It’s an understatement to say that the coronavirus pandemic has impacted everything. COVID-19 has changed the way people work, live, and shop. With people stuck at home, new habits have formed and consumers have become more comfortable with buying online and having things delivered. The need for solid eCommerce Inventory Software is prevalent.
Consumer spending on Amazon is up 35% over the same period last year.
Whether you are selling products with FBA on Amazon, your website, social media, or multiple eCommerce marketplaces, inventory management software (IMS) is even more important since COVID-19 started disrupting the world around us.
Effective inventory management helps prepare organizations for intense periods of demand and disruptions to supply chains. During normal times, an eCommerce inventory management system provides visibility into past, current, and future activity through demand planning and reports.
It gives businesses a way to forecast demand and make sure reordering occurs at just the right time for peak efficiency. When demand explodes, you need instant access to information and the ability to manage your amount of safety stock, quickly create purchase orders, and restock.
If you are working with multiple sales platforms, you need a single dashboard to manage all your inventory. There simply isn’t enough time to manage different proprietary systems. You have an opportunity to do business right now. You need to be at the top of your game.
What is eCommerce Inventory Management Software (IMS)?
The right IMS will serve as a central hub for your eCommerce inventory software and management. It will manage and measure the amount, location, pricing, ordering, and fulfillment process for inventory across your platforms and channels.
eCommerce inventory software gives you an accurate count of what’s in your system at any time, help you forecast future demand, and make sure you have enough stock on hand to handle fulfillment.
Your eCommerce inventory management software will integrate with your existing supply chains, third-party sales channels and marketplaces, vendors, and drop shippers.
Once orders are placed, your inventory management software can generate pick lists for warehouse teams to pick and pack. An IMS can guide them through the most efficient route to warehouse, aisle, shelf, and bin locations to prepare orders for shipping. The eCommerce inventory management software should integrate with shipping solutions, such as ShipWorks, ShipStation, or ShipRush, for a seamless workflow.
An eCommerce inventory management system can tell you at a glance which products are out of stock, in stock, understocked, and overstocked. Each of these items is important when it comes to the efficient management of your inventory.
Out of Stock & Understock
When items are out of stock, you’re losing sales. Customers aren’t happy and you miss opportunities. In addition to the loss of sales, it can decrease customer loyalty and damage your brand.
The same goes for understocks. Poor inventory management can leave you short in safety stock to tide you over until orders arrive from suppliers. It may also force you to pay higher prices for raw materials or products when you need them faster.
An eCommerce inventory management system can help manage your supply chains to anticipate and avoid stock outs.
When you have overstock, you’re tying up cash that could be invested in other areas of your business. It’s a common occurrence and can hurt profitability. At any one time, researchers estimate there is more than $1 trillion tied up in inventory, accounts receivable, and accounts payable. That’s a lot of capital that’s tied up and unable to be put to use.
Optimizing your working capital delivers improved operational efficiency. It also gives organizations the opportunity to fund growth, reduce levels of debt, and maximize returns.
This can also lead to dead stock as products expire or consumer trends change. This means increased holding costs until you can sell if – sometimes at a loss.
The most efficient eCommerce sellers have tight control over the inventory and use lean inventory practices. They have the least amount of inventory they need in stock while making sure they have enough to meet consumer demand. They manage lead times for suppliers and have the right amount of safety stock on hand to bridge the gap between ordering and restocking.
In your warehouse, eCommerce inventory software gives the knowledge tools to manage your stock. At any time, you can see exactly how much inventory you have and the potential revenue from every SKU. This allows you to make smarter decisions and better business decisions. It can help you decide which products to market or discount, where you need to adjust supplies or suppliers and evolve storage and warehousing capabilities.
Keeping your inventory safe, accurate, and connected to the proper platforms, marketplaces, channels, and shipping is key to efficient operations.
Why is eCommerce Inventory Management Software Important Right Now?
When consumer demand spikes, you’ve got to recognize it early so you can gear up. In normal circumstances, you can anticipate when sales will grow. Most retailers have peak seasons, such as around the holidays, where they can increase the inventory of popular items.
When unusual occurrences happen, you’ve got to make changes immediately to take advantage of the opportunity or minimize the losses.
During the COVID-19 outbreak, sellers of hand sanitizer, toilet paper, and masks couldn’t keep supplies in stock. When consumers couldn’t find the products that they wanted at their preferred seller, they moved to competitors. If your competitor is able to fulfill an order that you can’t, not only have lost a sale but you may have lost a customer.
If eCommerce stores had recognized the trend early, they could have increased their inventory, increased sales, and had an opportunity to gain customers. As the supply chain for these products became disrupted, those without a solid eCommerce IMS missed out.
A robust inventory management system might not totally avoid stock-outs in such a case, but it would flag the unusual activity and generate reorders automatically instead of waiting until stocks dwindle.
Selling Through Amazon During Crisis Times
One thing many retailers learned the hard way when selling on Amazon was that the eCommerce giant could change the rules at any time. When demand spiked, Amazon prioritized seller listings that could self-fulfill rather than FBA (Fulfillment by Amazon) shippers. This penalized eCommerce sellers on the Amazon platform using FBA. While they changed this after a few weeks, it disrupted sales for many on the marketplace.
In March, when the COVID-19 pandemic worsened in the U.S., Amazon shifted strategy again. They prioritized the shipping of essential goods, such as medical supplies and food. They did this for the right reasons – to be able to quickly restock and deliver essential goods. This also hurt sellers of other products until the restrictions were lifted nearly a month later.
We won’t argue the validity of these changes but it acts as a reminder that when you are dealing with marketplaces and digital platforms, you’re not always in control of your destiny. Rules and systems can change. Restrictions can be put in place. Decisions can be made to benefit the marketplace or platform that can hurt your business.
This shows how important it is to create a supply, sales, and fulfillment chain that you can control. We’re not suggesting you abandon Amazon. That would likely be a mistake. It does show the significance of your eCommerce inventory management system to adapt quickly as situations change to allow you to stay flexible.
Switching from FBA to MFN or 3PLs
For example, some sellers quickly shifted to becoming MFN sellers on Amazon. Others turned to third-party logistics services (3PLs). These can be daunting tasks to do quickly. Using eCommerce inventory management software with SkuVault can help you make these changes. SkuVault can guide you through the process of transitioning to MFN with the help of eCommerce inventory software.
Supply Chain Management During COVID-19
The disruption to supply chains left many eCommerce retailers without the materials and items they needed to fulfill orders. In researching how this impacted businesses, researchers Thomas Choi, Dale Rogers, and Bindiya Vakil determined that the companies that invested more heavily in mapping and managed supply changes were much better prepared during the pandemic.
When COVID-19 first hit hard in China, it impacted many eCommerce sellers that sourced inventory from China. This left them unprepared and incapable of quickly sourcing other suppliers. It also increased the cost of goods quickly.
Efficiently managing your supply chain, lead times, and safety stock using eCommerce inventory software can help mitigate supply chain issues and stock shortages. While it won’t guarantee disruptions to the supply chain, it can help forecast the potential problems and give you an earlier warning.
Managing Inventory in Crisis Times
In good times, efficient inventory management is important. In crisis times, such as selling in a COVID-19 environment, efficiency is no longer optional. It can help ensure your business remains viable in the future.
When your inventory is spread out over multiple eCommerce sites, inventory management can get complex quickly. Whether you are a small business or a large business with thousands of SKUs, accurately managing your inventory is a must. Errors cost time and money. If you make too many of them, it can hurt your reputation or even get you banned from online marketplaces and selling platforms.
An IMS automates your inventory. Once you receive your goods, you enter the information into your IMS. As long as your staff uses the system as their central hub for warehousing, storage, pick, pack, ship, and order fulfillment, your inventory will always be accurate. Automated triggers for reordering based on historical data and peak sales periods can avoid inventory pile ups and stock-outs.
It can also increase efficiency in operations, which saves time and money. By creating optimized pick lists, SkuVault helps make your warehouse staff more productive. Using digital pick lists rather than paper lists can eliminate paper waste, printing time, and scanning. Quality control features are built-in to check pick lists against orders to avoid costly shipping errors.
Why Now Is the Time to Invest in Efficiency
When there are uncertain times, buyers’ habits change. Consumers are trying companies and products they haven’t tried before. This represents both an opportunity and a challenge. It becomes a challenge if you can’t fulfill those needs when they find your products online. It becomes an opportunity when you can meet their needs.
The actions you take right now can determine your company’s future. Times of economic uncertainty can reshuffle the deck for companies. There will be winners and there will be losers. Companies that fail to improve efficiency, increase their working capital, and evolve as things change around them can see their fortunes fade.
Here is a story you may not know. In the 1920s, two cereal companies dominated the landscape with almost equal shares of the market. Both Post and Kellogg’s took different approaches during the ensuing economic downturn. Post cut back everywhere it could. Kellogg’s took a more aggressive approach, increasing its marketing while focusing on operational efficiency. As the country moved into depression, Kellogg’s outperformed Post and continued to outperform it afterward.
By investing in efficiency and staying aggressive, Kellogg’s moved from parity to dominance. It’s been the dominant brand for more than 90 years.
The way companies approach uncertainty will shape the business landscape for the future.
Management consulting firm Bain & Company looked at what happened to companies during recessionary periods and found some dramatic results. More than a fifth of companies that had been category leaders in the top quartile in their industry fell to the bottom quartile. At the same time, roughly 20% of companies that went into uncertain times in the bottom fifth were able to move to the top 20% of performers. Many industry leaders fell to the bottom and previously poor performing companies rose to the top of the market because of the moves they made during economically uncertain times.
Waiting until things settle down can also be a mistake.
Two-thirds of companies that showed growth after troubling economic times took bold action while it was happening.Harvard Business Review
An exhaustive study published in the Harvard Business Review reported that two-thirds of the companies that showed growth after troubling economic times took bold action while it was happening. They didn’t wait. Their investments led to more efficient and profitable operations even during the downturn. More importantly, 70% of the companies that made gains sustained those gains long-term. Conversely, the companies that lost ground rarely recovered. Less than a third have been able to regain their prior market share.
Bain & Company calls moments like we are in right now “intense crucibles of opportunity.”
Invest Now, Not Later
46% of small and midsize businesses report they are deferring software investments right now. It’s no surprise that companies are watching expenses carefully these days. However, there are two notable facts about that statistic. First, 54% (the majority) of companies are not putting off infrastructure investments, such as inventory management software, to improve efficiency and profitability. Since 1 out of every 2 businesses is continuing to invest in infrastructure improvements, if you’re not considering it, it’s likely your competitors will.
Secondly, research proves that optimal business strategy isn’t to cut tech investments during slowdowns or market surges. In fact, it’s the exact opposite. It is the right time to improve systems and increase efficiency.
SkuVault Is Inventory Management Software to Grow Your Business
Things continue to evolve with the coronavirus pandemic. Right now, eCommerce inventory management software is playing a significant role in how well companies are dealing with what’s happening. While you can’t control what’s happening in the world, using SkuVault as your eCommerce inventory management system can help you adapt quickly to changing environments.
SkuVault connects channels, organizes warehouses, and manages inventory efficiently with powerful integrations and simple workflows. This lets you sell faster, pick faster, and ship faster.
Whether you need to shift your fulfillment models, reprioritize your suppliers and supply chains, or manage your inventory more efficiently, SkuVault can help. Contact us today for a demo and let us show you how we can help grow your business.