eCommerce Inventory Management Tips & Tricks

eCommerce Inventory Management Tips & Tricks

Keeping track of inventory and deciding what to order takes more than guesswork. Inventory management is a science. Getting it right makes your business run smoothly. If you're struggling with inventory management, this article can help. Today you'll learn some basic forecasting models to improve your current inventory management system. 

Don't worry -- we'll make it easy and painless.

Inventory Stock Forecasting Models

Seasonal fluctuations, sales slumps, and market shifts make forecasting inventory a challenge if you rely on gut instinct alone. Forecasting models take the guesswork out of how much stock to order. Different forecasting methods can be used depending on your business type. 

Here are the ones you need to know.

Demand Forecasting

Demand forecasting takes many variables into account to predict buying trends. It works by revealing the products consumers are likely to buy, which markets will do best, and how to price goods accordingly. This gives you a picture of the inventory to buy, how much, and when. There are several types of demand forecasting.

Naive Forecasting

This method is beginner-friendly. Past data is used to predict future inventory needs. While easy to understand, this is not always the most reliable method. 

For example, using last month's sales to predict this month's inventory can be dicey. That's because month-to-month forecasting doesn't account for market shifts like holidays, etc. Sales may boom before Christmas, but January can be a dud. If you based inventory purchasing off December sales figures, you could be in a lurch. 

Another example is clothing sales. Let's say you sell women's clothing, and prom dresses sell like hotcakes in May. Come June; formal dress sales will slow as the school year closes. Naive forecasting month-to-month doesn't consider these factors.

A better method is comparing last year's month-to-month sales data to predict this year's inventory needs and, for example, using last December's sales to predict this December's sales. While more reliable forecasting models exist, this would give better accuracy than using the previous month's sales to figure out this month's inventory.

Examples of naïve forecasting include the time series model, moving average forecasting, and exponential smoothing.

Seasonal index

This inventory forecasting model goes a step beyond naïve forecasting. This method helps business owners see whether sales are changing due to the season or an overall increase in consumer demand. Knowing the difference is a massive help in planning inventory needs. First, the average demand is calculated. Then seasonal demand is calculated. The percent increase (or decrease) is given a value. Then, compare the change in demand this season to last season. Any sudden increase or decrease can tell you a lot about consumer shopping habits.

Consumer surveys

Perfect for a new product launch, consumer surveys seek to determine what consumers will buy, and when. For example, you may survey women 30-45 to see if they are interested in a new hair removal device, or ask families if they will buy a swimming pool this summer. With enough data, you can make an informed decision. This is also known as "buying intentions" forecasting.

Some types of consumer surveys are end-user surveys, enumeration surveys, and sample surveys.

Game theory inventory forecasting

For B2B companies, game theory forecasting works nicely. Mathematical analysis is used to see how consumers make purchasing decisions when faced with their competitors. Learning how competition drives buying behavior in certain situations can help B2B businesses learn what to buy and when. For example, if you sell POS systems or a new CRM software, this method could come in handy. B2C companies can use it, too.

Related: How to Use a Perpetual Inventory System to Grow your eCommerce Business

Sales force composite method

If you sell nationwide, regional sales can tell you a lot. This method draws on the expertise of regional salespeople to predict buying behavior. This allows you to see changes in demand by region. This method is a bit limited in scope. Still, it works for getting a general idea of regional sales so you can plan what inventory to buy for each area, and even which warehouses locations are best for certain types of inventory. For example, winter coats may do great in the northeast USA, but sunglasses and beach gear do better in southern California and Florida.

Delphi model forecasting

All hands on deck! The Delphi method is an advanced forecasting method with many experts involved. A panel of experts forms an inventory forecasting consensus after multiple rounds of surveys designed to determine buyer behavior. Each round of results is reviewed with a statistical summary before the next round begins. The experts can adjust their opinion after hearing from the other experts. Ultimately, it gives you a solid picture of what inventory to buy and when.

Executive opinions forecasting

This method relies on executive advisors from different departments. Each department analyzes data and comes up with a consensus. Then, each department reviews what the other departments had to say. Then, they come together to draw final predictions about consumer buying behavior. The final consensus can be a good indicator of future sales trends.

There is more room for bias and mistakes in this method than Delphi forecasting, but it is more "within reach" for the average business owner because it is less complex.

Data mining method of forecasting

This method takes a close look at existing data to find patterns. Patterns can predict future buying behavior. Mathematical algorithms are used to identify trends. This method is similar to stock market forecasting techniques. If you know the stock market at all, that means it doesn't guarantee perfect results because unexpected events may happen in the future. However, looking at recent trends can steer you in the right direction as you plan what inventory to buy.

Predictive analysis method

Similar to data mining, prediction method forecasting locates patterns in past data to determine future buying behavior. Rather than mathematical algorithms, this method uses scoring to identify past trends and the relationships between trends. For example, customers who buy hiking boots in the winter may be more likely to buy camping gear in the summer. This makes inventory purchasing easier and strengthens your marketing efforts.

Related: Popular Amazon Inventory Management Tools You Can Use For eCommerce Business

eCommerce Inventory Management Tips

In inventory management, accuracy and efficiency are key. To keep your inventory in check, there are several tips and tricks you should consider:

1. Use a barcode scanner to keep track of your inventory

Using a barcode scanner is an efficient way to keep track of inventory, as it allows you to scan products as they enter the store or warehouse quickly. This means you can accurately record the quantity and manage stock levels more rapidly than manually counting items by hand. Not only does this save time, but it also reduces errors associated with manual data entry and ensures that your records are always up-to-date.

Barcode scanners come in various types, including laser, image, and RFID scanners for different barcodes, such as UPCs and QR codes. When deciding which type of scanner to use, it's essential to consider the size of your inventory and how many items need to be scanned. For example, if you have many things, a laser scanner may be more suitable as it can read longer distances than other types of scanners. On the other hand, if you only need to scan a few items at a time, then an image or RFID scanner might be better suited for your needs.

Once you've chosen your barcode scanner, ensure it's set up correctly and programmed with the correct information to read the barcodes correctly and accurately record the data in your inventory system. Furthermore, regular maintenance should be done on the scanner to ensure that it is always working correctly and up-to-date with any changes in technology or software updates.

2. Create separate product categories for a more accessible organization

Organizing your inventory into separate product categories can be a great way to quickly find items and ensure you're not overstocking any particular item. By creating distinct categories for different types of products, you'll easily track your stock levels at all times.

Creating these categories is a simple but effective way to ensure efficient inventory management. Depending on the size and type of your business, it might make sense to create broad general categories such as "clothing" or "office supplies" or more specific ones like "dresses" or "pens" depending on the products your store carries. This will allow you to easily access information about each item in just a few clicks without searching through your inventory records.

Once you have created these product categories, you must stay organized and ensure that they are regularly updated with new items as they enter your store. This will help ensure accuracy when tracking stock levels and prevent overstocking any particular item. Additionally, you can quickly locate the right product when creating customer orders without sorting through the entire inventory list.

Another benefit of categorizing products is that it makes it easier for customers to navigate through your store by allowing them to filter search results by category. This can improve customer experience since they don't have to manually browse through all of your products to find what they're looking for. It also helps potential customers discover products they may have yet to learn about since they can easily explore different categories without much effort!

3. Establish purchase order thresholds to avoid overbuying

Establishing purchase order thresholds is an essential step in preventing overbuying. By setting up thresholds, you can quickly identify when to restock certain items and prevent unnecessary buying that could lead to waste or loss of inventory.

The best way to decide on the thresholds for each item is by understanding the demand and supply of particular products. This includes researching what types of customers are buying which products, how often those products need to be reordered and maintaining accurate records about current stock levels. Once this data has been collected, you can set up appropriate stock levels for each product so you're not overstocking any particular item.

Having these purchase order thresholds in place also helps prevent ordering too much of a product quickly, which can lead to wasted resources or deadstock if there is no demand for it. Additionally, it allows you to accurately plan future orders without running out of stock unexpectedly or having too many overstocked items sitting around unused.

Overall, setting up purchase order thresholds effectively ensures optimal inventory management and efficient resource use. Not only does this help avoid overbuying and wasting resources, but it also provides customers access to the products they need when they need them, leading to increased customer satisfaction and loyalty!

4. Compare prices between different eCommerce platforms and suppliers

Comparing prices between different eCommerce platforms and suppliers is a great way to get the best price for your inventory, allowing you to maximize profits. Not all eCommerce platforms or suppliers offer the same pricing structure – some may charge a flat fee per transaction. In contrast, others may have subscription fees, so research is essential to determine which will be the most cost-effective for your business.

When comparing prices, there are a few key factors that should be taken into account. The first is the ease of use – ensure the platform or supplier is user-friendly and has features that fit your needs. Additionally, consider each company's customer service policies, turnaround time on orders, shipping costs, and return policies to understand what kind of support they provide in case something goes wrong. Finally, look at their data handling procedures to ensure that any personal or financial information stored on their servers is kept secure and protected from potential security breaches or identity theft.

By comparing prices between different eCommerce platforms and suppliers, you can save time and money while ensuring you have access to the products customers need when they need them. This will help improve customer experience as well as increase overall profitability!

5. Use automated inventory management software for streamlined tracking

Automated inventory management software for streamlined tracking is essential for any successful business. This type of software helps streamline the tracking process by automating data entry and eliminating manual input, which can save time and money in the long run.

Automated inventory management software allows businesses to track their products more accurately and efficiently. For instance, it can help with stock level monitoring by providing real-time updates on product availability and alerting you when stock levels reach a certain threshold. Additionally, it can track customer orders, manage supplier relationships, generate purchase orders automatically, generate reports on sales trends and performance metrics, and much more.

Automated inventory management software also simplifies the overall process for the business owners and employees involved in the tracking process. By eliminating the need for manual data entry, users can spend less time on mundane tasks and focus on strategic decisions that will benefit the business. The software also provides clear insights into how products perform so that informed decisions can be made quickly and efficiently.

6. Periodically audit your stock to ensure accuracy

Periodically auditing your stock is essential to ensure accurate inventory counts. Auditing inventory regularly allows you to identify any discrepancies that may have occurred during shipping or stocking, helping to ensure accuracy and minimize instances of overstock or understock. This also eliminates any unnecessary costs that can arise from stocking too much product or not enough.

When auditing your inventory, it's essential to check for accuracy against what was initially ordered and shipped and document any changes in quantity or quality. Additionally, it's necessary to look for damaged goods that may need to be returned or replaced. Lastly, note any discrepancies between the inventoried products and their original descriptions – such as incorrect sizes, colors, or designations – so you can quickly make adjustments before they cause any further issues.

Auditing your stock regularly is critical to maintaining accurate inventory counts and ensuring customer satisfaction. Not only does this help cut down on wasted resources due to inaccurate record-keeping, but it also helps prevent costly mistakes like mismatched orders or incorrect shipments! Taking the time to audit your stock periodically will save money while increasing customer satisfaction with the products they receive.

These are just a few tips for effective inventory management for eCommerce businesses. With an optimized supply chain management system in place, keeping track of inventory levels and meeting customer demand will become much more accessible and


There are many inventory forecasting techniques. It's up to you to decide which is best for you. The size, type, and complexity of your business should point you in the right direction. For new and small business owners, naïve forecasting and consumer surveys are a good place to start. For better insight, a more technical method like those mentioned above may be more useful.

Recommended: What Is Buffer Inventory & How It Affects Your Business

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