These days, the future of a small business more or less comes down to whether or not they have a healthy online presence.
But even after a business has set up a stellar website, posted frequently on social media, replied to reviews, and generally checked all the obvious online boxes, the next aspect of selling online that may trip them up is order fulfillment.
Specifically, syncing online and in-store inventory management.
How do you adjust supplies now that you have a new avenue of sale? How do you make sure that someone doesn’t order the very last of an item at the same moment you pack it up for someone in-store? What tools are out there to make the process easier?
Let’s dive in and find out.
What is inventory management, and why is it important?
Inventory management is the act of accounting for all the stock you have, as well as all the stock you’ve sold, and all the stock that you have on the way. It can potentially also involve tracking your supplier’s or customers’ stock (which can be helpful for predicting best times to order).
Knowing how much stock you have and how much you usually sell informs your decisions about the optimum amount of product to keep in stock. Too much and you may waste money on items that go bad, gather dust on the shelf, or that you’re never able to sell at full price. Too little and you may lose the chance at potential sales by having nothing in stock when people want your goods.
Your best friend in inventory management
Monitoring the stock you currently have is important for three reasons:
- It lets you know what’s selling well, and what’s not
- It keeps you informed of just what you have in store to sell (and prevents you from selling items you no longer actually have)
- It helps you order and adjust stock according to buyer habits unique to each location
By addressing the first point, you can make a pretty good prediction for the last one: how much more to order.
Traditionally, inventory has been managed with checklists and spreadsheets, and ordered based on the wisdom of experience and a hard-earned knowledge of one’s customer base and their needs.
However, while it’s true that there is rarely a substitute for experience, this strange season is proving that even store owners that have been in business for decades can sometimes be tripped up and fall if they just keep on with what they’ve always done and are unable to adjust with the times.
Having an online store will require, and indeed, will manage some of your inventory for you. But if you have both a physical and online presence, most likely you will need (or at least greatly benefit from) some designated inventory management software.
Depending on what you’re selling, inventory management systems can keep track of parts and progress in products you’re self-manufacturing, and/or can keep you updated on the stock of your suppliers, as well as the stock of those you supply (alerting you when a big order may be on the horizon).
But what’s likely most interesting to many small businesses that are just moving online is the ability of inventory management systems to sync and manage multiple locations - or both your online and physical inventory.
Solving the main dilemma
When introducing the option of online purchasing to your business (or your client’s business), one of the trickiest parts is syncing online and in-person inventory. How do you know how much to stock in both iterations of your shop, and how do you make sure you don’t accidentally sell stock online that you’ve just sold out in person?
The most practical way to go about this is to think of your business as a multi-location venture, one of your “locations” being your brick and mortar store, and the second being your online store. Just like if you had two physical locations, you can’t have one item in two places at once. Designate some of your products for your online location, and some for your physical location, keeping the online stock separate and inaccessible to in-person shoppers.
But what if a shopper comes in asking about an item that’s sold out in-store but is still available online (and therefore the potential sale is sitting just a few meters away in your back stock room)?
Instead of simply going to the back to grab one of the items from your designated online products, first say to the customer, “Let me check if I have this in stock” and check your website to see if the item is still available, or if it’s sold out online since you last checked.
If you still have the item available in your online store, adjust the website stock right then and there to reflect the purchase being made, and then go grab the item for your in-person customer.
At the end of the day (or at multiple points in the day, depending on how busy your store is), take a tally of what’s selling well in person, and what’s doing well online. If you’ve sold out of something online but have extras of that item in person, remove some from the shelves and add it to your online inventory stash. Adjust your website to reflect the new stock in your online “location”.
This works the opposite way as well. If you’ve sold something out in person, but still have stock left online, adjust the online stock numbers first, then bring the items out to place on your shelves.
If this gets confusing throughout the day, or you’re worried about getting interrupted in the middle of the process and forgetting to update online numbers, save it until after closing hours.
Rules for managing inventory effectively
So you’ve got a system in place, you’re ready to think about your online store and in-person store as two separate “locations”, now what are the rules for knowing how much to order, and when?
Check out these 11 best practices that guide you on “setting par” (a certain minimum number that tips you off to order more of an item), prioritizing inventory according to the ABCs, and more.
What is the best inventory management software for you?
In the last decade, the amount of software designated for inventory management has drastically increased.
Each has its own strengths and weaknesses, but with such a vast array of options, you’re sure to be able to find one that suits your or your clients’ needs.
Some of the biggest considerations include cost, applicability to your (or your clients’) industry, and compatibility with existing point of sale (POS) and/or accounting software.
The prominence of this compatibility factor actually means that many POS and accounting software options include some sort of inventory management capabilities. If you already have one of these options in place, check first to see whether or not it has tools for inventory management before investing in a separate solution.
For a thorough ranking of the best options out there, check Capterra’s annually ranked listing here.
For the best free options, check out this alternative list of inventory management tools, also thoroughly researched and ranked.