How to Track Inventory for Your eCommerce Business

How to Track Inventory for Your eCommerce Business

a woman tracking inventory in a warehouse

Why is inventory tracking important?

This may seem like an obvious question, but with only 43% of small businesses tracking their inventory (according to 2022 research), it clearly deserves our attention.

In this post, we’ll not only go over why inventory tracking is so important for eCommerce businesses but also:

  1. Inventory tracking best practices
  2. Challenges to effective inventory management (and how to overcome them)
  3. Key tools, software, and equipment to streamline your inventory tracking

Let’s start by outlining some of the reasons why inventory tracking is so important:

1. Avoiding stockouts

Inventory tracking helps ensure you never run out of stock, so your customers can always find the items they need when shopping on your site.

Stockouts are one of the easiest ways to lose customers, as most prospects will immediately go to a competitor when faced with an out-of-stock product.

2. Managing reorder points

Good inventory management also prevents overstocking by setting reorder points — which help track when it’s time to restock.

Reorder points must be set in tandem with safety stock for each product you sell.

Safety stock is the amount of inventory you keep on hand in case of unexpected demand or an unforeseeable shortage from a supplier.

Setting these reorder points can be tricky, as they’re determined by unique variables like supplier lead time and customer demand.

Check out our blog post on the safety stock formula for more information.

3. Meeting customer demand

Knowing exactly how much inventory you have on hand and when it will be replenished helps you meet customer demand more quickly, especially when you start stocking your products on multiple sales channels.

4. Understanding the true value of inventory

With an accurate picture of your on-hand and in-transit inventory, it’s easier to understand the value of your inventory at any given time — so you know the exact worth of what’s in your warehouse.

This can help you understand how much of your capital is tied up in stock and how much is available for reinvestment into other business areas.

5. Analyzing business performance

Inventory tracking also provides insights into how your business is performing, so you can make more informed decisions about inventory investments and pricing strategies.

So now that we’ve established why it’s so important to track inventory for your eCommerce business — let’s dive into the specifics of how to do it.

How to get started with eCommerce inventory tracking

1. Conduct an inventory audit

This is the first and most important step — you’ll need to assess what inventory you have in order to track it.

We know that the word “inventory” and “audit” are practically curse words in a warehouse, but audits don’t need to be a source of dread.

There are ways to do inventory audits without shutting down business operations.

Check out our post on inventory cycle counting for more information.

2. Choose a tracking system

Once you know what inventory needs to be tracked, it’s time to select a tracking system that fits your specific needs and budget.

For an all-in-one inventory management platform, we’d recommend our very own SkuVault.

You can track inventory in real-time, get automated alerts when it’s time to reorder, and access reporting and analytics.

While you don’t need a dedicated IMS (inventory management system) to track inventory, you’ll avoid a lot of headaches as opposed to using Excel or some other static, manual tracking method.

3. Set up your tracking system

Once you’ve chosen the right system, it’s time to get set up and begin entering in information. This includes item codes, SKUs, descriptions, and more.

If you’re using an inventory management system like SkuVault, you can easily integrate it with your existing systems to make setup even easier.

For a quick and easy way to both input and maintain inventory data, we recommend barcoding (more on that later in the post).

4. Track all incoming inventory

Now that your system is up and running, it’s time to meticulously track all inventory — from purchase orders to returns.

This includes recording location, quantity, and condition — so you can track your inventory accurately across multiple locations.

Using a platform like SkuVault makes this simple and easy. You can see all in-house and in-transit inventory on one convenient dashboard.

5. Establish reorder points

Setting up reorder points helps you track when it’s time to restock inventory.

You can set up a basic reorder system — such as monitoring past sales data — or use an inventory management system to track sales velocity, current stock levels, and more.

For more information, check out our post all about inventory forecasting.

6. Monitor inventory performance

Finally, track the performance of your inventory over time — so you can evaluate which products are selling well and which aren’t.

This helps you make smarter decisions about pricing strategies, restocking orders, and more.

By tracking your inventory, you can stay ahead of the game when it comes to managing your eCommerce business and keeping track of everything from purchase orders to pricing strategies.

The time you save with automated tracking and reporting could be better spent on other tasks, like expanding your product line or improving customer service.

So don’t wait — get started tracking your eCommerce inventory now.

Tips for effective inventory tracking

1. Set reorder points

Reorder points are the predetermined levels at which you will restock inventory to avoid stock-outs.

Reorder points should be set up on a per-product basis, and are often based on factors like:

  • sales velocity
  • product demand
  • supplier lead time

We’ll talk more about reorder points and safety stock later in the post.

2. Automate where you can

Automated tracking enables you to track inventory in real-time — without having to manually enter data — leading to exponential efficiency.

One of the ways IMS platforms like SkuVault help with this is by integrating with all your existing mission-critical software platforms (such as accounting software, shipping management, channel management, and more).

Plus, with SkuVault, you get out-of-the-box support for barcode scanning, so you can start inputting your inventory data right away.

Speaking of which…

3. Use barcoding

Barcoding is probably the most efficient and cost-effective technology you could implement today to immediately improve your inventory tracking processes.

Barcode technology has been around since the 1950s, has barely changed, and is ubiquitous across the world, proving just how valuable it is for inventory tracking.

Barcodes make it easier to track inventory accurately, as they provide a unique identifier for each item in your inventory.

Use barcodes to track stock levels, track items as they move between locations, and more. For more information on getting started with barcodes, check out these related posts:

5. Set up notifications

Setting up notifications (e.g., email alerts) can help you stay on top of changes in inventory levels and track shipments more easily.

Inventory management systems like SkuVault track inventory levels and send real-time alerts when stock needs to be replenished — saving you time and money.

By following these tips, you’ll be well on your way to successful inventory tracking for your eCommerce business.

The key is to automate and streamline as much of the tracking process as possible. This not only reduces the risk of human error but frees you up to focus on more pressing areas of your business.

With the right inventory tracking system in place, you’ll be able to track your inventory more efficiently and provide a better shopping experience for your customers.

Challenges to eCommerce inventory tracking

1. Managing multiple warehouses

If you have multiple warehouses and need to track inventory across them, it can be a challenge to keep track of everything.

To make sure that all your products are accounted for, use an automated tracking system that allows you to track stock levels and shipments between locations in real time.

2. Keeping track of SKUs

It can be difficult to track all the different SKUs in your inventory, especially if they’re spread across warehouses.

Using barcodes and product codes can help you track items more easily — and most tracking systems allow you to assign codes to each item in your inventory.

3. Accurately predicting customer demand

Predicting customer demand can be a challenge, as it’s hard to anticipate exactly how many items you need to have in stock.

Using strategies like reorder points and analyzing sales data over time can help you track inventory more accurately and prevent running out of popular items.

Inventory tracking equipment and tools

Software and tracking equipment can help you track inventory more easily and efficiently. Here are some of the most popular tools and systems for eCommerce inventory tracking:

1. Inventory management software

Inventory management software like SkuVault, Linnworks, and TradeGecko helps track stock levels, order fulfillment, and other aspects of inventory tracking in real-time.

2. RFID (Radio Frequency Identification) trackers

RFID trackers use radio frequency technology to track inventory, enabling you to track stock across multiple warehouses and locations in real time.

3. Barcode scanners

Barcode scanners are used to scan barcodes on items, making it easier to track individual items in your inventory.

4. Shipping software

Shipping software like Shipstation and Shippo helps track shipments across multiple carriers and locations, making it easier to track orders and inventory levels in real time.

5. ERP systems

Enterprise resource planning (ERP) systems track orders and inventory levels across multiple warehouses, locations, suppliers, and customers. They can also be used to track shipments and provide insights into customer demand.

Manual vs. automated tracking

Manual tracking is when you track your inventory by hand, tallying up figures and keeping track of stock levels. This can be a time-consuming process, as it requires a lot of attention to detail.

It’s also very prone to human error since you’re dealing with precise values across many SKUs.

Automated tracking systems use software to track inventory in real time, allowing you to easily track stock levels across multiple warehouses and locations.

Likewise, this is often more efficient and accurate than manual tracking, as it eliminates human error.

Key areas to track inventory in the supply chain

Inventory tracking is essential in the supply chain. Here are some key areas you should always have your eye on:

1. In-stock inventory

Keeping track of what items you have in stock is important for ensuring that customers can always find the products they’re looking for.

2. Back-ordered inventory

Backorders can cause delays and reduce customer satisfaction, so it’s important to track back-ordered items and keep track of their progress.

3. Returned inventory

Returns can be hard to track and manage, so using an automated system can help you track returned items easily (especially when it’s as easy as scanning items back in with a barcode scanner).

4. Inventory levels at each warehouse or sales channel

Keeping track of your inventory levels at each warehouse or sales channel can help you keep track of stock levels in real time and ensure that no items are ever out of stock.

Using software like SkuVault, you can see exactly how much product you have allocated for each channel (your website, Amazon, eBay, etc.), and where most of your sales are coming from.

By tracking these key areas of the supply chain, you will be able to track your inventory more effectively and efficiently — providing customers with a better experience.

Benefits of using inventory tracking software

Aside from the fact that we build and support an inventory management platform (and are a bit biased), there are undeniable benefits to using inventory management software in your eCommerce business.

These include:

1. Automated inventory tracking

Using automated inventory trackers gives you immediate insight into all your inventory levels across every sales channel from one convenient dashboard.

This allows you to quickly adjust stock levels and optimize operations.

2. Increased visibility

Inventory trackers give you greater visibility into the supply chain, allowing you to track orders and shipments across multiple warehouses and locations (as well as lead times from suppliers).

3. Improved customer service

Using the reorder reminders built into most inventory management platforms, you never have to worry about keeping reorder points in your head.

This reduces the likelihood of stockouts, and thus makes for a much better customer experience overall.

4. Reduced costs

How much does it cost to lose a frustrated customer?

How much are your manual errors costing you?

How much do you value your time?

If you find yourself considering these questions, it’s likely time to invest in an automated inventory management solution.

Inventory trackers can help you track stock levels more efficiently and reduce the (often hidden) costs associated with manual errors.

5. Integration with other tools

Inventory trackers can be easily integrated with other tools and systems, such as accounting software and customer relationship management (CRM) software.

This ensures that all your data, both regarding your inventory and your customers, is accurate and up-to-date.

Plus, it means you don’t have to constantly reconcile all your software platforms to make sure they’re “talking” to each other correctly.

6. Accurate forecasting

Inventory trackers can provide insights into customer demand, enabling you to track and predict future orders accurately.

This will help ensure that you always have the right amount of stock on hand, without overstocking or understocking.

7. Increased security

Inventory trackers can help keep track of product information, such as serial numbers and lot numbers, allowing you to track products more securely.

This will help protect your business from fraud and theft.

Ways to improve inventory tracking in eCommerce

In order to track inventory more efficiently, there are a few key steps you can take:

1. Automate where possible

Using automated trackers will help reduce the amount of manual work required to track inventory. This will make it easier and quicker to track stock levels across multiple warehouses and locations.

Plus, as mentioned throughout this post, it frees you up to stop working in the business and start working on the business.

2. Use barcodes and scanning

Barcodes are some of the cheapest and most efficient ways to track inventory. By using barcodes and scanning, you can track stock levels in real-time and update records quickly.

3. Invest in a software solution

Investing in inventory tracking software will help streamline your operations and reduce costs associated with manual tracking.

4. Analyze reports and make data-driven decisions

By analyzing inventory reports, you can track customer orders and shipments, as well as identify areas of improvement.

This data-driven approach will ensure that your business is always running optimally.

By taking the above steps, you’ll be able to track inventory more efficiently and accurately for your eCommerce business.

This will help provide better customer service, reduce costs, streamline operations, and improve the overall shopping experience for your customers.

Final thoughts

In conclusion, tracking inventory for an eCommerce business can be a complex and tedious process.

However, by using automated trackers, barcodes, and scanning, investing in software solutions, and using reports to track trends and customer demand, you’ll be able to track inventory more efficiently while providing better service to your customers.

The insights gained from these tools will help reduce costs associated with manual tracking as well as prevent stock-outs or overstocks.

With the right strategies in place, you’ll have everything you need to track inventory accurately for your eCommerce business.

And for more information on how SkuVault can come alongside you and help you get there, check out our features page or schedule a live demo via the link on this page.

Thanks for reading!

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