough. This is a key reason to use an ecommerce inventory management software.
- You will need to manually manage inventory for multiple marketplaces. Then an excel sheet is just isn’t enough. As the business grows, so does the size of the excel sheet. This is a recipe for disaster. Apart from the irritation of operating heavy files, there are large chances of human error.
- Some businesses employ extra manpower to handle each marketplace separately. However, this leads to manual error. What if you have two pieces of a t-shirt, and a customer orders two on Myntra and another customer orders 1 one on Flipkart? This leads to order cancellation by you- the seller, reducing your seller rating.
- Now to the above you may say that you will reserve inventory units for each marketplace. This is not practical. Marketplace-wise demand estimation is difficult. There might be a sudden sale on Amazon or Paytm may be offering attractive cashback. It is impossible for a seller to know beforehand how much inventory to allocate to each marketplace.
- Multiple warehouses add to the problem. Now it’s not just about managing inventory across marketplaces but warehouses too. Imagine manually trying to reconcile inventory across warehouses, marketplaces & physically verifying inventory on a day-to-day basis.
3. Overseeing Multiple Marketplace & Warehouses
As your company grows, as an ecommerce seller; you need to oversee businesses across multiple marketplaces. Additionally, you will end up having at least two warehouses or sign up for fulfilment programs like Amazon FBA, where you need to send products to their warehouse. Now imagine how difficult it would be it is to control this. There will be several operational issues, payment leakages, returns to be managed etc.
- You will have trouble smartly managing inventory across ecommerce sites. You may somehow get through day by day owing to your employees. But the strategic insight that an ecommerce inventory management software provides, will be missing. Consolidating orders, sales, returns across marketplaces will become challenging.
- It is the same story for multiple warehouses. The matter gets confusing when you have to balance between your own warehouse and marketplace warehouses. You need to also deal with suppliers, their POs, goods received notes, manufacturers & many other external parties that are connected to your warehouse. Most sellers forget- the warehouse is the base of your entire inventory. It is this inventory that needs to get automatically reflected on marketplaces. But you cannot do that without an ecommerce inventory management software.
4. Cutting Costs v/s Investing in Tools that Grow Your Business
Ecommerce sellers in India tend to cut costs as much as possible. This approach is about cutting costs to grow profits. It is a very conservative approach and may not take you far in life. However, a good businessman knows that to grow, you to need to invest in tools that help you expand your business. Growing business adds to economies of scale, bringing down your fixed costs- eventually leading to improved profits.
- In our tendency for ‘jugaad’, Indian e-commerce sellers will try to manage with excel sheets even when they scale to 8 marketplaces and are fulfilling 200 orders per day. However, they soon realize it is humanly impossible to do it.
- Many sellers tend to purchase ready-made inventory management excel sheets formulated for ecommerce sellers. However, these sheets are not real-time. Suppose a customer purchases 2 pairs of shoes from your Flipkart store, the sheet will not automatically detect it. An ecommerce inventory management software can.
- Some sellers understand the benefits of a software. However, to cut costs, they will use software which provides inventory management with very limited features. Often such software are meant for offline businesses. A proper ecommerce inventory management software is designed for ecommerce. Browntape for example gives you the option of linking your offline store too. But it is designed keeping in mind the complications of an ecommerce business.
5. Lack of Business Insights
Business insights are required so that you can be sure you are steering your business in the right direction. Without an ecommerce inventory management software, ecommerce sellers end up spending most of their time on day to day on operational issues.
- A centralised inventory management system gives you a consolidated insight across different channels. So, you have an overview of your whole business. And are not dealing it with as per marketplaces. It’s a more effective way to run an online business.
- Data is important and very important when it comes to ecommerce businesses. An ecommerce inventory management software provides you data in numbers and even easy-to-understand graphs.
- Such software also gives you insights about your best performing SKU across marketplaces, the city contributing to most of your orders, the day of the week which has maximum sales. You may say this can be done with an excel sheet. However, you must do it again and again. With a software, its real-time and reports are easily downloadable. In the e-commerce world, timely access to data is important. In just a minute, you can lose your business to another seller.
What is an E-Commerce Inventory Management Software?
An ecommerce inventory management software centralises the inventory data of an ecommerce business. It allows an online seller to track inventory, right from purchase, warehouse storage to ecommerce sales and returns.
- Most ecommerce software nowadays need not be downloaded. They are provided on a Software as a Service (SaaS) platform, so that all you need to do is simply login.
- The good news is ecommerce inventory management software is not expensive in India. You have several good options and the fees can be as low as Rs.2 per order.
- Software such as Browntape which are designed to be easy to use, making inventory management an enjoyable experience.
- To understand how an ecommerce inventory management software works, please see the diagram below. This is a simplified version, where we have just shown the warehouse and marketplaces. But such software can also link you purchase, courier and more. As orders flow from marketplaces, they enter the software system and are automatically collated.
- Then this information flow to the warehouse section of the software which is linked to warehouses. Depending on stocks, products are allocation and this information is returned to the marketplaces, confirming an order. If say a there just 2 units of a mixer jar available, you can also configure for such a message to reflect on the marketplace- “Only 2 units left”.
What are the Benefits of Using an ecommerce inventory management software?
- Sign into A Single Panel: What most sellers love about ecommerce inventory management software like Browntape is that there is no need to log into multiple ecommerce marketplace panels anymore. All your inventory details automatically flow into a single seller panel/software.
- Reduced Manual Dependency: You no longer must depend on heavy excel sheets and human intervention to reconcile inventory.
- Reduced Error and Stock Outs: As everything becomes automated, stock errors drastically reduce. This impacts your cash management in a positive manner.
- Improved Marketplace Seller Rating: Cancellation by seller often leads to a fall in marketplace rating. Ecommerce inventory management software help improve your marketplace reputation.
- Better Demand Forecasting: Thanks to the consolidated data collection across marketplaces & key insights provided by such software, you can easily see the seasonal trends in the past. This helps you correctly estimate demand & stock the right quantity.
- Set Product-Wise Minimum Stock Levels: Due to the inventory insights gained through the ecommerce inventory management software, you can know the average demand for each SKU in your catalogue. Hence it becomes easy to maintain minimum stock levels and set a reorder time basis the lead time for procurement.
- Better Management of Returns: Return management across different marketplaces is a cumbersome process for most sellers. When using an integration software, if becomes easy to add back good inventory to your pool, after physical verification.
We hope the above article gave you a detailed insight into why an ecommerce sellers should us an inventory management software. There are multiple options available in India and the small addition of per order cost of approximately Rs.2 per order is worth the growth you will get in your business. The ecommerce industry in India is bound to only grow from here on. As an ecommerce seller, its best to automate as many tasks as possible so that you make the most of this growing industry.