Inventory Management for New E-Commerce Entrepreneurs

Welcome, e-commerce entrepreneurs! If you're running your business out of your garage or home, you're in the right place. Let's dive into the exciting world of inventory management and make it a breeze!

What is Inventory?

What does inventory mean? Inventory is the stock of products a business holds to sell to customers. It includes raw materials, finished goods, and everything in between. Essentially, it's what you have on hand to fulfill orders.

Top 4 Inventory Management Softwares

Looking for an inventory management system? Below are the top four platforms we recommend to keep track of the amount of inventory you have on hand. This will help you measure if you have extra inventory you need to put on sale to make space for higher performing items.

1. QuickBooks Commerce: Perfect for small businesses, it offers inventory tracking, order management, and more.
2. Zoho Inventory: Streamlines operations with features like multichannel selling, order fulfillment, and reporting.
3. TradeGecko: Ideal for businesses with complex inventory needs, offering automation, sales channels integration, and analytics.
4. NetSuite: A comprehensive solution for inventory, sales, and financial management, suitable for growing businesses.

Inventory Sheet Template Examples

1. Basic Inventory Sheet: Includes columns for item name, description, quantity on hand, and reorder level.
2. Warehouse Inventory Sheet: Adds sections for location, bin number, and shelf space.
3. Product-based Inventory Sheet: Organizes items by category, with additional fields for SKU, cost, and supplier information.

Top 3 Inventory Apps for Smartphones

1. Stock Controller: Offers barcode scanning, inventory tracking, and customizable reports.
2. Sortly: Helps organize inventory with photo attachments, tags, and custom fields.
3. Inventory Now: Simplifies inventory management with easy-to-use interface and cloud backup.

Understanding Inventory Metrics

Inventory Turnover Ratio: This measures how efficiently you're selling your inventory. A higher ratio indicates quicker sales and better management. Aim for a ratio higher than 1.0, but the ideal ratio varies by industry.

Days Sales of Inventory (DSI): DSI measures the number of days it takes for inventory to turn into sales. A lower DSI indicates faster inventory turnover and better liquidity.

Stockout Rate: This metric calculates the percentage of time a company runs out of stock. A high stockout rate may indicate poor inventory planning or forecasting.

Lead Time: Lead time measures the time it takes from placing an order to receiving the inventory. Shorter lead times mean faster response to customer demand and reduced inventory holding costs.

Carrying Cost of Inventory: This is the cost associated with storing and maintaining inventory, including storage, insurance, and obsolescence. It's essential to keep this cost as low as possible to maximize your revenue and avoid excess inventory.

Fill Rate: Fill rate measures the percentage of customer demand fulfilled from on-hand inventory. A higher fill rate indicates better customer service and satisfaction.

Inventory Accuracy: This metric evaluates the precision of inventory records compared to physical inventory counts. Higher accuracy reduces the risk of stockouts and overstocking.

Gross Margin Return on Investment (GMROI): GMROI measures how profitable your inventory is relative to the investment in it. It helps assess which products generate the highest returns.

Obsolete Inventory: This metric tracks inventory that is no longer sellable or in demand. Minimizing obsolete inventory reduces storage costs and improves cash flow.

Backorder Rate: This measures the percentage of customer orders that cannot be fulfilled immediately because of insufficient inventory. Lower backorder rates indicate better inventory management and customer satisfaction.

Shelves best suited to house inventory at home

Double Rivet Shelving: Ideal for heavy-duty storage needs, double rivet shelving can hold between 1,300 and 1,500 pounds per shelf. It provides sturdy support for bulky or heavy items. https://www.uline.com/Grp_467/Industrial-Steel-Shelving

Wire Shelving: Wire shelving is versatile and durable, making it suitable for various at-home warehouse setups. It allows for airflow and visibility, making it easier to identify and access items stored on the shelves. Additionally, wire shelving is easy to assemble and adjust, providing flexibility as your inventory needs change over time. https://www.uline.com/Grp_263/Industrial-Wire-Shelving

Plastic Shelving: Plastic shelving units are lightweight, affordable, and resistant to rust and moisture. This makes them suitable for storage in damp environments like basements or garages. They are easy to clean and maintain, offering a convenient storage solution for at-home inventory management. https://www.uline.com/BL_24/Plastic-Shelving

Adjustable Shelving Units: Adjustable shelving units come with shelves that can be set to different heights. This allows you to accommodate items of various sizes and shapes. This makes them suitable for organizing a wide range of inventory items in your at-home warehouse. https://www.uline.com/Cls_32/Shelving-and-Storage

Choosing the right shelving solution based on your inventory needs and space constraints helps you organize your at-home storage for easy inventory management.

What is Inventory Shrinkage?

Inventory shrinkage refers to the loss of inventory due to theft, damage, or errors in record-keeping. It can significantly impact your bottom line and requires proactive measures to minimize.

Perpetual Inventory Method

In perpetual inventory management, inventory levels update in real-time through software or systems. This method offers accurate and up-to-date information on stock levels.

Best Practices in Inventory Management

1. Regular Audits: Conduct frequent inventory checks to ensure accuracy and identify any discrepancies.
2. Forecasting: Use historical data and market trends to predict demand and plan inventory levels accordingly.
3. Supplier Relationships: Build strong relationships with suppliers to ensure timely deliveries and competitive pricing.
4. Efficient Storage: Organize your inventory for easy access and use your space efficiently.
5. Automation: Leverage technology to automate repetitive tasks, such as order processing and stock replenishment.

With these tips and tools, you'll be a pro at refining your inventory management process in your garage or home in no time! Happy selling!

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