Stock managementis a critical part of your brand’s business operations, refers that you set a balance between your product purchases and customer orders by analyzing product changes. By stock management in ecommerce you deduce which one of your products are sold increasingly and which products you will need.
In e-commerce, stock amount is extremely important, your products wait in the warehouse, ready to packing to order, if high-volume sales swell up suddenly. You can manage your stock inhousely or you can outsource your operations by a 3rd party e-commerce solution provider company . We’ve collect the informations about what you need to know about stock management for you.
1. Take control of the supply chain
An ideal stock management, the supply chain should be transparent and completely taken under your control. Both the number of products in your warehouse and the number of products in your e-shops should reflect the absolute amount. If you know the capacity of your products in your warehouse, transfer or returned correctly, you can prevent your customers from encountering “Out of Stock” statement. Due to manage your inventory in the best way, you can utilize by stock management programs. We kindly recommend you that research about the programs and choose the most related to your brand according to the size of your business
2. Take advantage of sales data
You should observe high-selling rated products in your stock well and renew them within the shortest time. Manage the circulation stamina with best-seller products is a necessity. Besides by considering the seasonal conditions, you should organize purchases for the next periodsPrevious years’ datas will help you. You regard different scenarios such as your customer volume, product range and warehouse width. In order to set flexible structure in inventory you can collaborate with external solution providers and purchase a fulfillment service We recommend that you to check fulfillment solutions provided by fiCommerce.
3. Perform ABC analysis
According to the Pareto principle, also known as the 80/20 rule, 80% of your turnover is gained by 20% range of your product. ABC analysis also helps you to categorize your products according to their returns based on this principle. Thus, you can always keep your stock level high in products that includes a large part of your income and are important to you.
If you have a wide range of products, ABC analysis can be quite useful when checking your stocks. According to this analysis, the products in group A are your most important products and require a strict stock control. On the other hand, products in group C are of low importance.
For example, if you have an apparel store, you can group sweaters as follows:
Group A products: Best-selling
Group B products: Christmas-themed sweaters
Group C products: Less preferred sizes, colors and patterns
4. Maintain safety stock
Keeping some extra product in the warehouse protects you against order fluctuations. These extra hand-held products are called safety stocks. Thanks to this, you can continue to sell your products, meanwhile, waiting for new products from your suppliers and you do not have to turn your customers down. Especially during campaigns when sales increase or market forecasts are incorrect, safety stock gives your brand strength. The customers of your competitors whose products are out of stock can choose your brand in such cases and become your loyal customers if they are satisfied with your brand. The safety stock formula, also known as buffer stock, consists of different alternatives. We recommend that you research the most suitable formula for you. One of the most common formulas is as follows.
Safety Stock = (Daily Maximum Usage x Maximum Delivery Time) – (Average Daily Usage x Average Delivery Time)
5. Apply FIFO and/or LIFO methods
First-in, First-out (FIFO)
In stock management “first-in first out” method is widely preferred, according to it, while sales continue the first stocked goods are the first sold ones. If your goods have an expiration date and are affected by trends and current developments, it is ideal for you to apply the first-in first-out method.
Last-in, First-out (LIFO)
Another stock management application you can choose is the last in, first out. According to this method, the last stocked-products are sold first. This means the high cost of goods sold,lower net income and less tax liability. Businesses with a high transaction volume and the price of the product they sell are quickly affected by inflation can choose the first out method due to the tax advantage.