Why Your Business Won’t Grow Using Excel for Inventory Management

Why Your Business Won’t Grow Using Excel for Inventory Management

Excel for Inventory Management


An omnichannel retailer with a fairly new, but well-established niche t-shirt business currently has an inventory of ten size large red t-shirts in her warehouse. All ten are listed for sale on her website. They are also listed on Amazon and eBay. Four of them quickly sell on her website, and then ten minutes later another eight sells on Amazon. She’s currently using a manual spreadsheet system for her inventory management. 

Unfortunately, she didn’t have time to update the inventory count to reflect these sales.

What would you do in a situation like this? Do you risk your reputation with buyers who have bought directly from your site? Do you risk displeasing Amazon? Neither option is great. Like our seller in the example above, you’ve spent a lot of time and effort branding your website. Indeed, you’ve probably created a loyal following of people who come directly to buy your products. And as you’ve grown, you’ve also put more and more of your eggs in Amazon’s basket. Not to mention, now you have to quickly update your inventory on eBay before there are any more sales.

So, what do you do?

Bad buyer experiences on Amazon can lead to low seller ratings. Unfortunately, this also means decreased visibility. Repeated instances can ultimately get you kicked off, which can be a deathblow to businesses whose livelihoods are tied to that channel. And, if the current trends hold true, more and more sellers are going to be at Amazon’s mercy.

A third of companies report missing shipment deadlines because they’ve sold an item that they didn’t really have in stock. If you continue to rely on manually updated spreadsheets to manage inventory, this scary scenario is all but inevitable.

What Is an Inventory Management System (IMS)?

An inventory management system, or IMS, is a tool that can track products across your business supply chain. From order placement to order delivery, it maps the complete journey of a product. 

An IMS automates your inventory. Once inventory information is entered into your system, the information will always be accurate as long as your staff uses the system as their central hub. You get detailed reporting, which helps with better purchasing and forecasting.

Automated triggers can be set to tell you when it’s time to reorder based on preset minimum inventory levels. This helps avoid disappointing customers when they are ready to buy, and you don’t have the stock on hand to fulfill their order. It can also help avoid inventory pileups and tying up cash in stock that isn’t moving.

Why is it Important to Use an Inventory Management System?

When starting out, most online sellers and eCommerce businesses rely on spreadsheets to manage inventory. It’s just simply part of the growing pains of a new business.

For inventory management specifically, this means having to manually update the sheets when orders come in and are shipped out. It means manually calculating which items are in stock, when and how much to re-order, and finding the product in the warehouse. It means not always being sure about your ability to anticipate large scale buying trends -even though you need that ability to stay ahead of demand.

As a company that prides ourselves on streamlining eCommerce processes – specifically automating tedious and complicated manual warehouse practices – we encounter a lot of frustrated small to medium-sized businesses using Excel for inventory management.  

We love Excel, but…

At SkuVault, we love Excel. It’s an invaluable tool and capable of some pretty complex functions. However, when it comes to using Excel for inventory management, forget it. As anyone who’s tried to make it work will know, it just doesn’t cut it. In our experience in switching clients from Excel to inventory software to our warehouse management system SkuVault, this is how it usually goes down:

A retailer that uses Excel for inventory management usually has spreadsheets that are more of a general approximation of their stock, rather than a full, accurate representation of their physical inventory. That can quickly escalate when you are selling across platforms and marketplaces.

This is vital for a few reasons, but it all really boils down to the havoc that out of stocks can cause when it comes to customer satisfaction and brand trust. Most eCommerce retailers are multi-platform sellers. You might sell, for example, on your own website, Amazon, and others. If your spreadsheet quantities are incorrect, then so will the quantities listed on your website and others. You run the risk of being able to fulfill orders and losing sales. If you want to expand your business onto new online marketplaces, the problem only intensifies.

In our experience, clients manually update their Excel for inventory control when shipments arrive and when products are shipped out, and then, usually only whenever they can get around to it – maybe at the end of the business day when things aren’t as hectic. When they use Excel for inventory management, these spreadsheets need to contain a huge amount of information – all of which must be entered manually.

Manual Updates Cost Time and Money

Manual updates can take a serious amount of time. That means important information often gets overlooked. Instead of getting accurate, real-time information that’s automated, you run the risk of human error when things get entered incorrectly.

There’s also the cost of using Excel for inventory software. Think about the hourly wages you pay someone to enter all the information. Assuming you are at least paying this warehouse worker minimum wage, that’s at least $225 a month spent on Excel for inventory management. We have a lot of clients who thought they were saving money by not getting the right tool for their business, but if anything, we’ve found that such clients were actually losing a good deal of money once they’d also accounted for the customer service and labor hours necessary to remedy customer issues concerning out of stocks.

The two biggest costs in running most eCommerce operations are the costs of labor and capital for inventory. At any one time, more than $1.1 trillion is tied up in inventory, accounts receivable, and accounts payable. Factors such as shrinkage, overstock, and stock-outs add up to another trillion dollars!

Even small improvements in efficiency and productivity can significantly increase your margins.

How to Do Inventory Management Without Excel

There is always a point at which businesses realize they’ve outgrown their reliance on spreadsheets. Usually, this happens due to the limitations of timely and accurate information as well as dealing with the inevitable human error that always tends to compound as volume increases and complexities increase. This is the inevitable “good problem” of generating more and more sales and orders.

The prospect of changing a process as fundamental as warehouse management can seem daunting – especially when most sellers are used to their own system of using spreadsheets. That’s why it’s important to use a warehouse management software that offers dedicated onboarding and training and can quickly get you up and running.

A manual spreadsheet can only take you so far. 

Build Your Brand Faster with SkuVault’s Inventory Management System

SkuVault’s inventory and warehouse management software is built for eCommerce sellers. Here’s a sampling of just some of what SkuVault’s IMS can do that Excel can’t:

Managing the Supply Chain

With SkuVault’s warehouse management software, you can leverage your supply chain to improve the bottom line:

  • Manage multiple warehouse inventory from the cloud
  • Track supplier costs and manage suppliers in one location
  • Reduce costs by knowing exactly what you have in stock so you can forecast better
  • Ensure you always have the products on hand that you need, when you need them
  • Use barcoding to save time receiving inventory
  • Reduce costs by knowing exactly what you have in stock

Data-Driven Decision Making

SkuVault’s reporting and analytics automate the reporting functions and provide the information you need to see what is happening. Real-time and on-demand reports can be customized and shared to give you operational insights to make better forecasting and purchasing decisions:

  • Investigate previous transactions to confirm accuracy and past quality control actions
  • Track sales, quantities on hand, and every warehouse action from order to fulfillment
  • Promote strong interdepartmental communications and further optimize workflows
  • Manage inventory across all FBA and third-party platforms so you can view stock in real-time
  • Easily juggle kits and raw material components so your warehouse team can locate and fulfill orders with ease and fewer mistakes
  • Avoid painful oversells
  • Create a purchase order based on what’s on order, in-house, and pending
  • Transfer on-hand inventory between warehouses and retail stores
  • Identify cycle count opportunities and prevent human error


One of the most powerful reports in the Replenishment Report. With the click of a button, you can generate a detailed report to help you make smarter and faster purchasing decisions. Using three types of reports – reorder, replenish, and assembly – in sales forecasting, reorder point, and maximum/minimum quantity methods, your sales history from every channel is funneled into a single report. This helps you make better purchasing decisions and take the guesswork out of operations.

Optimizing Warehouse Operations

Another place SkuVault IMS outperforms spreadsheets is in managing warehouse operations. Imagine if you could automate the receiving process using bar codes to avoid manual entry, find the optimal place to store goods down to the aisle, shelf, and bin location, automatically generate pick lists using optimized routing for efficiency and track the entire supply chain from ordering to shipping. With SkuVault, you don’t have to imagine it. It’s real.

When merchandise arrives, warehouse workers can use barcode scanning to accurately record inventory quickly. Customize the storing and picking process to your unique workflows for peak warehouse efficiency. Paperless pick lists, using barcode scanning, can be adapted to wave picking, hyper picking, or other pick sessions to save time. Items can be scanned again at the QA level for accuracy and to update inventory before being sent to shipping.

SkuVault integrates with all your favorite eCommerce solutions for seamless end-to-end management, including:

  • Marketplaces, such as Amazon, eBay, Jet, and Walmart
  • Accounting, such as QuickBooks, Xero, and Zudello
  • Channel Management, such as ChannelAdvisor, SolidCommerce, and Zentail
  • Shipping Platforms, such as ReadyCloud, ShipRush, and ShipStation
  • eCommerce Platforms, such as BigCommerce, Magento, Shopify, and WooCommerce
  • Point of Sales, such as Lightspeed, Retail Pro, and Square
  • Analytics, such as Anvizent and Lokad
  • CRM, such as Cloud Conversion, Oracle, and Salesforce


SkuVault also integrates with Drop Shipping, EDI, and ERP. Check out the list of integrations and think about how difficult it would be to manage this using Excel spreadsheets.

Additional Features that Make Excel Spreadsheets Obsolete in Inventory Management

The integrations are just the beginning with your IMS. Using SkuVault, you can easily manage complex functions that are impossible using Excel:

  • Customizable catalogs
  • Detail product listings down to the SKU level
  • Sell multiple SKUs in ready-to-ship Kits and Bundles
  • Create POs based on reports and inventory visibility
  • Manage inventory using Lots, First In / First Out (FIFO), and First Expired / First Out (FEFO) pick methods
  • Easily convert case packs into individual quantities

Without a WMS in place, businesses are usually not able to sustain their current volume, let alone continue to grow. But, once these solutions are in place, spreadsheets can now be used the way they were intended. Much of the tedious process of inventory management with spreadsheets can be automated with an IMS. This frees up resources to work on other parts of the business.

Common Questions about Using Excel for Inventory Software

Here are some of the common questions people ask when thinking about using Excel for inventory system or Excel for inventory control.

Are there inventory management excel formulas I can use?

While there aren’t specific tools to automate the process, you can use the SUMIF function and Excel tables. You might set up, for example, a basic inventory management excel formula on your spreadsheet that tracks all of the SKUs as they come in, update a section when they go out, and get a list of current inventories.

You can find some free templates for Excel for inventory tracking, including inventory management excel formulas, online on the Microsoft website. Very small retailers that have a handful of SKUs may be able to make Excel for inventory tracking work as long as they are extremely conservative in the number of items they have available for sale online since none of the information is real-time.

Does Barcode Scanning Reduce Error Rates?

You bet it does. One study, conducted by Auburn University researcher, revealed that retailers that tag and scan inventory can increase accuracy from 63% to 95%! Barcode scanning dramatically reduces human error, which continues to be one of the biggest problems retailers cite when using spreadsheets and manual tracking.

What Forecasting Can I Do with Excel?

Most sellers that rely on excel to track inventory can’t do much in the way of forecasting except for looking at historical trends. Even complex spreadsheets aren’t capable of doing much in the way of analytics. Because it is so labor-intensive to enter detailed information into spreadsheets manually, most sellers just enter the basic details they need to maintain inventory counts. It’s tough to analyze if you don’t have the data. This leads to inventory control mistakes that can be costly.

An IMS, such as SkuVault, will give you a wealth of data that can be used to help forecast demand and even automate much of the process of reordering, including when it’s time to reorder and the amount of stock you need.

Conclusion: Why Embracing New Technology Matters

Mark Twain is credited with the quip that “history doesn’t repeat itself, but it often rhymes”. What he meant by that is that while exact events don’t always repeat themselves, overall trends tend to hold true. Continuing this history lesson, about 100 years ago most farmers relied on plows drawn by animals to get the soil ready for planting. When the tractor was introduced, they had a choice to make; continue with what they knew to be reliable, albeit slower, or make the investment to upgrade to the new technology. Sure, a horse-drawn plow will get the job done – eventually – but when more and more of your competition is using a tractor, and by doing so gaining efficiencies and higher yields, the choice becomes obvious. Either embrace the new technology or risk being left behind.

While selling online may seem completely unrelated to farming, there are actually quite a few similarities with this example. Farmers who wanted to stay viable had to adapt or else lose out to the competitor who had made the investment in the new technology and taken the time to make it work.

Farmers who continued relying on a horse-drawn plow were less able to fulfill their yields and get their crops planted on time. Similar to the t-shirt vendor, this lack of efficiency cost them big time. And like farming, online sellers also have to understand complex networks of interrelated patterns and systems to be successful.

So, whether you are an early 20th-century farmer or a 21st-century t-shirt vendor, if you don’t have the right technologies in place, you won’t be able to sustain your current volume, let alone continue to grow. Don’t rely on Excel for inventory tracking.




Grow your eCommerce business with SkuVault

Schedule a Demo

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

SkuVault Inventory and Warehouse Management Software logo