In the U.S., retailers hold $1.35 worth of inventory per every dollar of sales. While inventory is a retailer’s greatest asset, you can’t afford not to optimize it for higher profits.

You’re bleeding money if you have products piling on the shelves, incorrect stock counts, or underperforming vendors. Inventory reports exist to offer valuable insights and help you improve inventory accuracy. Yet, many small- and medium-sized businesses rely on manual reporting methods or don’t report on inventory at all.

By performing regular inventory reports, you can reduce stockouts while meeting demand and improving inventory accuracy, which is critical to satisfying customers.

Keep reading to learn more about inventory reporting, including the types of inventory reports and how they can impact your business.

What is an inventory report?

You can use a digital or physical inventory report to summarize the amount of current inventory you have on hand. Your report may include data representing best sellers, total inventory, and other product information that helps in inventory categorization, tracking, and management.

The right inventory report will provide information on what you have on hand, what you can sell, and what you must order. 

Why is inventory reporting important for ecommerce retailers?

eCommerce inventory reporting can positively impact your business in several ways. Inventory reports tell you exactly how much inventory you have on hand. If you order inventory without knowing what is in stock, you risk over or under-ordering products.

Brick-and-mortar shops need to track their inventory items, but they don’t require the same level of sophistication as online retailers.

eCommerce purchases are not limited by time or location. They’re made at any hour and from anywhere in the world. If your business is rapidly expanding, you’re at a higher risk of stocking out when a customer places an order.

eCommerce business owners must minimize the risk of this occurring, so inventory levels should be updated as often as possible to ensure complete data. To make precise inventory adjustments, you need an automated inventory management solution that syncs with your POS software to track inventory for you. That way, you always know exactly what you have and can reorder merchandise or supplies right on time.

Calculate average inventory levels

Once you report on average inventory levels, you can compare them to historical averages. Then you can identify trends that could indicate changes in customer preferences or your business model.

Predict future inventory requirements

If an upcoming large order requires more inventory than you have on hand, you can run an inventory report to identify where your inventory is sourced from.

With a precise inventory report, you can strategically oversee stock items, avoid stocking too much, and guarantee you have enough stock to fulfill new orders.

Increased customer satisfaction

Not having enough stock on hand hurts both customer satisfaction and retention. Imagine visiting a store or website to buy something but discovering the item is out of stock.

Data shows that 37% of shoppers will shop with another brand if an item is out of stock. 9% of those consumers choose to buy nothing at all.

Accurate inventory reports will help you know when to re-stock your store to maintain an adequate supply of goods for your customers.

Improved accounting processes

With robust inventory reporting metrics, your accountant will better understand how much money is leaving your business versus how much money is coming in.

Understanding where products are located helps you to better understand the costs associated with each stage of the supply chain. It also helps you manage inventory better and keep up with customer demand.

How often should you run inventory reports?

Depending on your needs, reporting frequencies vary. You should schedule your reports more frequently if you have a lot of inventory.

Whether you’re a small business or a large one, it’s always good practice to run inventory reports. There are several different times when you might want to run an inventory report.

Weekly and monthly

You can easily get weekly and monthly reports from point-of-sale systems and inventory management software.

Weekly and monthly reporting gives you a regular view of your stock levels, sets appropriate thresholds for when to order more products, and informs marketers on how well customers responded to promotions.

Before and after busy seasons

Real-time sales reporting is a huge benefit for eCommerce retailers. However, to maximize sales, you should analyze period-over-period growth. For example, you should run inventory reports to compare sales over Black Friday and Cyber Monday 2021 to sales in 2022.

You can also run reports during other busy shopping periods, like over Valentine’s Day or Mother’s Day.

Dependent on your operations

If you’re running a store where there are lots of daily or hourly orders (i.e., a grocery store or convenience store), then you’ll need to report more information more often to decide which products to buy.

Regardless of your niche, the goal is to strike the right balance between keeping your customer base happy and ensuring your business remains profitable.

Inventory reports you should know

There are several crucial reports you should use to stay on top of inventory control—and it’s essential to not only report on the data but also understand its meaning.

The data contained in these reports will give you an accurate picture of your inventory status so you can decide the next steps for your business.

There are countless inventory reports for retailers, but these are the most popular:

• Inventory-on-hand report
• Inventory aging report
• Inventory turnover report
• Low inventory report
• Product performance report
• Incoming stock report
• Inventory location report
• Inventory movement analysis report

We’ll explain what each type of inventory report is, why inventory managers use them, and how to interpret the results.

1. Inventory on hand report

If your store always runs out of stock, then your customers will go shopping elsewhere. If you want to ensure that the products in your shop are always available for sale, then you need to be aware of which items are running low in supply.

Meanwhile, if some products are in the warehouse for too long, it may mean they’re not selling well enough. It may be time to reevaluate carrying those products.

An inventory-on-hand report will give you an exhaustive view of your products and variants across all of your warehouses and stores.

2. Inventory aging report

It’s critical to keep tabs on how much inventory is sitting on the shelf—and for how long. Inventory aging reports allow you to determine how many days you’ve been holding onto inventory and its quantity.

You will receive insights such as:

• Non-moving products
• Slow-moving products
• How long your products sit in inventory
• The cost of maintaining this inventory for long periods

With this data, you’ll better understand which products your customers buy versus those they don’t. Then you won’t have to infuse money into inventory that doesn’t sell.

3. Turnover inventory report

Turnover is most commonly used to determine how quickly a company collects money from its customers’ invoices or how fast the company turns over its inventories. You can analyze year-to-date inventory turnover using this report.

Investigating high and low inventory turnover ratios can help determine which products are understocked (high turnover rate) and overstocked (low turnover rate).

Turnover inventory reports allow you to fine-tune your prices, ordering quantities, and inventory levels. You can show turnover by either products or warehouses and stores.

4. Low inventory report

The low stock report shows all products which are low in stock because they’re below the minimum stock level threshold you’ve set. If your current on-hand inventory exceeds the minimum stock required for that item, then it won’t appear on the low inventory report.

Regularly looking at low-stock reports allows you to spot trends around which products are consistently running out of stock. If a particular product shows up consistently on this report, then that might mean that you need to order more of it.

5. Product performance report

Product performance reporting tells you which products are the best sellers and most profitable. You may want to consider looking at the gap between purchases. If there has been a long period of time between the first and final sales dates, then you need to look into why the products in question aren’t selling fast enough.

If you’re having trouble meeting consumer demand for your products, you may want to consider placing bigger orders.

6. Incoming stock report

Incoming stock reports provide an overview of which product lines are due for open purchase orders within a specified time frame. They give you much-needed insight into your on-hand inventory to safeguard from over or under-ordering stock. Often, these reports also show each item’s primary vendor so you can easily order merchandise to meet future demand.

To ensure that you’re covered if your primary supplier fails to deliver, you should also list alternative vendors who can fill your orders.

7. Inventory location report

Knowing where your product is located at any given time is crucial for both multi- and omnichannel retailers. With inventory location reports, you can track inventory in real-time across warehouses, distribution centers, and third-party marketplaces—supporting complete visibility into your total assets.

Keeping an accurate count of your product by store helps fuel a highly efficient fulfillment system and reduces the risk of having too few or too many products available at any given time. You can quickly identify one or several stores that are running out of a particular item.

From the data, you can determine whether you should order additional stock or transfer some of your current inventory to another location.

8. Inventory movement analysis report

Inventory movement analysis is a report that illustrates how stock moves along your supply chain. business. It provides details on inflows and outflows of products and their quantities over a fixed duration of time. You will be able to identify which products move quickly and which don’t. Fast-moving goods lead to quicker profits, while slow-moving goods squander working capital.

This information is critical for retailers, as it helps them decide which products to buy and clear cash blockages. 

Level-up inventory management with these inventory reports

It’s undeniable that inventory reports are crucial for the successful operation of any retail or eCommerce shop. Small-volume stores can often afford to report their inventory manually. For accurate reporting, they can keep track of inventory and update their records frequently enough in an Excel spreadsheet.

However, this isn’t a permanent solution.

If you want to scale your eCommerce store, you’ll need inventory management tools that grow with your company.

Inventory reports help you understand where your inventory is located, how well it’s performing, whether there’s any room for improvement and more. You’ll be able to quickly identify which products to order, which sales campaigns to run, and how best to keep your business profitable (and your clients happy).

This blog post was a guest post from our friends at Flxpoint.