Omnichannel inventory management: what it is and best practices

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Omnichannel inventory management is a term thrown around a lot in the retail world. 

But what does it mean, and how does it benefit your organization? And more importantly, what are the best practices for implementing an Omnichannel Inventory Management system? 

In this article, we will discuss all of those things and more. By its end, you should understand Omnichannel Inventory Management and how it can positively impact your bottom line. 

What is omnichannel inventory management?

Omnichannel inventory management is the discipline of managing and reconciling inventory across multiple sales channels, including social media, ecommerce platforms, and brick-and-mortar locations. 

Good omnichannel inventory management allows you to track and manage inventory across all sales channels from a central location. 

This means retailers have real-time visibility into their inventory levels, whether a product is sold in-store, online, or through a third-party marketplace.

Businesses that use omnichannel inventory management

A number of businesses have seen the benefits and are utilizing omnichannel strategies to stay ahead of the competition.

Some of the most notable examples include Amazon, Starbucks, Target, and Best Buy.

Advantages they see range from increased customer satisfaction to higher sales and profits.

Omnichannel inventory management has also been shown to reduce out-of-stocks, increase fill rates, and decrease costs associated with managing inventory.

The benefits are numerous, which is why more and more businesses are turning to omnichannel inventory management solutions. 

The benefits of an omnichannel inventory management solution

Managing inventory across a single channel is challenging enough. When you add multiple channels, the complexity grows exponentially. 

Trying to manage these things manually — with paper or spreadsheets — is a fool’s errand. 

Even using the digital dashboards of each channel without a centralized solution isn’t ideal. 

What you need is a software solution that acts as the “single source of truth” for all your inventory data. 

By utilizing a software solution, you can take advantage of several key benefits, including:

  • Eliminating stockouts and backorders
  • Improving customer satisfaction
  • Reducing operating costs
  • Increasing revenue and margins

How does an omnichannel inventory management system work?

Write about how an omnichannel inventory system works.

An omnichannel inventory management system works by tracking and managing inventory across all sales channels from a central location. This means businesses have real-time visibility into their inventory levels, whether a product is sold in-store, online, or through a third-party marketplace.

Differences between omnichannel and multichannel retailing

Write about the differences between omnichannel and multichannel retailing.

Omnichannel and multichannel retailing are both terms used to describe the practice of selling through multiple channels. The key difference between the two is that omnichannel retailers have a unified strategy for managing inventory across all channels, while multichannel retailers manage each channel separately.

Say you’re currently using a multichannel way of selling your goods, including your online store, brick-and-mortar store, social media sales, etc. So, what’s the difference between doing that and switching to an omnichannel approach?

The primary thing that makes omnichannel better for you and your consumers is that each step is connected. In fact, integrating everything will make it much easier for customers to get what they want.

Also, using the omnichannel retailing approach can save you a lot of money because you’ll use a much more unified inventory system.

Even better, your customers will appreciate being able to buy something online yet return it to your store. But, of course, there are multiple obstacles and challenges you must overcome first.

Barriers to omnichannel inventory management

What stands in the way of getting your company’s omnichannel management system up and running? Consider the following.

(Lack of) technology

Omnichannel inventory is something you can’t do by hand. You simply must streamline the process by using an automated technology solution.

A solution like SkuVault houses all your channel sales, software integrations, shipping labels, and inventory data in one accessible place.

Disconnected supply chain processes

In order for an omnichannel inventory system to work, every link in your supply chain must be connected. This includes your vendors, manufacturers, logistics providers, and more.

If any of these parties aren’t using compatible software or don’t have a way to communicate with each other, it will throw a wrench in your inventory management system. The good news is that there are plenty of software solutions available that offer built-in supply chain management features.

SkuVault, for example, includes a vendor management system (VMS) that gives you the ability to track and manage your relationships with vendors all in one place.

Order inaccuracy

With so many moving parts, it’s important to have a system in place that can keep track of everything and ensure accuracy.

An inventory management solution will give you the ability to see your inventory levels in real-time across all channels, so you can make adjustments as needed.

It will also automate tasks like order fulfillment and shipping to help reduce errors. Omnichannel inventory management is a complex process, but it’s one that can have a major impact on your business.

By taking the time to implement a system, you can improve customer satisfaction, reduce operating costs, and increase revenue and margins.

Lack of inventory visibility

If you can’t see your inventory levels in real-time, it’s impossible to manage them effectively. This is one of the biggest challenges businesses face when trying to implement an omnichannel inventory management system.

Without visibility into your inventory, you run the risk of overselling products, which can lead to angry customers and lost sales.

The good news is that there are technology solutions available that can give you the visibility you need. SkuVault, for example, offers real-time inventory tracking across all channels, so you always know what’s in stock.

High storage costs for inventory

It’s imperative that you have a dedicated place within your processing center for each of your sales channels.

Failure to do so invites dead stock and may leave you needing to clear out old merchandise. Instead, use your storage space appropriately to ensure that you don’t stock way more or less than is required.

Tracking your orders

You need to know exactly what goes into each order, where it came from in your inventory, and where it needs to be shipped. This is the only way you can accurately keep track of your inventory levels and ensure that orders are being fulfilled correctly.

The good news is that there are plenty of software solutions available that can help you track your orders and inventory levels.SkuVault, for example, offers real-time inventory tracking across all channels, so you always know what’s in stock.

It also includes a built-in order management system (OMS) that gives you the ability to track and manage your orders all in one place.

Best tips and practices for omnichannel inventory management

Now that we’ve looked at some of the challenges you must overcome, let’s look at some of the best tips and practices of an omnichannel inventory management system.

Know your true inventory levels

Get this: 43 percent of small businesses in the U.S. don’t track their inventory (or do so with a manual system). 43 percent!

Therefore, simply knowing your true inventory levels puts you ahead of nearly half of the country’s small ecommerce businesses.

Knowing true inventory levels necessitates having visibility into your inventory across all channels, including brick-and-mortar stores, ecommerce sites, marketplaces, and more.

The only way to do this is by using a technology solution that offers real-time inventory tracking. SkuVault, for example, gives you the ability to see your inventory levels in real-time across all channels so you can make adjustments as needed.

This is critical because if you don’t have visibility into your inventory, you could end up overselling products and angering customers—not to mention losing sales.

Encourage in-store returns

Encouraging in-store returns can be very helpful to your overall profit loss. After all, bringing a customer into the store to make a return has several potential bonuses for your business.

  • Your customer may find what they want in the store or even discover new items to purchase.
  • Customers won’t have to waste time printing a return shipping label and going to a shipment business. They will appreciate this time saved, especially if they find what they want in-store.
  • Not only will you be rewarded by their in-store shopping, but you’ll also save money on the cost of paying for a shipping label. In other words, it’s a win-win!

So, what happens if they return the item in-store without purchasing anything new? No problem!

You’ll still gain the ability to sell the item in-store without having to go through the costly process of paying someone to scan it into your warehouse and re-list it online.

Integrate your supply chain

By integrating your supply chain, you’ll be able to see every step of the journey—from when an item is ordered to when it arrives in-store or at a customer’s doorstep.

This level of visibility gives you the ability to track items, so you always know where they are and when they’re expected to arrive.

It also allows you to quickly identify any potential issues that may arise so you can take steps to mitigate them.

For example, if you see that an item is going to be delayed, you can quickly update your website or app so customers are aware of the delay and won’t be left frustrated.

Integrating your supply chain also has the added benefit of giving you visibility into your inventory levels so you can make necessary adjustments to ensure you always have the right amount of stock on hand.

This is especially critical during peak times, such as holidays when demand is high and you don’t want to run out of items.

Optimize your return policies

Another for omnichannel inventory management is to improve your return policies. Your return policy should be clear, concise, and easy to understand. It should also be flexible so you can offer different options depending on the product, channel, and customer.

For example, you may want to offer free returns for items purchased online but charge a restocking fee for items purchased in-store.

You should also consider offering different return options such as store credit, exchanges, or refunds. And, be sure to clearly communicate your return policy to customers, so they know what to expect.

Contending with a return does, of course, cost your business some money. But not having a solid return policy could affect you even more.

Most shoppers are willing to shop somewhere more frequently if offered an easy-to-understand return policy.

Build a customer satisfaction plan

Another way to set your business up for success with omnichannel inventory management is to build a customer satisfaction plan. This involves creating a system for tracking and responding to customer complaints or questions.

Building a customer satisfaction plan shows customers that you care about their experience and that you’re committed to making things right if something goes wrong.

Creating a customer satisfaction plan doesn’t have to be complicated. But, it should be tailored to your business and include the following elements:

  • A system for tracking customer complaints or questions
  • A plan for how you will handle returns and exchanges
  • A process for responding to customer feedback
  • A clear, concise, and easy-to-understand return policy

Remember: satisfying your customers is one of the most important rules of the retail business. Doing so will create return customers who will spread the word about your company.

Stock your inventory across multiple locations

In the early days of online retail, it was enough to store all your inventory in one central location. But as business picked up, you quickly realized that this wasn’t the most efficient way to do things—especially if you were dealing with a lot of products.

Nowadays, it’s very common for businesses to have inventory spread out across multiple locations. This method has several benefits. First, it allows you to get your products closer to your customer base, which can help with shipping times. Second, it gives you a buffer in case one of your warehouses is having issues (e.g., weather problems).

And lastly, if you’re dealing with perishable items, it’s always good to have a backup plan. For instance, if one location is out of stock, you can quickly send products from another to keep your customers happy.

How long will it take to implement an omnichannel inventory management solution?

The time it takes to implement an omnichannel inventory management solution will vary depending on the size and complexity of your business. However, most companies can expect to be up and running within a few months.

If you’re looking for a more immediate solution, you can do a few things to get started. First, take inventory of your current stock levels and where your products are located. This step will give you a good starting point for creating an omnichannel strategy.

For more on this topic, check out our post on taking a physical count of your inventory.

Next, start thinking about how you want your customers to interact with your business. For example, do you want them to be able to purchase online and pick up in-store? Or, do you want to offer a more seamless experience where they can buy online and have the products shipped to their door?

Once you have a good understanding of your goals, you can start looking for solutions to help you achieve them. There are several excellent options out there, so take your time and find one that’s right for your business.

The breakdown: omnichannel inventory management

In summary, omnichannel inventory management is a system that allows businesses to manage their inventory across multiple channels.

This type of system can be very beneficial for businesses, as it allows them to get their products closer to their customer base and provides a buffer in case one of their warehouses is having issues.

Additionally, omnichannel inventory management can help businesses to better understand their customers’ needs and wants. Implementing an omnichannel inventory management solution can take some time, but it is well worth it in the long run.

Let Linnworks assist your business with omnichannel inventory management today

If you’re looking to improve your inventory management, an omnichannel solution is a way to go. And if your business hasn’t figured out how to manage several channels of commerce, Linnworks can help you get started today.

Linnworks’ integration allows you to sync your inventory data across multiple online sales channels, giving you the order fulfillment efficiency needed to grow your business.

SkuVault’s robust suite of built-in features, such as comprehensive automation and centralized inventory synchronization, help companies better manage their inventory across all channels and marketplaces.

Have questions?

If you’d like to know more about how SkuVault can elevate your business, please get in touch with us at (502) 795-5491. Or, you can schedule a live demo with us to learn more about how our software can help you take your business to the next level. Our team will be more than happy to answer any questions you may have!

Matt Kenyon

Matt Kenyon


Matt has been helping businesses succeed with exceptional content, lead gen, and B2B copywriting for the last decade. When he’s not typing words for humans (that Google loves), Matt can be found producing music, peeking at a horror flick between his fingers, or spending quality time with his wife and kids.