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Automated inventory management: What is it and how does it work?

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Employees working in a warehouse, surrounded by packages, using an automated inventory management system.

As sales go up, operational complexities tend to follow. 

Omnichannel operations add a layer of complication to this growth. This is where automated inventory management comes in.

In this post, we’ll discuss what automated inventory management is, its role in a retail business, and why you should automate managing your inventory. 

What is automated inventory management?

An automated inventory management system is a practical tool for businesses of all sizes to help them automate the inventory control process. Instead of having your team manually enter data and perform tedious management tasks, the software does it for them. It is more accurate, efficient and insightful than manual inventory tracking and saves a huge amount of time.

What is automation’s role in a retail business?

With the Effortless Economy, consumers today have high expectations around convenience and expect to order from their chosen channel by selecting the shipping or pick-up option that works best for them.

To meet these expectations and get the product into the consumer’s hand when it’s needed, retailers must have oversight on what’s merchandising on its channels and what price, so they can accurately reorder and maintain stock levels. This is where automation comes in. Automation technology helps ecommerce retailers deliver on these expectations.

In addition to being able to get products to consumers when they want them, having inventory oversight and automation capabilities helps retailers control their marketing budgets. For instance, if a specific product is out of stock, the retailer would know instantly. Instead of continuing to spend budget on PPC ads, retailers can halt digital marketing for items that are sold out. Retailers often run into this issue during busy sales periods like Black Friday and Christmas shopping. Not only does sending PPC leads to a sold-out product hurt your budget, but it can also cause friction in the purchasing journey and frustrate consumers.

Why automate managing inventory.

Inventory automation is critical for ecommerce success.

Not only does it help your team run more efficiently, but it also helps improve the customer experience. Customers expect a seamless shopping experience from omnichannel operations. Automation helps you deliver on these expectations. And it helps you provide your customers with what matters most to them: convenience.

In Linnworks “The Effortless Economy” research, nine in ten shoppers prioritize retailers who offer a convenient experience, and nine in ten shoppers prioritize retailers who offer a convenient experience. 46% prioritize convenience over price when picking a retailer, and 78% value convenience higher since the pandemic.

In another study, Adobe revealed that enterprises around the globe are currently investing in improving customer experience across the life cycle of a product. This is directly related to the expectations of consumers. 42% of the global enterprises involved in the study were prioritizing the improvement of cross-channel experiences. The importance of a seamless shopping experience across all sales channels cannot be emphasized enough. 

Companies utilizing an omnichannel customer engagement strategy retain 89% of their customers on average, according to reporting by Invesp. This number is too large to be ignored. You need a solid omnichannel strategy to improve the customer experience, and inventory automation can make all the difference. 

The features of a good automated inventory management system.

Running a successful ecommerce business relies on having the tools and systems in place to order the right stock at the right time. You must have the right quantity on hand to fulfill orders as they come in without significant delays.

Good automation software will have all the necessary features to help you reconcile your sales with stock levels across all of your locations. 

Accurate real-time overview of orders

This feature goes right along with keeping the correct amount of stock on hand. A real-time overview of orders is a must for automated inventory management. It compares available stock with the ability to set up re-ordering trigger events. An automated system can even trigger orders directly to the supplier so your team can skip a manual purchasing step from the inventory management process.

Predicting supply and demand

Smart, advanced software that analyzes sales patterns can help predict supply and demand. This ensures that stock with seasonal demand, like many retail goods during the holiday shopping season, can be stocked at levels high enough to meet demand and return to normal levels after the sales spike. Automation software can help improve the bottom line by looking at sales and stock levels across the board and automatically forecasting to optimize stock levels.

Automating workflows

A key feature of any good automation software is the ability to automate repetitive and tedious workflows. Once the customer makes a purchase, a complex system should move into action behind the scenes. The software determines workflow rules once the order is placed for efficient fulfillment service. 

For example, say the customer’s nearest logistics center is out of stock for the products they ordered. The order would automatically be fulfilled from a different location where the goods are in stock. Alternatively, the software could pause the order until the goods are in stock at the closest logistics center while still fulfilling the order within the promised shipping window.

Automating managing listings

This practical feature allows out-of-stock items to be listed online as long as they are identified as ‘out-of-stock.’ In some cases, the software can make recommendations for a similar product or allow the shopper to sign up for a notification when the product is back in stock.

Another way the listing feature can be used is by writing a single listing and sharing it across all sites and apps where the product is sold. This keeps listings consistent, reduces the chance of mistakes, and saves the time of writing multiple descriptions.

Targeting copy to audiences

Retailers often use different language to target various demographics. Automation software can help by individualizing bulk listings to suit different channels. For instance, you wouldn’t want to use the same copy to speak to Gen Z as you would an older audience.

Automation can help by allowing different versions of a listing to be displayed for each type of site or app. Core basics would be kept constant such as dimensions, technical features, and environmental credentials, but the language would change to resonate with the audience reading it. Pricing and promotions can automatically be tailored to the audience as well.

Grouping listings

Another helpful feature of automated software is the ability to group listings.

This means you can categorize products that are similar or complement each other. Purchases of one product could then notify the team that there’s a demand increase in a specific category and allow them to stock accordingly. If replacement stock isn’t available from a supplier for a specific item, then the retailer could stock up on the alternative the software recommends. Another option with this feature is to create urgency and manage expectations by adding a notice to low stock items such as “selling fast” or “limited availability.”

Automate inventory with Linnworks.

If you are looking to scale your ecommerce business, you need total control and over your operations. With Linnworks, you can manage your orders and inventory in one place:

  • Manage inventory across all of the sales channels you sell on 
  • Optimize your inventory, order, and fulfillment processes from a central location
  • Gain detailed reports and insights to faster, data-driven decisions 
Discover Linnworks inventory management software

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