Inventory management is a vital, but often overlooked, aspect of running a profitable ecommerce business. It can impact your customer relations, your sales, your fulfillment speed, and most importantly, your bottom line.

The key goal of inventory management is to know how much stock you have, where it is, and where it’s going. Keeping up with this information isn’t the most exciting part of running a business, but inventory management mistakes can lead to unexpected stockouts, shipping errors, oversells, loss of customers, and even your store being suspended from marketplaces.

A strong inventory management strategy will allow you to run lean, scale your business, ship faster, and increase your sales.

What Does Good Inventory Management Look Like?

Implementing a killer inventory management strategy doesn’t have to be expensive or difficult. In fact, it’s surprisingly simple. There are five general tips I give every ecommerce business owner I get a chance to talk to.

Use Uniform SKUs and Master SKUs

If you’re selling multichannel, inventory management will be a lot more difficult if you aren’t using uniform SKUs. The stock keeping number you use for a product should be as similar as possible no matter how many channels you’re selling that product on. This helps clear up any confusion as to your overall stock count of the product, which cuts down on overselling and stockouts.

Record Purchase Order Data

Do you know how long on average it takes for your purchase orders to be fulfilled? If not, you need to get your hands on this data. Mistimed purchase orders can lead to stockouts and more expensive purchase orders as you try and correct mistakes. Every moment your stock is listed as unavailable, you’re throwing money down the drain. This information will also help you run a leaner business. If you know exactly how long a purchase order will take compared to your average sales, you can make smaller purchase orders and save more money.

Choose a Great Software Solution

Some businesses choose to do their inventory management manually with Excel spreadsheets. I don’t find this a great strategy for any business that wants to grow. It simply isn’t scalable. It might work at 50 or even 100 orders a month, but what about 10,000 sales and hundreds of SKUs? You’d have to spend all day in front of a computer screen. Giving inventory management software a try has tons of benefits over manual inventory management.

  • No human error
  • Cross-channel inventory syncing
  • Automated order routing
  • Low inventory alerts

Picking a great software solution is a key aspect to taking the cap off your business and allowing it to grow while keeping your inventory management airtight.

Know the Seasonality of Your Products

If you sell youth football helmets online, you should know that the beginning of the peewee football season is going to be your highest selling time of the year. This allows you to make sure you’ve got extra stock ready to go. It also means you can run leaner during the offseason. Product seasonality is a major aspect of inventory management. Your stock isn’t a rotisserie oven: you can’t set it and forget it. It should adjust throughout the year. Pulling ecommerce reports on a yearly basis will help you know where your spikes are and be prepared for them, or you can use Google Trends to see when people search for the item most.

Keep Backup Stock for Emergencies

If the worst happens and you end up without any stock to fulfill your orders, it’s a good idea to keep some extra product on hand to fulfill the order yourself. This can come in the form of a backup supplier, a dropshipper, or even keeping a few orders’ worth of items in your own home or storage facility. Remember: this should just be used as a worst-case scenario. Fulfilling your own orders is costly and not scalable. But maintaining the ability to do so if necessary is smart business planning.


This may seem like a lot to do, but the benefits are immediately apparent. Like any good habit, it takes some dedication to start, but once you do, you’ll wonder how you ever managed without it. Start implementing these tips today and you’ll be surprised how much easier and more profitable your business can become.

About the Author

dion beary from ecomdashDion Beary writes about ecommerce for ecomdash, an ecommerce automation software system. He has more pairs of Chuck Taylors than any one person needs.