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A guide to multichannel inventory management in 2023.

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Inventory Management
A woman using a multichannel inventory management software in a warehouse.

Consumer experiences have become simultaneously fragmented and more connected than ever because of multichannel selling. At any given moment, your customers may be reviewing your website, comparing products on a marketplace or shopping at a physical store, and this array of buying options poses challenges for multichannel inventory management. 

Each of these moments is an opportunity to connect with your audience, but you’ll need to embrace total commerce ⁠— the concept of being wherever your customers want to shop ⁠— in order to meet them. Customers also demand convenience, including a seamless experience across all sales channels. 

Embracing a multichannel sales strategy comes with challenges, including updating listings and managing orders across different systems, each with distinct requirements. Responding to these challenges while managing inventory across multiple channels and platforms can get complicated without the right setup and processes. 

Learn more about multichannel inventory management in a multichannel selling environment, the challenges businesses face and the benefits of using an inventory management system to manage inventory across multiple sales channels.

What is multichannel inventory management? 

Multichannel inventory management is the process of managing inventory and orders across the variety of sales channels where businesses sell their products. This includes selling on marketplaces, direct-to-consumer and B2B. 

What are some challenges of multichannel inventory management? 

Meeting customer demands on multiple sales channels can be challenging but rewarding, especially if your business is growing quickly. 

Here are some of the issues encountered by growing multichannel ecommerce sellers.

Overselling and stockouts 

When selling on multiple channels, tracking inventory counts manually becomes more difficult. It’s easy to overlook a sudden change in sales volume and fail to replenish stock, which leads to missed sales opportunities. If you’ve tried to make a purchase online only to find out later that the product isn’t available, you understand how stockouts create a negative customer experience. Misrepresenting inventory levels, even unintentionally, can also result in adverse actions from online marketplaces.

Stocking too much inventory 

Another challenge ecommerce businesses face is stocking too much inventory when you don’t need it, which leads to wasted spend and additional stocking fees. This problem can be exacerbated by selling on multiple channels. In that situation, forecasting demand is a more complex process, with careful consideration required when deciding how to store inventory. Other factors to consider when deciding on inventory levels across multiple channels include how marketplace sales are performing against expectations and how other channels are performing. 

Inadequate inventory tracking

Ecommerce retailers need oversight of what products are available on which sales channels, and at what price points. Sellers also must ensure that products are delivered to the customer within the promised time frame. Without an accurate inventory tracking system in place, you risk a greater number of human errors in every part of your sales cycle.

Inaccurate forecasts caused by poor data 

High-growth ecommerce businesses need accurate and up-to-date insights and data from all areas of the business to implement an effective supply chain strategy. This data should be easy to obtain, understand and update. Getting quality, consistent can be particularly challenging when selling across multiple channels because the reporting features, metrics, delivery and format can vary.

Higher order defect rate 

Order defect rate (ODR) is a metric used by marketplaces to determine the ability of a seller to provide a good customer experience. For sellers on marketplaces such as Amazon and Walmart, surpassing ODR limits can lead to penalties, including the revocation of selling privileges.   

Inconsistent or poor customer experience

Your customers expect the same level of service wherever they make a purchase. When you’re selling on a single website or marketplace, this can be easily managed, but every new channel adds complexity to your sales and customer service processes. To provide the same high-quality experience for every customer, you need a complete view of your business operations and the ability to respond to customer needs efficiently and effectively.

What are the benefits of multichannel inventory management?

As order volumes increase across multiple channels, you don’t want to waste time logging in and out of platforms to list products and manage orders. 

The benefits of using an inventory management system like Linnworks is that you can grow sales, improve efficiency and avoid the risk of overselling while scaling up your business and adding sales channels. Read on for more benefits of inventory management across channels.

Optimize each sales channel with automation 

Managing inventory across your sales channels can be difficult, especially as you add and test new sales channels. Your time should be spent growing the business, not tracking down supply issues.  

With an automated inventory management platform, you can have real-time oversight across your entire supply chain to ensure customers get their orders in the promised time frame. This type of software also comes with rules engine integrations so you replenish stock automatically when a product sells out on one channel or reaches a designated supply level. 

Improve customer experience 

The last thing you want is a customer placing an order for inventory that’s not available. But that’s only one aspect of a great customer experience. Multichannel inventory management can ensure product listings are correct, orders are tracked through delivery and inventory is replenished ⁠— each of which further improves the customer experience.

Utilize demand forecasting 

With the right multichannel inventory management software, you’ll gain data-driven insights that help you optimize your strategy and make profitable business decisions. Demand forecasting, in particular, can ensure you always have the right amount of stock on hand. 

Demand forecasting helps seller stock the right products at the right levels across all sales channels, minimizing the chance of overselling. In addition, demand forecasting helps you scale inventory levels up or down based on peak season. 

Manage product listing descriptions 

Manually listing product descriptions is time-consuming even on one sales channel, let alone multiple channels. To save time ⁠— and even more importantly, to ensure consistency when the customer engages with a brand ⁠— each listing can be manually written, then automatically shared across all of the online sales channels where the product is sold. 

Make supply chain operations efficient

Automation can help streamline back-end supply chain processes. For example, a single order may include products from multiple warehouses. Automation software can determine the most efficient path to fulfilling the order. This ensures orders are on time and correctly fulfilled. By contrast, manual processes for such orders are likely to result in partially fulfilled or incorrect orders, lateness and higher shipping and inventory costs. 

What to look for in multichannel inventory management software.

Real-time data and insights

A good inventory management software provides consistent updates of real-time stock levels across all sales channels as orders are processed. With a centralized dashboard, you can see historical key sales metrics and important information on shipping performance, inventory and orders, including sales volumes and refunds.

Optimization of inventory management and improved efficiency

The listing of products in stock should be adjusted automatically as stock is sold on each sales channel. At the same time, the amount of stock available in product listings should also be adjusted as inventory levels replenish. 

Automated purchase orders and supplier relationships 

A multichannel inventory management system should make it easier to manage supplier relationships by storing essential information such as lead times and minimum required order levels. In addition, good inventory management software automatically tracks purchase orders, manages the entire purchase order process and automatically generates orders as needed. 

Shipping improvements

Inventory management software can streamline shipping workflows and significantly reduce manual tasks for each order. Additionally, you can manage the pick-pack-ship process more easily and efficiently. Other important features of any good multichannel inventory management solution are  the ability to assign the right carrier or fulfillment partner and to track orders after they have been shipped. 

Available Integrations

The functionality of your ecommerce operations can be greatly expanded with integrations. Make sure you review the available selling channels that can integrate with your inventory management software to ensure that you’re not sacrificing functionality for performance. If you can’t access the sales channels you need, there’s not a benefit to using it. Beyond selling channels, consider integrations that improve other aspects of your operations.

Multichannel inventory management in action with Linnworks.

Direct Plants, an outdoor plant company, transitioned from a physical retail business to online sales with eBay in 2006, later expanding with a direct-to-consumer website and an Amazon-branded store. Due to the seasonality of its products, the company had as many as 1,000 stock-keeping units (SKUs) in season at any given time. Manually updating these SKUs was difficult and time-consuming.

Furthermore, Direct Plants was selling products quickly, making it more difficult to maintain accurate inventory levels and leading to oversold products. Without accurate tracking and sales data, the company didn’t know which seasonal plants were popular, which led to missed revenue opportunities.

The retailer partnered with Linnworks to help establish a multichannel inventory and order management system that could help manage products more effectively. Shaun O’Brien, company director at Direct Plants, said, “The ability to quickly update SKUs to reflect changes in our inventory and accurately syncing inventory levels across our selling channels means I don’t have to worry about overselling or underselling, which frees up my time to focus on the business.”

Customers expect convenience. They want seamless shopping experiences in the places where they choose to spend their time. The challenge for brands is managing inventory on multiple sales channels at the same time.

Multichannel selling requires businesses to meet customer demands and provide a positive experience that exceeds expectations. To do this, top sellers make sure back-end processes are connected to multichannel inventory management software.

Book a demo to discover how you can grow your business with Linnworks

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