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A guide to multichannel inventory management in 2022.

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

Brands need to stay connected to their customers in multiple online environments to meet customer expectations. 

Why? Because customers demand convenience. A seamless experience across all sales channels is what is expected.

That means brands need to embrace Total Commerce — the simple concept of being wherever your customers want to shop. 

And brands are recognizing that they need to be present on multiple channels and platforms, and create seamless experiences to meet customer demands — according to Linnworks recent research on the great commerce acceleration, 96% of businesses say the pandemic has accelerated their adoption of news sales channels. 

Embracing a multichannel sales strategy comes with challenges — from keeping listings updated, to tracking orders, and managing and shipping inventory. Inventory management across multiple platforms can get complicated if it’s not properly set up across your business. 

In this guide, we look at the definition of multichannel inventory management, 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 major challenges of multichannel inventory management? 

Meeting customer demands on multiple sales channels is hard work. 

There are going to be challenges that come up when managing multiple channels simultaneously, especially if your business is growing fast. Here are some of the issues growing multichannel ecommerce businesses encounter. 

Avoid overselling and stock outs 

When selling on multiple channels, it is difficult to keep track of inventory availability manually. You want to make sure you avoid stock outs. Stock out is the overselling of products. For example, when a product in one of your sales channels, like Amazon, says “in stock” in the product listing —  but in reality the product is  out of stock — this leads to a negative customer experience, and potential adverse actions from Amazon

According to Linnworks research, 76% of consumers say convenience is a key priority when selecting a retailer. This means brands need to create experiences that are seamless and be transparent and communicative about delivery and product availability. 

Stocking too much inventory 

Another challenge ecommerce businesses face is stocking too much inventory when you don’t need it, leading to wasted spend and additional stocking fees. 

Lack of product visibility 

Ecommerce retailers need oversight on what products are available on which sales channels, and at what price points. That way  retailers can process sales and manage stock levels easier. What’s more, having oversight gets the products delivered to the customer within the time frame that is promised.

Not having the data to understand supply and demand 

High-growth ecommerce businesses should have the correct insights and data from all areas of the business to implement an effective supply chain strategy. This data should be easy to obtain and understand. 

Further Reading: A guide to multichannel ecommerce – strategies and solutions.

What are the benefits of multichannel inventory management?

As order volumes increase and you manage sales on multiple channels, you don’t want to be trapped in the time consuming process of logging in and out of platforms to list products and manage orders. 

The benefits of using an inventory management system like Linnworks allows you to grow sales, improve efficiency, and avoid the risk of overselling as you grow your business and add more sales channels. 

Optimize each sales channel with automation. 

Managing inventory across your sales channels all at once is difficult, especially as you add and test new sales channels into your strategy, your time should be spent growing the business not tracking down supply issues.  

That’s where automated inventory management technology comes in. An advanced inventory management platform gives you real time oversight on all of the stock across your entire supply chain to ensure customers get their orders in the promised time frame. Additionally, rules engine integrations in the software can  replenish stock automatically when a product sells out on one channel, or reaches a designated supply level. 

Improved customer experience 

Inventory should be available when a customer places an order. You want to make sure you have the inventory to deliver the product to the customer. This creates a positive customer experience and leads to brand loyalty. 

Demand forecasting 

With the right multichannel inventory management software, you’ll gain more data-driven insights allowing for more profitable business decisions. You can ensure you always have the right amount of stock on-hand with demand forecasting

For example, with a clear picture of supply and demand throughout the year, you can forecast when you need more inventory. For example, taking the guesswork out of estimating seasonal demand during the holiday shopping season. Using demand forecasting, you can ensure you are stocking the right products at the right levels across all sales channels so that you don’t oversell. In addition, you can make sure that inventory returns to normal levels after the seasonal demand peak. 

Manage product listing descriptions 

Multichannel product listing software saves huge amounts of time because you don’t have to write product descriptions manually to list across multiple sales channels. To save time, and even more importantly, to ensure consistency when the customer engages with a brand, one listing can be manually written, then automatically shared across all of the online sales channels where the product is sold. 

Efficient supply chain operations 

Another important benefit of multichannel inventory management is automating back-end supply chain processes after the customer makes a purchase of your product.

An example of this is when a single order can involve products sourced from multiple warehouses. Automation software will determine whether the nearest logistics center to the customer is the right location  to gather all of the products ordered, or if it’s necessary for the order to be fulfilled through a different center where all of the products in the order can be found. 

The automation process improves the customer experience because it ensures orders are on-time and fully fulfilled when logistics centers communicate with each other. Executing this process manually can lead to partially fulfilled, late orders, or higher shipping costs from utilizing a storage location farther away from the customer. With the right software and back-end processes in place, growing ecommerce businesses can now make sure they always fulfill an order correctly, and deliver within the promised time window. 

What to look for in multichannel inventory management software.

Real time data and insights

A good inventory management software provides consistent updating 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 read all important information on shipping performance, inventory, and orders such as refunds and sales volumes. 

Optimization of inventory management and improve efficiency

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

Automate purchase orders and supplier relationships. 

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

Improve shipping 

Using an inventory management software, you can streamline shipping workflows and significantly reduce manual tasks for each order.. In addition, you can manage the pick, pack, ship process easier and more efficiently. Another important feature of any good multichannel inventory management solution is the ability to assign the right carrier or fulfillment partner, and track orders after they have been shipped. 

Multichannel inventory management example with Linnworks.

Direct Plants 

Direct Plants, a family-owned business, sells a wide range of outdoor plants. Direct Plants worked successfully in physical retail before transitioning online to the marketplace eBay in 2006. The company also added a direct-to-consumer website and an Amazon-branded store to its sales channels. 

The problem Direct Plants had with selling on multiple channels was the manual process of managing a changing list of SKUs. The reason the SKUs changed was due to the seasonality of Direct Plants products. As a result,as many  as 1,000 SKUs were in season at a given time. 

Direct Plants faced a challenge: having accurate inventory levels as orders came in fast. Without the ability to maintain accurate inventory levels, the company oversold their products, leading to a negative experience for customers with delayed orders. In addition to overselling, Direct Plants did not know which of the seasonal plants were popular from a lack of data tracking and insights. Causing them to miss significant revenue opportunities from underselling these popular plants.

Because of the challenges with managing inventory across multiple sales channels, Shaun O’Brien, company director at Direct Plants, approached ecommerce design agency Frooition to learn about recommended solutions. Frooition recommended Linnworks to manage multichannel inventory and order management, and BigCommerce as Direct Plants’ ecommerce platform.

Shaun says, “I can’t imagine operating without Linnworks. Providing fast and efficient service is critical for a perishable item such as outdoor plants, and because I can trust Linnworks, that helps build our customers’ trust in our business. 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. I have full control to set up new users and can give them streamlined access to focus on order management means they can focus on day-to-day operations and order fulfillment, which frees up my time to focus on the business.”

Read the case study: How automating inventory and order management delivered multichannel sales growth for Direct Plants

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.

Ecommerce businesses must come prepared to meet customer demands, and provide a positive experience that exceeds expectations. This requires setting up the back-end processes with a multichannel inventory management software

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

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