As more retailers diversify their sales channel strategy, the challenges of inventory management become increasingly complex. While stock control for one or two stores may be relatively simple, multichannel inventory management requires better visibility and the need to be agile and react quickly to trends.
In this post, we’ll walk through everything you need to know about multichannel inventory control, from the costs and causes of poor inventory management, to what you should look for in your search.
Coming to Grips with Multichannel Inventory Management
For many retailers, adding new sales channels amplifies existing inventory management problems. Before pursuing a multichannel strategy, it’s best to update and perfect your existing processes. This will ensure you transition smoothly when your business starts growing.
Coming to grips with inventory management processes has many benefits. It highlights which parts of the process are sticking points, and where optimizations can be made. A review also helps you choose the right multichannel inventory management system when it’s time to upgrade.
Whether you have one store or multiple sales channels, a review at least every 12 months is necessary to ensure you’re not incurring avoidable costs, and offering customers the best service possible.
Conducting an Inventory Management Review
The inventory management process has five stages. Understanding what happens at each stage makes reviewing and pinpointing potential problems easier. The five stages are:
- Purchasing: buying raw materials or finished goods
- Production: turning raw materials into sellable goods
- Holding Stock: managing the stock on your shelves and warehouse
- Sales: selling goods to your customers
- Reporting: tracking key metrics like inventory turnover to identify areas for improvement
Most retailers buy goods in a sellable format, only encountering stages 1, 3, 4 and 5. Despite this, each part of the process is equally important. Useful questions to ask during the review that relate to inventory management include:
- Which suppliers have the shortest lead times?
- How accurate are suppliers with deliveries?
- Which products have the best inventory turnover ratio?
- Which products have the best sell through rate?
- How accurate are our safety stock calculations?
- How often do we experience stockouts and on which products?
Regular reviews and tightening processes makes managing stock across multiple channels more effective because you have templates and guides to help. Reviews also highlight where your current inventory management systems aren’t performing, enabling you to create a feature/functions list for any new software you might purchase.
Choosing The Best Inventory Management Software
For multichannel inventory management to be efficient and successful, a few core competencies must be kept in mind, including:
- Maintaining a 360° view of your stock at every location
- Having real-time stock and sales updates for every channel
- Running reports to support data-driven decision making
These principles directly relate to what you should look for when purchasing inventory management software. Using different software for each sales channel doesn’t give you the visibility or real-time view of inventory and sales data that’s required. An all-in-one inventory management solution is the modern approach for multichannel retailers.
Top Inventory Management Software Features
With these core competencies in mind, here are the top five features you should look for when deciding on the best inventory management system.
1. Multichannel View
It’s critical that you’re able to manage all your sales channels in one system. That means being able to do everything from updating product information for every channel, to viewing sales and stock information, to logging returns. It’s also important for these channels to be connected and updated in real-time.
One key reason is that customers no longer see ‘channels.’ They want to shop how they want, when they want. This omnichannel expectation means you must be able to offer an online store experience, buy online, pick up in store, and buy online, return to store. If your systems aren’t connected it’s near impossible to offer value-added services like these and your customer experience will suffer.
2. Integrations to Third-Party Ecommerce Platforms
For online retailers especially, increasing distribution through online channels like eBay, Amazon, and Walmart is core to business strategy. Multichannel inventory management systems must integrate with platforms like these.
One benefit is you only need to update your product information once, rather than input it separately into each system. This saves a huge amount of time and ensures product information is consistent across every channel. Centralizing sales and product reports from all channels is also a huge plus, and makes sales analysis much easier and quicker.
3. Reporting & Analytics
The best way to optimize processes and grow your business is to create reports and analyze where improvements can be made. Any inventory management software you choose must include a robust suite of reports.
Some key reports to look for are:
- Sales by Product
- Sales by Channel
- Inventory Valuation
- Cost of Goods Sold
- Product Average Purchase Price
- Returns Summary
- Low-stock/Out-of-stock Products
These insights allow you to take your business to the next level by reducing your costs and maximising your margins.
4. Cloud-Based Access & Updates
Cloud-based software is particularly important for companies with numerous retail locations. Where on-premise software is installed on-site, and only accessible on-site, cloud-based software can be accessed from anywhere, as long as you have an internet connection.
This makes stock, sales, and overall business management much easier and more efficient. It enables regional managers and head offices to access data from specific stores and regions in real-time and make data-driven decisions instantly to maximise sales at any time.
5. Warehouse Management Capability
To ensure that deliveries and stock levels are managed accurately, features like QR and barcode scanning are incredibly useful. For companies with large warehouses that get regular deliveries, manual data entry is time consuming and prone to errors.
Most modern inventory management systems integrate with handheld devices including tablets and mobile devices. Up-to-date electronic records tell you who received deliveries with a time and date stamp and enable you to implement batch tracking for improved product traceability.
Top 6 Ecommerce Inventory Management Software Systems
Ecommerce inventory management software is an essential requirement if you’re selling online, especially on multiple sites. This could be variations of your site for different markets and regions or third-party marketplaces like Amazon and eBay.
These six ecommerce inventory systems are feature-rich and have a multitude of functions that enable you to achieve cohesive and efficient inventory management.
Sellbrite is one of the leading multichannel inventory management solutions on the market. It’s owned by GoDaddy which has extensive knowledge of the online environment as a worldwide hosting, domain name, and website provider.
In terms of features, Sellbrite has everything you need to manage sales and products across multiple online marketplaces. It’s also versatile and has features that enable it to become your order management software, product management hub, and a fully-featured analytics platform.
Getting your products into Sellbrite is easy using the bulk upload feature. Once this is one, you can list your products on any of the top marketplaces that Sellbrite integrates with (including Amazon, eBay, and Walmart) by creating listings for each marketplace using your uploaded data.
To tie everything together, you can turn on inventory sync. This will automatically update your listing quantities to match your available inventory. You can also use inventory rules such as “use 100% of inventory” and set minimum and maximum sales quantities.
|Package||Monthly Order Limit||Monthly cost|
|Forever Free||Up to 30 orders per month||$0|
|Pro 100||Up to 100 orders per month||$29|
|Pro 500||Up to 500 orders per month||$79|
|Pro 2k||Up to 2000 orders per month||$179|
2. Quickbooks Commerce (Formerly TradeGecko)
In August 2020 Intuit acquired TradeGecko. This makes what is now Quickbooks Commerce an incredibly powerful tool, thanks to the financial, payment, reporting, and accounting tools that sit behind this omnichannel inventory management platform.
Quickbooks Commerce boasts an impressive set of features and claims that you can organize your products, orders, payments, customers, and insights all in one place, in one secure system. Because of this, it’s a strong choice for businesses that are already managing stock and sales across multiple sales channels.
Like Sellbrite, Quickbooks Commerce integrates with all the top marketplaces you would expect including Amazon and eBay. It also connects with popular ecommerce platforms including Shopify, Shopify Plus, and WooCommerce. It integrates with over 50 platforms from CRM to POS to forecasting software.
With a #1 rating inventory and order management software on Capterra and Software Advice, it’s a favorite among multichannel retailers. It’s suitable for B2B and B2C websites, and a total of $14 billion has been transacted through the system.
|Package||Monthly Order Limit||Monthly cost|
|Founder||Up to 10 orders per month||$39/mo|
|Lite||Up to 100 orders per month||$79/mo|
|Small Business||Up to 1,000 orders per month||$199/mo|
|Business||Up to 2,500 orders per month||$599/mo|
Orderhive is true to its name, giving you a 360° view of your retail operation. The price is competitive versus the other systems in this list, and it offers fantastic value for money.
Users can manage everything from products and orders to customer data, returns and shipments. This true multichannel system covers much more than inventory and enables you to access this information anywhere as a cloud-based system.
Much like the other ecommerce inventory management software systems, it has a wide range of integration partners at over 300. This includes carts on popular platforms like WooCommerce and BigCommerce as well as other useful shipping sites like FedEx and ShipStation.
The standout feature is ecommerce automation. With innovative workflows, Orderhive can do everything from create orders and customer folders, to auto-fulfilling orders through selected warehouses, and more.
|Package||Monthly Order Limit||Monthly cost|
|Free (For Shopify Users)||N/A||$0|
|Lite||Up to 200 orders per month||$44.99|
|Starter||Up to 1,200 orders per month||$134.99|
|Growth||Up to 3,000 orders per month||$269.99|
|Enterprise||Unlimited Orders||Contact For Quote|
Ecomdash is a flexible, cloud-based inventory management platform that’s most popular with mid-sized businesses. One of the key strengths of Ecomdash is the flexibility you have to tailor it to your processes and inventory requirements. For example, you can manage products by SKU, serial number or your own specific product identification system.
Automated inventory sync is another important feature to note. It keeps your inventory updated 24/7 across every single channel. This reduces the risk of overselling items. It’s also useful if you sell kits or multipacks as the automation can detect when products have been selected as part of these deals and adjust overall stock figures accordingly.
Order management is another crucial strength that Ecomdash brings to the table. The full order management suite enables you to print pick lists, packing slips, and shipping labels from one easy to use dashboard. You can set rules for products to drop ship to suppliers and keep your customers updated with automated order status updates and tracking information sync.
|Package||Monthly Order Limit||Monthly cost|
|1||Under 100 order per month||$60|
|2||101 – 500 orders per month||$90|
|3||501 – 1,000 orders per month||$135|
|4||1,001- 3,000 orders per month||$190|
|5||3,001 – 6,000 orders per month||$250|
|6||6,001 – 10,000 order per month||$350|
|7||10,000+ orders per month||Contact For Quote|
Ordoro is another ecommerce inventory management system that has plenty of features to help you manage your entire online sales process. From the pricing you will notice a massive jump between the Express and Pro packages although it’s disappointing that Express does not appear to have inventory management included.
That being said, one of the benefits of Ordoro is the discounted shipping rates it offers at every package level with USPS. It claims that retailers can save up to 67% when shipping using the Ordoro platform. Other shipping partners include UPS, FedEx, DHL and Canada Post.
Advanced features that are useful include inventory allocation, low stock alerts and filtering, profitability tracking, and barcode scanning. Ordoro has packed many features into their enterprise system, which makes it suited to larger retailers.
These features combined with the postage discounts make Ordoro one of the best multichannel inventory management systems on the market, if you have the budget to put it in place.
|Package||Basic/Additional Features||Monthly cost|
|Express||Barcode scanning, shipping presets||$59|
|Pro||Inventory management, dropshipping||$499|
|Enterprise||Custom integrations, supplier management||Contact For Quote|
6. Stitch Labs
Stitch Labs is a mid-market to enterprise solution for brand trading $1m or above, or transacting over 25,000 orders per year. Some of the brands that use the platform include Chubbies, Brooklinen and Sunski, who achieved 20% wholesale growth and halved inventory management time.
With a clean and easy to use interface, Stitch Labs makes inventory and order management across multiple channels quick and straightforward. As well as standard inventory management, it offers B2B wholesale management, purchasing and replenishment features, and a suite of reporting and analytics. Merchandising is also made easy with tools for creating bundles, pre-orders, and loyalty programs.
Stitch Labs integration partners are a little on the light side compared to others, but they do integrate with all major platforms including Shopify, Amazon, eBay and Etsy. B2B users may be happy to see integrations with popular tools like NuOrder and Envoy B2B.
|Package||Basic/Additional Features||Monthly cost|
|Essentials||Inventory and order management||$N/A|
|High-Growth||Overflow order routing||$N/A|
|Premium||Smart replenishment report||$N/A|
Common Issues with Managing Inventory Across Multiple Channels
Before we finish, getting familiar with common inventory management problems is important. It helps you identify issues early on and implement solutions before it’s too late. Most problems occur due to lack of planning and having systems in place that aren’t fit for multichannel businesses.
These four inventory issues are among the most common that businesses encounter.
Overstocks are when a business orders too much of one product or product range. It’s usually the result of poor inventory management and forecasting.
However, holding too much stock can also be caused by external market factors like a sudden drop in demand, particularly during specific periods, such as seasonal promotions.
As of June 2019, U.S. retailers are sitting on approximately $1.36 of inventory for every $1 in sales. As we’ve seen with the recent pandemic, if demand suddenly decreases and you have too much stock, the cost of holding that stock can be more than the sales you’re making, leading to significant losses and even the closure of some companies.
Out of Stocks
Stockouts are unavoidable in modern retail, but every effort should be made to minimize them happening. The impact on your sales might be more than you think. A Harvard Business Review study found that if a product is out of stock in-store, 21%-43% of consumers will go to another store to buy the item.
The real-world impact of stockouts is lost sales and frustrated customers. Modern consumers have an “I need it now” mentality which means, if you don’t have it, they will go to someone that does. Good inventory software will run reports on low-stock and out-of-stock items, with some automatically placing orders to suppliers when stock hits a low-threshold trigger.
Offering a fast delivery service is essential for retailers selling online, especially with services like Amazon Prime offering same-day delivery in some areas.
Despite this, many retailers are still struggling because they have ineffective inventory management processes in place, and lack visibility of stock across all locations. Issues range from overselling products because they don’t know what they have in stock, to slow pick and pack processes because they don ‘t track product locations accurately in warehouses.
The size of the US is a barrier to offering services like next-day delivery, although there are solutions. Locating your stock closer to your customers is a fantastic way to cut delivery times and delivery costs. One way to do this is by dispatching ecommerce orders from the closest store, to the final delivery address.
Returns are an inevitable part of modern retail. No retailer has a 0% return rate, and they never will. However, a research report from retail analyst firm IHL Group found that up to half of all returns are partially ‘preventable’. The most common reasons for returns are product defects and size issues, most prevalent in the apparel industry.
Another common reason for returns is when the wrong product or the wrong quantity is sent. This has a domino effect, causing issues with overselling and underselling. Many errors like this wouldn’t be picked up during a manual stock management process, which highlights the importance of having the right system in place that tracks the full inventory lifecycle process.
If you’re a retailer selling across multiple sales channels, multichannel inventory management should be a top priority. Having the right products in stock at the right time can be the difference between exceeding sales targets and missing them completely.
Luckily, a new breed of software has entered the market called multichannel inventory software. These platforms enable you to manage everything from orders to inventory to shipping and returns in one system. Whether you’re selling in one store and online or across multiple online marketplaces, these platforms will help you to manage and grow your business effectively.