Inventory Management System

Benefits of Using Inventory Management System for your eCommerce Business

Customers have become highly demanding with the advent of the internet in the retail industry. They dislike when they see their favorite products being “out of stock”. What makes them even more agitated is the delayed delivery of the products.

These statements define the importance of a well-maintained inventory for e-Commerce businesses. To make things clearer a study by Oracle Retail states that 13% of customers would never return to an online store if their order has been delivered late.

To keep your customers happy, you need to be an informed eCommerce business owner. You need to know precisely what you can sell online, how much you can sell, and when you can deliver them. 

These can be managed if you have an efficient inventory management system for your eCommerce business. Before we discuss the benefits of an inventory management system, let’s try to understand what the term means. 

What is Inventory Management? 

 inventory management

According to the definition, inventory management refers to the entire process of ordering, procuring, storing, and managing the assets including raw materials and final products. Inventory management also includes warehousing and logistics of assets and the final products. 

Why do eCommerce Businesses need an Inventory Management System?

As your eCommerce business grows, you would expand to new markets and try out different sales channels. And once your order volume increases, the order fulfillment becomes even more complex.

inventory management system

There are multiple errors that can come from trying to manage your stocks manually: 

  1. You will have to manually check the stock for each sales channel 
  2. There will be a lack of visibility on real-time stock levels 
  3. It takes a large amount of time to just recognize areas with deficit stock and then ensure stock reaches there in time for the order to be delivered 
  4. Manual input of data can cause delivery delays, overselling, customer unhappiness, and frequent out-of-stocks alerts 

An Inventory management system allows you to have an overview of the entire process. This in turn helps you do damage control when the stock of a  product falls suddenly or if there is a sudden spike in demand for a particular product. 

Advantages of having an Inventory Management System 

Having accurate details of each products is extremely important for e-Commerce business owners. This can only be feasible with the help of automation. Investing in robust inventory management systems ensures all data inputs and tracking is being done by software and not human eyes and hands.

Here are a few reasons why an inventory management system should be a priority for all e-Commerce business owners.


Sales are never the same throughout the year. During festive seasons you might see a spike in demand, or dips during off-seasons. 

Having visibility over your current stock levels helps you plan for the future too. You can relocate stock according to the demand that you have forecasted for a specific sales period. 

Optimal levels of stock 

Maintaining optimal levels of stock is a two-fold challenge. 

You should avoid having too much stock or deadstock. Not only does it result in unnecessary expenditure, but it also increases the chances of damage and warehouse costs. 

On the other hand, understocking can result in customer disappointment. You are not being able to meet market demands and compells your customer to purchase from another online seller. 

Optimal levels of stock 

Source: Madraskarri

Cutting down on human errors 

Hundreds of products, different geographical regions, and different sales platforms. It is very difficult for humans to manually input all these data accurately and fast. 

There are high chances of miscalculation, omission, duplication of data, and delays. Automation through software removes all these problems. 

The software usually does need slight human intervention in terms of oversight. But other than that, other core functions like assembling and syncing data across platforms are automatic and instant. 

Real-time visibility 

When manually tracking stock levels, you might find out that a stock is low after a customer order has been placed. You will then need to replenish the stock before it is delivered – automatically extending your promised delivery date. 

An inventory management system allows you to have real-time visibility over your stock levels across platforms. If an order is placed on your online store, instantaneously, the software would update itself letting you know what the current stock level is. 

Managing customer expectations 

There are thousands of e-Commerce websites today. If a customer is disappointed in your service, they will not hesitate to shift to another seller.

This is why it is important to manage their expectations. They should know the accurate delivery date, out-of-stock orders, and when they’ll be back in the store. 

Customers are generally okay with longer delivery times, as long as they feel like there has been transparent communication with them. Improve your customer service by improving your visibility over the entire production process. 

Tracking and analysis

An inventory management system helps you record and track your inventory history. It can help you analyze which products are selling out fast, which take too much time to sell, and the sales pattern throughout the year. 

Tracking and analyzing the available data can help you prepare more adequately for festive seasons or for periods of low sales. 

There are multiple key performance indicators (KPIs) that you could track to identify areas that need improvement. Here are the two most important ones: 

KPIs to Track Areas Needing Improvement

Inventory turnover time 

Inventory turnover time, also known as stock rotation, is the time that you take to completely sell and replace your inventory in a set time frame. 

Inventory turnover time 

Source: BlueCart 

Lead time 

This is the time taken for your vendor or supplier to deliver products to you for stock replenishment after you placed a fresh purchase order. 

Improving these KPIs can improve your customer retention rates and also help widen your profit margins. 

Read this free eBook on how data analysis can help boost your small eCommerce business. 

Higher profit margins 

Not knowing accurate information will mean you are spending a lot more on emergency expenses than actually investing in business processes.

An inventory management system can help you have more control over operational costs. 

Do you have an emergency fund for your eCommerce business?

Once you optimize inventory turnover time and the lead time, you save money on trying to scramble for products or for fast deliveries. You also save money by not having to maintain deadstock. 

Once your supply chain and inventory management are in sync, you increase customer retention and loyalty and hence increase your profits. 

What Makes a Good Inventory Management System? 

Utilize software that can help you accurately forecast sales expectations and also have real-time visibility on every single location of your stock – up to the shelf that it is on! 

Good inventory management software will have to be intuitive in nature. You should be able to integrate multiple eCommerce tools with your inventory management system for maximum efficiency.

For example, if you own an online store, customer relationship management systems, and third-party logistics providers, it is necessary to integrate your inventory management system with all these to ensure seamless fulfillment and delivery of orders. 

If you are selling on a marketplace and your own online store, manually streamlining the inventory management process is next to impossible! 

An integrated system will allow you to step back, relax and let the software automatically upgrade you with stock levels across different platforms. You can then focus all that time and attention on expanding your business operations. 

With your own online store on Instamojo, you can specify different units (SKU), add shipping details, set up minimum and maximum stock units, manage invoices and also keep a track of the order status – all from your Instamojo Dashboard.

With a free or premium account, you also get access to our premium shipping partners like Pickrr. Instamojo and Pickrr have served thousands of customers and have ensured customer satisfaction with timely deliveries all over India! 

Create your free online store and also get access to a host of other important eCommerce tools on Instamojo premium plans that start at just Rs 10/day!


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