Stock control, or inventory control, is an important part of running your online store. And that’s because your stock is so vital to your business. If you don’t have any stock, it’s hard to offer fast deliveries. But too much stock can be killing too. How do you manage your stock and what are some great tips to improve your stock control.
When people start an online store they often think about selling items, doing marketing, and talking to customers. But most starting online retailers don’t think enough about where and how their products are stored and how to keep track of them.
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Why good stock control is important
But stock control or inventory control is key to running a good business. And it’s not easy. Some ecommerce companies have too little stock, which more often than not leads to unhappy customers. While other ecommerce companies go the other way and overstock items. This seems like a harmless plan, but it will cost you unnecessary amounts of money and space.
Having efficient stock control or inventory management will definitely take some time and effort, but it will be worth the while. Luckily, there are some simple ways to improve your handling of stock.
Is your stock too small or are you overstocking? Find the middle ground.
What’s the difference between inventory or stock?
To make things clear, let’s define ‘inventory’ and ‘stock’, so you know what is what.
Inventory includes finished products, as well as all the assets you own or use to complete production, like machinery and the building in which the products are made. Inventory can be divided into four categories: raw materials, work in progress, MRO (maintenance, repair, and operations) supplies, and finished goods.
Stock includes the finished products, but also parts or materials you sell to customers. So, raw materials can both be stock and inventory.
Usually, when you purchase products from a supplier, you immediately buy a multitude of items, which you then have to store. That’s how the stock is created. Stocking up is usually not a big deal in the beginning. But when your online store grows and you start selling larger quantities, it’s important you have a good insight into your own stock, so you can optimize your stock control.
Also, in order to be interesting enough for a large supplier, you must have a good overview of your sales numbers and you must know how often you expect to place an order with the supplier. Sometimes, it can be quite difficult to purchase from a supplier or a wholesaler in a good and efficient way, but luckily there are platforms that connect wholesalers and retailers.
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The right amount of stock
You want to sell as much as possible. You also want to sell as fast as you can. That’s why you need stock. But having too much can kill your business. It could cost you lots of money, effort, and warehouse storage.
So, it’s very important to analyze your stock and to smoothly manage it. Stock control is key. You want the exact amount of stock and take into account the turnover rate of your stock. And when you’re purchasing goods to sell, don’t think too lightly about seasonal items. These products usually sell extremely well for a very short time, so make sure your warehouse is set up accordingly. Selling season items could also mean having a warehouse that’s basically too big for the offseason period.
For better stock control, it’s important to analyze your stock.
Here are some aspects you need to keep in mind when deciding how much stock you will carry:
- How much does the stock cost?
- How much warehouse storage is needed?
- How many seasonal items will you sell?
- What’s the products’ shelf life / turnover rate?
- Do you order in bulk or by batch?
Do you order in bulk or by batch?
Managing stock is more than just purchasing items and keep track of which items are sold and which are still in your warehouse. You should also watch closely which products generate the most revenue, which products have the best margin, and which products cost you the most (to purchase, but also to keep stored). If you know these kinds of things, you can optimize the assortment in your online shop. And it helps you limit unnecessary stock.
When you have a small assortment, stock control can be quite easy to manage. You can just use Excel, the spreadsheet program that’s part of Microsoft Office, or use Google Spreadsheets. This is free and can be used both online and offline in your browser.
Keeping track of your stock in a spreadsheet can become unbearable.
But when you have lots of products in your stock, keeping track of this in just a spreadsheet soon becomes unbearable. This will also be the case when you want to achieve a good turnover rate of your stock. And even more when you run a physical retail store as well, or when you deliver your goods from several different warehouses.
ERP software might do the trick
If one of these situations applies to you, you might get better stock control if you ditch your spreadsheet program and instead go for ERP software (enterprise resource planning). By controlling your stock using a centralized system, you can prevent double-handling (the action of completing processes more times than necessary) and have daily tasks automated. Making use of ERP software can increase efficiency, save you money and give you a better insight into your stock.
Making use of ERP software can increase efficiency.
Stock control is just one of the many features or modules ERP software can have. If you’re looking to buy ERP software, with regards to managing your stock, see and check if the software includes the following features:
- Stock tracking and management
- Sales and purchase order management
- Multi-channel order fulfillment
- Storage management and stock transfers
- (B2B ecommerce functionality)
- Payment gateway functionality
- Integrations with ecommerce, accounting, shipping i.a.
- Intelligence reports and analytics
Stock control through a fulfillment company?
If your stock is too big for you to handle, or you want to dedicate your precious time to other parts of your ecommerce business, you could outsource your stock control through fulfillment. There are many ecommerce fulfillment companies that can store your stock, but also take care of shipping your orders and managing returns. Partnering with a fulfillment company might seem like a pricy thing to do, but because they take care of so many things, you can dedicate your valuable time to other things. In the end, this could lead to your company saving money!
Dropshipping can also be very interesting because it could help you prevent having overstock. With dropshipping, you only order the amount of items at a dropshipping supplier that your customer wants. No longer do you have to stock hundreds of SKUs of a certain product in your warehouse. Instead, the dropshipping supplier only ships the number of products that are actually ordered by your customers.
Dropshipping can prevent overstock.