Wednesday, September 17, 2014
E-commerce Planning and Inventory Management
In the Last 15 years or so, E commerce is perhaps the fastest growing industry that has taken the world by a storm and is expected to reach 1.5 trillion US$ by the end of the year after an YOY growth of about 20.1%. This has become possible because after a successful stint in the developed countries, it is the developing countries today that provide a huge potential for the growth and adoption of E commerce and Mcommerce with Asia-Pacific overtaking North America in the total revenue generated. But today while the industry is growing at a breakneck speed, its attractiveness has led it to become highly competitive, which is why most of the companies are trying to differentiate by optimizing their operations and business models. As in any competitive landscape, the only way to cut yourself apart is by giving the best deals to your customers without compromising on your service. To make this possible without compromising on your margins, it is extremely important to look at the costs involved and optimize your resources. And given that SCM related activities account for approximately 75% of the operational costs, Demand planning, forecasting and Inventory management has become one of the crucial deciding factors for an e commerce success.
Let us look at the best practices in e commerce inventory management:
Stay organized. Staying organized is one of the basic concept of inventory management. Know what you have and where to find it."Use the obvious," says Katie Hughes who sells Slip On Dancers, an accessory that turns running shoes into dancing shoes. "Lay out inventory in your storage area in a way that is visually easy to queue how many you have of an item." If you have more inventory than you can easily gauge by eye, you may need a technology-enabled solution.
Never be out of stock. Make sure you have enough stock of the items which your website says it is available. "For customers who receive an 'out of stock' notice on a page, it's a terrible disappointment," Colegrove says. "If you're going to carry a product on your website make sure you never run out of it."Jason Haeger, founder of the AJ Coffee Company, says a physical count of the inventory on a regular basis is one way to keep tabs on quantities. He usually recommends a count once a week by the same person."Have just one person in charge of inventory count and product ordering," Haeger says." If the business is just one person, set aside scheduled time for this task. It will seem tedious and feel like a waste of time, but it should be done as an essential part of risk management for the business' bottom line."
Select a tailor-made system. When it comes to managing sales and inventory, your business might only be as good as the software you're running. "When selecting a shopping cart for your online business, look for a system that integrates with industry standard software for inventory management, bookkeeping and other services," Colegrove says. "As your business grows and your e-commerce needs change, this will allow you to move to a new shopping cart solution while minimizing impact to your business operations."
Running a successful commerce site is a job for an entrepreneur who knows what to sell and how to manage sales. Being able to organize the inventory and keep track of what's in stock and what's not, reduces the chances of having excessive back stock or disappointing customers.
In order to increase the sales and profitability, there are multiple software solutions available that are designed to cater to the e commerce market.