In order to successfully run and grow your business, ​​you must be able to track inventory efficiently and consistently so that you know which products are selling well, which ones aren’t, and when it is time to reorder. 

However, keeping track of all of your inventory isn’t always easy. Maintaining an organized and efficient warehouse can take time, and it appears that the more people are involved, the more difficult inventory tracking becomes. Luckily, inventory management software can help. An efficient inventory tracking system can automate this otherwise tedious process and easily track all of your inventory from one place.

In this post, we explain what inventory tracking is, and why it is important. You will also learn about inventory tracking systems, how to keep track of inventory, and how to select the best inventory tracking method for your company.

Image by: aleksandarlittlewolf on Freepik

What is Inventory Tracking? 

Inventory tracking refers to the systems and methods through which a company keeps track of all of the inventory it has. Although the term ‘inventory’ has several meanings, it is most frequently used to refer to raw materials, unfinished goods, and products that are ready for sale to customers.

With the help of inventory tracking, you can obtain information about your exact inventory levels, the most recent delivery statuses, the location of each product, and other inventory-related details. Typically, an inventory tracking system can monitor the following information:

• Inventory accuracy
• Inventory levels
• Inventory locations
• Inventory turnover
• Delivery status
• Carrying costs
• Reorder levels
• Damaged goods
• Customer returns

The objective of inventory tracking is to have the proper amount of stock to satisfy consumer demand at all times, which is essential to generating revenue. 

Why is Inventory Tracking So Important? 

Implementing an inventory tracking system will provide you with accurate inventory data that has a direct influence on your business’s bottom line. Here are some of the most important benefits of inventory tracking:

• Improved stock visibility and clarity. Effective inventory tracking will help you eliminate any guesswork in your supply chain and, as a result, reduce the number of errors by providing a clear image of crucial metrics including inventory turnover ratio, order fulfillment rates, and stock on hand. This will result in better inventory planning and more informed business decisions to support the growth of your company. 
• Space savings. With demand forecasting and planning tools in inventory tracking software, you can precisely forecast demand at particular points in the supply chain, making sure inventory arrives on time. This understanding of inventory cycles results in a more organized and more efficient warehouse space.
• Better forecasting. If you have an accurate count of your stock at various points during the year, you’ll be able to estimate how much inventory you will need to have on hand to meet future demand. This might help you make informed purchasing decisions and prevent under-stocking or overstocking.
• Increased customer satisfaction. Inventory management systems provide inventory status to customers in real-time, and some solutions can even send automated tracking updates, which results in improved customer experience and increased sales revenue.

What is the best way to keep track of inventory?

Using reliable inventory management software and/or inventory management apps is the best method to track your inventory. With inventory management software and/or inventory management apps, you’ll be able to automate what normally is a time-consuming process prone to mistakes, receive notifications in real-time, scan QR codes and barcodes, etc. You may use inventory software or inventory management apps to keep track of all inventory activities, get real-time notifications, and keep everything in one place.

How to Track Inventory With Software

Inventory tracking will look different depending on the type of software you’re using; however, the following are some of the most popular features that can facilitate inventory tracking:

• Product categorization and custom tagging. This feature enables users to use drop-down menus or custom tags to categorize products by various attributes. Then, you can generate reports that, for instance, list every product a customer has bought in the previous year.
• Barcoding. Retail business owners can physically scan everything entering and exiting their facilities using mobile device barcoding, which automatically tracks the location and updates inventory levels.
• Inventory reporting. Visibility and transparency are important components of inventory tracking. But how do you make sure that all parties have the most recent inventory data in a way that is simple to understand? This can be handled for you with inventory reporting. For instance, you can use your inventory data to create visuals that demonstrate a rise in customer demand for a particular product over the previous quarter, the time it takes for certain products to arrive at your facility after being ordered, shortages in supply compared to the demand for a particular inventory item, etc.

Image by zinkevych on Freepik

How to Track Inventory More Efficiently

Inventory costs are significant for the majority of companies, regardless of their size. That’s why it is very important to understand how it moves and make sure that it gets to the correct destination on time. Here are some ways to improve the effectiveness of your inventory tracking:

1. Forget about manual inventory tracking

Spreadsheet-based manual inventory tracking not only takes a lot of time and effort but is also prone to error and challenging to scale. Change to a tracking system that reduces manual work and updates information in centralized databases automatically. Use standalone software programs and inventory management systems, which include automatic functions for stock replenishment and data tracking.

2. Audit your inventory tracking

Inventory tracking isn’t a one-off task. It’s important that you audit your inventory monitoring system on a regular basis in order to weed out inefficiencies, double-check accuracy, and identify opportunities for improvement.

Any errors in the inventory record can be found and fixed with the use of cycle counting. Cycle counting can be done by incorporating frequent, routine counts of sections or bays into daily operations. Consider assigning warehouse staff to specific areas and conducting daily counts using inventory cycle counting techniques.

In addition, be sure to compare inventory numbers to your financial statements. If, for instance, the revenue from things sold in your financial accounts doesn’t match the inventory statistics, you should look into the matter further. 

3. Record your inventory tracking procedures

Look for possibilities to enhance the flow of goods through your company by studying the supply chain. Consider what other businesses in your field are doing and adhere to inventory control best practices and inventory management formulas. Keep an eye on hiring decisions, seasonal demand, and purchase patterns as well, and ask frontline staff if they notice any tracking inefficiencies.  Look for saving opportunities as the stock goes from the supplier through the warehouse to the customer. Then, use this data to establish best practices and record your inventory tracking procedures for future reference.

4. Consider hiring an inventory manager 

If your company manages a large amount of inventory made up of a variety of products (especially if these products are perishable), you might want to hire a full-time inventory manager. Inventory tracking may be one of a manager’s tasks if physical inventory is a lesser portion of your company.

The Bottom Line 

Even though inventory tracking might seem like a fairly straightforward operation, it can be rather challenging when there are multiple products and more staff involved. After a certain point, tracking your stock manually and maintaining an efficient warehouse is no longer a possibility. This is where an inventory tracking system can be useful.

An inventory tracking system helps you keep track of your inventory’s location and movement. Although there are some standalone systems used just for inventory tracking, the majority of inventory tracking systems are part of inventory management software, such as ApparelMagic. Using ApparelMagic’s inventory tracking system ensures that your data is updated in real-time, accurately and efficiently. 

When you first launch your fashion business, it is likely that you will use spreadsheets to keep track of your inventory items. This is great for small apparel companies but as your company and the customer demands expand, you start selling on multiple channels, and your procedures become more complex, this approach can prove inefficient.

The most valuable asset for many companies is their inventory, both in terms of its value on the balance sheet and in terms of how crucial it is to the company’s operation. Proper inventory management is challenging, but it may boost your company’s profitability and increase the value you provide to customers. The question is, how do fashion business owners know when it is time to invest in inventory management software?

In this article, we’re discussing the challenges of apparel inventory management, as well as the top 7 signs that will tell you that it is time to subscribe to an inventory management system for business enterprises in the fashion industry.

Image by rawpixel.com on Freepik

What is the main purpose of inventory management?

Many supply chain executives believe that having more inventory is always preferable. This notion, however, is not always true and frequently results in subpar supply chain management and inventory control. In fact, having an excess inventory does not guarantee that you will be able to increase customer satisfaction.

The main purpose of inventory management is to optimize customer demand fulfillment while minimizing inventory costs. This is achieved by having stock of the right products in the right locations at the right times. We refer to this as inventory optimization.

But how will you know if you have an inventory problem? When is it time to invest in an effective inventory management system for business enterprises in the fashion industry?  

7 Reasons Why Your Apparel Business Needs an Inventory Management Solution

Here are 7 signs that you are not managing your stock in an effective way and that you need a management system for business inventory. 

1. Stock management is taking all of your time

Laboriously keeping track of each finished product you sell through each sales channel is not only tedious but also takes time away from what you should actually be doing: expanding your apparel business. As your company grows, you will need to concentrate more on other activities relating to growing your consumer base. You cannot accomplish this if you need to check every spreadsheet twice. 

2. You don’t know how much inventory you have

Have you got any idea what products your apparel company sells in a given period of time or how your inventory moves? If you have no data on your daily sales volume, stock flow, sales velocity, or stock turnover, that is a clear indication that you require an effective inventory management system! 

A good inventory management solution will allow you to generate reports with the push of a button so you can know the correct inventory you have at any given time. This will enable you to make more informed inventory decisions, including decisions on pricing, supply chain, and your overall overarching strategic objectives. 

3. There are inventory discrepancies 

Something is undoubtedly wrong with your inventory tracking if you have to regularly adjust your anticipated stock to match what you have sold. With the use of an efficient inventory management solution, you will be able to identify the potential causes of any discrepancies Additionally, the dedicated software solution will assist you in identifying shrinkage threats like theft and damaged stock, which in turn will lead to money savings. 

4. You are often running out of stock

Running out of stock across your entire warehouse on a regular basis is a problem because you’ll start missing out on opportunities to sell to your customer base and your customer satisfaction levels will suffer. The right inventory management system for business enterprises in the apparel industry can provide you, your warehouse personnel, and your sales team with real-time information about the products you have on hand, including their quantity and location. 

You can set, manage, and receive low-stock alerts to make sure you never have to deal with issues like phantom inventory or insufficient inventory. This is especially important if you have multiple warehouses and complex logistics. 

5. You are losing money due to overstocking

If you don’t know just how much stock you should keep on hand, you run the risk of ordering too much from your suppliers. Even slightly overstocking can lead to a waste of money that can be used for other purposes (such as marketing your garments). ​​

While it is smart to have safety stock, slow-moving products can easily turn into dead stock, i.e. dead inventory. With apparel businesses that don’t use an inventory management solution, dead stock can remain in the warehouse space useless and forgotten. A dedicated software solution will provide your fashion business with the tools it needs to determine the right stock levels based on thorough customer demand forecasting and avoid issues like excess stock. 

6. You do too much manual counting of physical inventory

An occasional manual counting of physical inventory is helpful because it enables you to verify the accuracy of your inventory and look for any potential inconsistencies. However, physical inventory counts shouldn’t be a regular occurrence. If you are relying solely on physical counts of inventory to determine what stock you have and don’t have, it can become a very taxing and time-consuming operation. Not to mention that both you and your staff are only human, which means that mistakes are inevitable. 

If your physical counts of inventory are wrong, so will your estimates of average inventory, inventory turnover ratios, economic order quantity, minimum order quantity, minimum levels, and other inventory management formulas! 

An effective inventory management system can accurately track your inventory supply in real-time, from the minute you place the order with your vendor until it arrives in the hands of the client, thus reducing the need to count on your stock levels manually. 

7. You can’t meet customer expectations

It’s impossible to deny that customer expectations have increased over the last few years. Fashion retailers must meet a number of customer expectations including free shipping, next-day delivery, and simple customer returns. Doing this efficiently relies on being able to connect your inventory levels, warehousing procedures and warehouse management, sales channels, and shipping carriers. This makes managing orders and returns easier, allowing apparel companies to concentrate on growth without having to worry about meeting client expectations.

Image by: vectorpouch on Freepik

How ApparelMagic Can Help With Apparel Inventory Control 

Cloud inventory software from ApparelMagic has everything needed to help you manage your entire fashion retail business. Our software can swiftly satisfy your needs regardless of the size of your apparel business. Some of the reasons to choose ApparelMagic’s services include:

• An extremely flexible system. ApparelMagic is a scalable, quick, and highly adaptable inventory management system for growing fashion businesses. 
• An abundance of features and integrations. We offer a variety of cloud inventory management software features, such as inventory control, order management, mobile barcode scanners, and eCommerce tools.
• Personalized dashboard. A visual dashboard can completely transform your company by providing valuable insights at a glance. You can be confident that you always get the most recent information because they automatically update.
• World-class support. A customer relationship manager is assigned to each new account and they are responsible for offering training, advice, and customization. Training and consultation are included free of charge during the trial period.

The Bottom Line

How you store, track, and manage your inventory data is becoming more and more crucial when running a fashion business in such a competitive market. By making an investment in quality inventory management software and pairing it with effective inventory management techniques, you can make sure that the logistical aspect of your company is prepared for the future. 

If you can relate to any of the warning signs outlined in this post, it might be time to consider investing in an effective inventory management system for business enterprises in the fashion industry. Contact our ApparelMagic team if you’re prepared to change the way you manage inventory.

Great fashion never goes out of style but clothing inventory can easily become dated and inefficient. If you aren’t on top of your inventory strategy as a business owner, your fashion retail business may suffer. 

Inventory management is one of the most important factors for apparel retailers.

Regardless of the size of your fashion retail business, you must employ effective inventory management techniques and strategies to ensure its success.

But what are those strategies? And what tools will make your inventory processes simpler?

In this post, we’re discussing the importance of fashion retail inventory management and sharing 5 top strategies that will help apparel retailers oversee their stock more efficiently. 

Image by rawpixel on Freepik

Why Is Fashion Retail Inventory Management Important

Here are some of the top reasons why every fashion retailer needs inventory management:

Cost reduction

The cost of storing your fashion inventory is known as the carrying cost of inventory. By monitoring your stock levels, you can make sure that you only have the products you need on hand which can help lower your carrying inventory costs.

This procedure may be automated. ERP (enterprise resource planning) software that is integrated with a warehouse management system or that has built-in inventory management modules can help you keep track of your stock levels and stock flow in real time.

Improved Supply Chain Management

Supply chain management is an essential part of fashion retail management. A properly managed supply chain can help you bring your goods to market quickly and effectively, whereas one that is poorly managed can cause delays and lost revenue.

Proper inventory management provides fashion companies with a more thorough understanding of their supply chain. It helps streamline storage and fulfillment processes by providing greater packaging accuracy, better delivery, and real-time tracking, all of which are essential for supply chain resilience.

Fewer Stock-Outs

Stock-out is a situation when you run out of the products your consumers want to buy. This can result in frustrated customers and lost apparel sales. 

An effective inventory management system can assist you in preventing stock-outs by providing you with real-time visibility into your inventory levels. Thanks to low stock alerts and stock notifications, you will always be aware of inventory running low, so that you can replenish before a stockout occurs.

Improved Sales Channel Management

Keeping track of your inventory levels might be challenging if you sell your goods through several different channels. This is due to the fact that each channel has a unique inventory level, and if you don’t have a reliable way to keep track of your stock flow (how your inventory moves), you risk keeping excess stocks or insufficient inventory. 

An effective inventory management system will allow you to monitor your stock levels across all of your sales channels. By linking your retail inventory management system with your eCommerce platform, your inventory levels will update automatically and you will always have access to accurate information. This way, you will be able to make more informed decisions, and offer a better online shopping experience, which will result in happier customers and an increase in sales. 

Accurate Inventory Forecasting and Reports

Making judgments about your inventory can be tough if you lack accurate, up-to-date data. This is due to the fact that you won’t have the knowledge necessary to determine which are slow-moving products and which ones are selling well.

The best stock management software generates reports that will help you make more informed inventory decisions and improve your planning abilities. 

Improved Communication with Suppliers and Fulfillment Partners

A good flow of information helps your inventory process and other business processes, allowing them to work together seamlessly. 

An effective inventory management solution allows you to exchange information with your suppliers, fulfillment company, and other business partners electronically. This will help you build a strong relationship with each partner, save you time and money by eliminating the need for paper documents, and reduce issues with suppliers.

Better Customer Service

Today’s consumers expect free, quick shipping, simple returns, and a great customer experience and if you are unable to offer these services, they will go elsewhere.

With the aid of a retail inventory management system, you can ensure that you have the products your customers want in stock and can ship them out fast by keeping track of your stock levels to make your customers happy and ensure high levels of customer satisfaction. 

Best Strategies for Fashion Inventory Management

Fashion retail inventory management is a continuous task. Here are some inventory management tips that will help you streamline your inventory.

1. Organize Your Inventory

If your inventory is well-organized, it will be much simpler and faster for your staff to locate or identify products in your warehouse space or retail store location. A well-organized retail space will also enable you to determine the precise stock level of goods that need to be ordered, thus reducing both understocking and overstocking. 

2. Keep count of your inventory

Regular physical inventory counts can help you determine the exact status of your stock, enabling better management and control. Physical counts of inventory can help you minimize spoilage and dead inventory while also lowering storage costs because a precise understanding of your inventory over time will help you plan your restocking more effectively.

3. Focus on forecasting

If you want to simplify the inventory process and optimize your inventory levels, you must focus on customer demand forecasting. This enables you to find the ideal balance between storing either too much or too little and ensuring a smooth operation of your fashion retail store. There are two widely used forecasting techniques you can use: calculating the reorder points and determining the safety stock level. Economic order quantity is another inventory management method that helps make efficient inventory forecasting decisions. 

An effective inventory management solution can also help you learn how to manage seasonal demand and fulfillment without raising off-season storage costs or stocking up on seasonal products that would remain unsold.

4. Use Handheld Devices

Utilizing barcode scanners or handheld devices to automate data collecting can help you streamline procedures and lower the chance of human error. For instance, you can use a scanner to rapidly and precisely document the items arriving while receiving shipments. Your system then automatically enters this data, saving you the time it would take for you to manually enter it.

Scanners can also be used for physical inventories and cycle counting. This might assist you in obtaining the most accurate picture of your inventory items so that you can manage them more effectively.

5. Invest in Fashion Inventory Management Software

Using specialized cloud-based apparel retail inventory management software ensures greater inventory accuracy and control. The best stock management solutions give you complete data visibility and a simple user experience by enabling you to upload an infinite number of photographs and files for any product.

The fact that such software provides a solution for more complex problems is by far its greatest benefit. You will be able to control your supply chain and inventory across many locations and sales channels. It will make tracking the number of products easier, guarantee that orders are sent promptly and from the closest distribution center, and improve customer satisfaction.

What’s more, ​​you can use barcode and RFID technology to prevent any inventory errors, integrate your POS to maintain precise inventory counts, etc. You can even monitor customer demand in real time for more accurate planning, strong sales, and increased cost margins.

Image by fabrikasimf on Freepik

What If You Don’t Have Inventory Management

No matter how little your business is or how few things you sell, if you keep inventory, you need to keep track of it. The applications for inventory management solutions are virtually countless. One of the best things about stock management is that it helps you create order. When your inventory is well managed, you are aware of your stock turnover, current stock quantity, where each product is located, what needs to be restocked, whether there are products that need to re-enter usable inventory, etc. 

With poor inventory management, on the other hand, your store will probably be disorganized and chaotic. You could lose out on sales if you can’t locate an item that a customer requests or if you counted incorrectly and don’t have enough of it. You have no idea whether you are dealing with shrinkage or theft, dead stocks, or phantom inventory. It’s also likely that you’re paying for extra goods that you don’t require. On the other hand, it’s possible that you’re actually understocking items that sell quickly.

Without inventory control, it is far more difficult to anticipate future sales trends, take advantage of seasonal swings, ensure accurate forecasting, and make informed plans. A store that doesn’t have effective inventory management procedures in place won’t operate to its full potential.

The Bottom Line

Any business needs inventory management software, but the retail fashion sector has unique challenges to overcome. It doesn’t matter if you have an online business that only sells through a single online channel or you have retail chains with numerous physical locations—the lack of proper inventory management can be devastating and eventually hurt your revenue.

Powerful inventory software is the future of inventory management. It is the best option for inventory management because it gives fashion companies a real-time view of their current product levels, both on the sales floor and in the stockroom. The system automatically updates as sales, customer returns, and new shipments are noted. It also syncs inventory with other business and financial operations to provide you with a real-time view of your cash flow and bottom line. 

Being able to complete every order efficiently is a requirement of the retail industry. The goal of a warehouse management system (WMS) is to ensure that materials and products are moved through warehouses in the most effective and economical manner possible. A WMS manages a variety of tasks that make this movement possible, such as inventory tracking, receiving, picking, and storage. Additionally, a WMS offers real-time visibility into a company’s inventory at any place and time, regardless of whether it is in transit or at a facility.

In this article, learn about the key features of inventory warehouse management systems, why warehouse inventory management is important, and industry best practices you can implement. 

Image by Jens P. Raak from Pixabay

Why Use a Warehouse Management System

Businesses that employ warehouse management solutions have increased supply chain management optimization. They keep track of stored products to make inbound and outbound shipments more efficient. This way, they can maintain the supply chain movement.

A WMS can help you speed up order fulfillment and keep track of what’s selling well. If you can see which products are frequently leaving your warehouse, you’ll be able to find new ways to optimize its layout and organization for maximum efficiency. When raw materials arrive, you may keep track of them and ensure that they are placed where they would be most useful for manufacturing and stocking. Instead of being at the other end of the room, the best-selling items can be close to the packing area or loading dock.

Some of the benefits that you might experience when using an inventory system for warehouse management include reduced labor costs due to more effective labor allocation, streamlined warehouse operations, improved inventory accuracy, precise demand forecasting, increased warehouse security and safety, an improved configuration for the layout of the warehouse, and improved supplier relationships and customer service. 

Types of Warehouse Management Systems

The type of WMS you choose will depend on how you organize your warehouse’s priorities. Start by determining what features you require in their system and how much you are willing to invest. After that, you may ask a supplier for further details about how they can efficiently customize a warehouse inventory system for your company. Here are the options you can choose from:

Cloud-Based vs. On-Premise

An on-premises warehouse management solution is one where you are in charge of hosting and maintaining the software and hardware connected to your system. This allows you total control over aspects like security and uptime, but because you are in charge of every component, it also has a high upfront cost. You will also need to keep your inventory warehouse inventory system regularly maintained.

A cloud-based warehouse management system, on the other hand, is hosted on a remote server and is often charged on a subscription basis. Software updates and bug fixes are taken care of by the vendor, and when you sign up, you often receive a level of service uptime that is guaranteed.

Standalone Vs. Integrated

Software with several features that is primarily used for warehouse management is known as a standalone inventory system for warehouse management. As a result, it might only be partially usable for other facets of your company, such as accounting or inventory. This kind of warehouse management system can include extensive reporting tools that will assist you in leveling up your warehouse because it is designed specifically for warehouse management.

The addition of an integrated warehouse inventory system is typically offered by your existing ERP supplier. ERP systems control accounting, stock management, and invoice generation. The warehouse inventory system receives the orders, controls inventory, and oversees product receiving and shipment. It is much simpler to keep track of which orders are the greatest ones to invest money in when everything can integrate into a single system.

Features of Warehouse Management Systems

Warehouse management software products share a lot of characteristics. These are a few of them:

• Warehouse organization. Organizations can adjust workflow and picking logic through warehouse design, ensuring that the distribution center is set up for the best possible inventory distribution. Bin slotting is established by the warehouse management system to maximize storage space and take seasonal inventory variations into account.
• Inventory tracking allows for sophisticated tracking and Automatic Identification and Data Capture (AIDC) technologies, such as barcode scanners and Radio-Frequency Identification (RFID), to ensure that products are quickly located when they need to be moved.
• Receiving and storing, which enables storage and retrieval of inventory and aid warehouse workers in finding items more quickly and easily.
• Picking and packing products, including batch, wave, and zone picking. Additionally, lot task interleaving and lot zoning features can be used by warehouse staff to direct picking-and-packing tasks in the most effective manner.
• Shipping management. This feature enables the warehouse management system to create packing lists and invoices for shipments, notify receivers of shipments in advance and send bills of lading of the shipment in advance.
• Dock and yard management helps truck drivers find the appropriate loading docks when they enter a warehouse. Cross-docking and other logistic tasks are made possible by more sophisticated use of yard and dock management.
• Labor management. Utilizing KPIs (key performance indicators) that show whether workers perform above or below expectations with an aim to aid warehouse managers in keeping an eye on employees’ performance.
• Reporting assists managers in evaluating the effectiveness of warehouse processes and identifying potential improvement areas.

Image by icondigital from Pixabay

Tips For Improving Your Warehouse Inventory Management System

Ensure that the following best practices and procedures are in place when designing your storage facility in order to move goods quickly, maximize efficiency, and increase profit margins: 

1. Determine Your Warehouse Layout

When a product is sold or needs to be transferred, your warehouse’s layout will either impede or aid your staff in picking, packing, and shipping.

How you organize your warehouse will largely depend on the goods you store. A warehouse that houses massive machinery, for instance, might have designated zones but is not very likely to have aisles and bins like a storage facility that houses smaller retail goods.

When designing the layout of your storage facility, consider how warehouse employees will be moving around the warehouse floor. Organizing warehouses into lots or zones and numbering bins and aisles might make it easier for warehouse personnel to move throughout the warehouse.

2. Appoint a Warehouse Manager

One of the most important steps when it comes to running a productive storage facility is hiring a warehouse manager with experience in managing a warehouse like yours. 

The warehouse manager will monitor your employees’ daily jobs to ensure that stock is being properly scanned and cataloged. They’ll also frequently interact with your warehouse inventory system in order to keep an eye on your stock levels. Finally, the warehouse manager will be in charge of managing any difficulties that arise and act swiftly whenever your warehouse personnel detects an issue. 

3. Establish a Workflow

After you have an organizational framework in place and a leader designated to oversee your warehouse operations, you’ll also need to implement a specific workflow. Your warehouse workflow should address how you receive new stock, where the new stock goes, and how it is tracked throughout the warehouse. You should also go over a number of operational issues with your warehouse manager, such as:

• Inventory tracking. This is a crucial component of inventory management since it enables employees to pick products from exactly the right area. Decide whether you need serial tracking, lot tracking, or a combination of both.
• Accounting methods like last in first out (LIFO), first in first out (FIFO), and weighted average method, are crucial to your warehouse management since most inventory software interfaces with accounting software to remove the possibility of human error and avoid the need for double entry. 
• Inventory audits and cycle counting are crucial in order to prevent loss and have better control over your inventory. If inventory counts are not performed on a regular basis, units could be lost or stolen without your warehouse manager being aware of it.

4. Use Warehouse Management Software

Many tasks related to warehouse management can be automated with warehouse inventory management software. This software can instantly update the record of all stock on hand in real-time and display accurately all your stock and where it is located in the facility.

The information in the warehouse inventory management software will tell you which products should be counted and how frequently. In addition, when products reach a specified minimum amount, warehouse management software can be configured to automatically replenish stock. Efficient warehouse software solutions automatically evaluate past sales data to establish the ideal minimum amounts for automatic reordering and the quantities at which it should restock each item. 

The Bottom Line

Even though warehouse operations are usually hidden from view by customers, they are a crucial component of on-time delivery.

The right warehouse inventory system can boost your warehouse operations’ efficiency, speed, and order accuracy while lowering operational expenses. This will help your business become more competitive and increase customer satisfaction.

As a result of the massive migration of manufacturers and physical retailers online, eCommerce has developed into a fiercely competitive market. If you want to succeed as an eCommerce retailer, you must continue to be profitable while satisfying your consumers’ evolving expectations. 

Today’s customers have more purchasing options than ever before, so in order to distinguish your eCommerce store, hold onto a substantial share of your market, boost profitability, and increase customer satisfaction, you need an established, proactive, and successful supply chain management plan.

This article discusses the essentials of eCommerce supply chain management, including how it works, its advantages, and tips on how to improve your supply chain strategy.

Image by ijeab on Freepik

What is an eCommerce Supply Chain

The eCommerce supply chain consists of logistical processes such as the acquisition of raw materials, production of finished goods, warehousing, inventory control, fulfillment, and delivery. A typical eCommerce supply chain also encompasses supply and demand, distribution schedules, and inventory tracking. The objective of eCommerce supply chain management is to ensure high-quality goods, as well as high levels of customer satisfaction. 

How does eCommerce supply chain management work?

An eCommerce supply chain begins with the vendor and finishes with the customer — the most important link of the supply chain. eCommerce supply chain management has five stages.

• Planning. During this stage, you gather supply chain data to ascertain the quantity of inventory required to satisfy market and customer demand. 
• Sourcing. Searching for suppliers, manufacturers, and vendors during this phase can help you find the inventory your clients will require.
• Making. This phase entails turning raw materials into finished products before putting them through packaging, and storage in preparation for distribution to the final consumers. 
• Delivery. The delivery phase is sometimes referred to as logistics. It includes every type of product transfer along the supply chain to the final customer.
• Managing returns. This phase (also known as reverse logistics) entails handling returned products from consumers and sending faulty and expired goods from your storage facility back to your vendor.

The total effectiveness of the supply chain is influenced by each phase of the supply chain management system. A change or problem in one stage has an impact on the entire chain.

Benefits of eCommerce Supply Chain Management 

Finding solutions to simplify the supply chain can have a significant influence on both internal operations and consumer experience. Here are a few advantages of optimizing your eCommerce supply chain:

More effective inventory management

Inventory management plays a vital role in the eCommerce supply chain. Proper management of your inventory levels can help you improve stock control, prevent unneeded stockouts and dead stock, and estimate future demand.

Common eCommerce inventory issues can be resolved in a number of ways, including setting reorder points based on past order data and projected future demand, conducting routine inventory audits, and deploying inventory management software.

Faster shipping times

One of the most crucial supply chain steps to get right is shipping. It can provide you with a competitive edge, help you decrease cart abandonment, and make sure you provide excellent customer service.

It is important to identify and eliminate any supply chain delays, particularly those that affect shipment. The two key variables that affect shipment delays include 1) the location of your manufacturers, fulfillment centers, and end consumers; and 2) the mode of transportation (freight, ocean, air).

Reduced costs

There are probably many areas where your eCommerce company invests more than is necessary. Undoubtedly, some of these sectors could be made more efficient. It is worthwhile to examine your supply chain to find potential cost-saving opportunities.

eCommerce supply chain management can help reduce costs in the supply, manufacturing, and distribution process and, as a result, lead to increased profits. 

Improved customer experience

An optimized eCommerce supply chain guarantees that you can provide the greatest client experience for each order. By looking for ways to improve the chain, you can lower shipping costs, shorten shipping times, and lessen the possibility of human mistakes because of a poorly managed supply chain. 

In addition, you can concentrate more efforts on enhancing customer engagement by letting customers track their orders in real-time and sending them updates from the time an order is received until it is delivered. 

Image by Freepik

Top 6 Strategies for Improving Your eCommerce Supply Chain

There are several doable suggestions you may employ to improve your eCommerce supply chain. Reducing shipping costs and delivery times, reorganizing your warehouse, and the usage of cutting-edge technologies are some of the most practical and easily accessible options.

1. Review the state of your supply chain 

Your eCommerce business would benefit from reviewing its supply chain tactics, regardless of whether you have only one sales channel or run a multichannel store. By doing this, you can identify workflow problems and determine which of your suppliers might be causing product delays or bottlenecks. 

Look for congested areas or weaknesses in your fulfillment process that, if fixed, might significantly improve your entire supply chain.

2. Reorganize your current storage space

Moving to a bigger warehouse site is not always feasible for small businesses or emerging eCommerce brands. However, you can reorganize your current storage space to make it more useful rather than looking for additional square footage. 

By redesigning the layout of your distribution center, you can solve inefficiencies in storage capacity and inventory mobility to ensure that your eCommerce supply chain runs smoothly.  

3. Reduce your delivery times and shipping costs

Today’s consumers expect quick delivery timeframes; therefore, lowering your shipping rates and subsequent delivery windows is one of the best methods to satisfy consumer expectations. 

Remember that reduced prices will increase your profit margins if you offer free shipping; yet, if customers must pay extra for shipping, they are more likely to provide favorable reviews and return to your online store when those prices are low.

4. Improve your workforce management

Most fulfillment facilities still use manual labor, which can become quite costly when your business begins to expand. If automation cannot help you achieve a good ROI, the next best option is to manage your staff more skillfully. 

You may manage your workforce more effectively by using productivity benchmarks and better time management to reduce your CPO and raise your order fill rate.

5. Use barcoding technology 

Barcode technology has completely altered the way warehouse logistics are conducted. eCommerce stores can track all warehouse activities using barcode scanners and labels, which significantly improves accuracy.

Barcode use also reduces processing times for returns, replenishment, and other tasks, which results in more effective supply chain management.

6. Implement inventory management software 

Your eCommerce supply chain might undergo a significant transformation thanks to cutting-edge software solutions like PLM and ERP. Inventory management systems not only provide automation to synchronize and streamline your operational processes, but they also immediately result in cost reductions.

Additionally, inventory management software offers real-time data and 24/7 analytics to assist in maintaining inventory control and streamlining your reordering procedure.

The Bottom Line

Finding ways to streamline your eCommerce supply chain will create a more effective team, reduce hassles, and boost productivity. You will ultimately provide a better customer experience by preventing stockouts, providing better shipping prices, and accelerating delivery times.

ApparelMagic is a comprehensive eCommerce software solution created especially for fashion online retailers. In this new era of online retail, the ApparelMagic system is famous for its capacity to streamline, automate, and expand your company, so that you can skillfully manage all orders and modernize your eCommerce supply chain management in a cost-efficient way.

Running a successful eCommerce company takes more than just having an online store. eCommerce business owners require a variety of software and solutions, including inventory management, CRM, marketing automation software, and others, to meet their operational demands. These solutions need to be incorporated into an eCommerce site, reducing the need for human interaction and saving businesses a ton of money and time. Because of this, eCommerce integrations are a crucial topic for online retailers.

In this post, we’ll discuss a few important eCommerce integrations that you can use to enhance or streamline your online store and succeed in the long run.

Photo by Mark König on Unsplash

What is eCommerce Integration?

The interaction between a company’s front-end system, such as a website, and the assisting back-end systems, including Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM) systems, can be defined as eCommerce integration.

In other words, eCommerce integrations let you alter the appearance of the website’s front end while taking care of a lot of complex processes in the background. 

eCommerce platforms like Shopify, Magento, and BigCommerce may not always have the inherent features you need. Adding a few eCommerce integrations to your store can help you get the user experience you want, even before you launch your online store.

Why Do You Need eCommerce Integration

Integration of eCommerce provides organizations with the advantage they require to remain relevant and innovative.

Assurance of data accuracy and integrity is one of the more noticeable advantages of eCommerce integration. The appropriate data enables businesses to recognize potential market trends and maintain their leadership in their sector. Accurate information on pricing and inventory also motivates clients to stick with your company. 

eCommerce integrations help with the reduction of errors and duplicate data. Instead of first passing via other independent systems, which can necessitate the duplication of data, integration enables the storage of data in one centralized system. eCommerce solutions greatly decrease the requirement for manual data entry and virtually eliminate any chance of data loss or duplication.

It also helps increase customer satisfaction and customer loyalty. eCommerce integration maintains transparency in a company’s operations and, in doing so, gets rid of excesses that may otherwise put off customers from making use of the convenience they provide. In addition, it aids in expanding sales networks, making sure that customers are given the greatest options possible. eCommerce integrations also enable a company to manage its resources more efficiently, which benefits your customer base by ensuring they receive the finest service possible, contributing to increased customer retention.

Integration reduces processing time by accelerating the data interchange between the associated systems. Additionally, it enables periodic system updates as well as ongoing inventory updates for the company. Businesses are also spared from having to sort through reams of identical data, keeping them suitably engaged with and focused on their main objective – the provision of high-quality goods or services.

At the bottom of it all, eCommerce integrations promote business growth. The more satisfied your customers are, the more likely it is that they will recommend your company to other possible clients who could be in their networks, providing valuable (and free-of-charge) word-of-mouth advertising. In the wake of the Covid pandemic, which fundamentally altered how business is conducted, eCommerce integration also aids organizations in maintaining flexibility and mobility. 

How to Integrate Your Website: Best eCommerce Integrations for Your Business

Here are 9 essential eCommerce integrations that every online company should take into consideration:

1. Inventory management integration

Spreadsheets used for manual inventory management rely on fragmented data, which makes it difficult to manage across channels and inhibits the inventory visibility required during a busy period like the holidays. In order to run your online business successfully, you need to be able to manage inventory and track orders in one location. 

Because of synchronization and real-time visibility provided by a third-party solution connected to your website, you can concentrate on expanding your business rather than inventory management. By integrating inventory management software like ApparelMagic, you can keep track of items sold, determine which products are most in demand, and decide when items need to be restocked. Integrations with inventory management systems also aid in maintaining a good supply and demand ratio and preventing missed sales. 

2. ERP Integration

Enterprise Resource Planning (ERP) is software that companies use to manage and automate daily business-related processes such as project management, procurement, supply chain management, risk assessment and management, accounting, and human resource management. Automating such tasks makes complicated procedures simpler, which significantly lowers the amount of physical labor necessary to carry them out successfully on a regular basis.

eCommerce integration with ERP can help with a variety of tasks such as placing orders, reflecting inventory changes, updating customers, reflecting pricing adjustments, etc. 

3. Warehouse management integration

WMS (warehouse management system) is essential ​​for businesses to meet customer demand while preserving costs. In order to ensure order fulfillment by maintaining precise inventory capacities, eCommerce suppliers and retailers are adopting WMS software to address issues like overselling, picking and packing speed, customer returns, and more. 

WMS is also important for dropshipping operations as it is required to sync a retailer’s inventory with those of the suppliers because dropshipping necessitates sourcing from several warehouses.

4. Customer relationship management integration

CRM (customer relationship management) integrations allow online businesses to grow and strengthen their business relationships with existing and potential customers. 

This kind of software keeps all of the client’s data in one place, including contact information, transaction history, and support summaries. The ultimate objective is to assist the company in enhancing business interactions, customer communications, and business profitability. CRM also helps eCommerce businesses derive actionable insights based on customer behaviors ranging from web usage stats to social media behaviors, to help them adjust their customer service approach and enhance customer acquisition.

5. Shipping and fulfillment software

Shipping can have a significant impact on how rapidly your business expands or fails. Thanks to the prevalence of accelerated shipping services like Amazon Prime, today’s customers expect fast shipment that is either free or cheap. In addition, they don’t appreciate receiving unexpected shipping charges during the checkout process, which is one of the main causes of shopping cart abandonment in many online retailers (the average shopping cart abandonment rate ranges from 59% to 79%).

Shipping and fulfillment software integrations help automate and simplify a number of shipping tasks like checking shipping costs from several suppliers, tracking shipments, and printing packing slips and labels. This type of integration can help online businesses lower the possibility of human error and give their clients the shipping options that are most suitable for them.

Photo by Roberto Cortese on Unsplash

6. Social media integrations

Considering the fact that there are over 302 million social media users in the US, social media platforms are a terrific location to listen to customers, engage with them, help solve problems, and influence their buying decisions.

Social media integrations can help eCommerce businesses automate conversations, save time, and make sure they are communicating their brand’s message consistently. You can incorporate interaction data from your social media management tool into your analytics dashboard to understand how much traffic social media platforms are driving to your shop. Social media can act as a stand-in for your customer service as well; for example, responding to a client’s inquiry or comment on Facebook is frequently quicker and simpler than doing so via email.

7. Email marketing integrations

Email is one of the preferred digital marketing tools when it comes to promotions and discount codes, store modifications or additions, and it is also frequently used for order confirmations and cart abandonment emails. Employing email integrations on your eCommerce site can help you with building email lists by gathering email addresses from browsing visitors so that you can follow up with them and entice them to convert to consumers.

Using eCommerce platforms in conjunction with an email marketing platform like MailChimp enables businesses to centralize and track customer data in one location.

8. Accounting integrations

Whatever you sell, make sure that your accounting solution integrates easily with your storefront. An accounting integration allows you to manage budgeting, bookkeeping, profit-and-loss charts, keep track of payroll, and create invoices. In essence, it’s a method for automatically syncing the sales and order data from your eCommerce site with your financial data.

9. Content management integrations

Content management systems (CMS) are used to manage and distribute text, photos, videos, and other pieces of content. Search engines find it difficult to index and follow the amount of virtually identical product pages that are continually migrating on and off an eCommerce website. By taking account of things like SEO, duplicate content, and canonical tags, a content management system tells search engines what these product pages are and what to expect from them. 

Manually creating and maintaining these product pages can only result in heaps of content and open the door to a long list of SEO penalties that many business owners might not even be aware of. 

The Bottom Line

It takes a lot of work to run a successful business online, but there are ways to speed up and simplify the process. 

Integrations across several software programs enable you to automate operations, synchronize vital sales data, scale high-quality products and services to more clients, and reduce the likelihood of a human mistake.

The right integrations will enable you to deliver consistent shopping experiences across all of the touchpoints of customer journeys, from order and inventory management to social media and email marketing, regardless of the eCommerce platform you are using.

Inventory management is one of the foundational elements of successful retail store management. As a component of supply chain management, the goal of inventory management is to supervise the flow of products from manufacturers to warehouses and finally to point of sale.

Poor inventory management causes inefficiencies because you don’t have reliable real-time information on how much inventory you have. This raises the possibility of ordering merchandise from suppliers incorrectly or selling phantom inventory.

Proper inventory management techniques, on the other hand, can help both physical stores and online merchants see an increase in sales, cut expenses, and keep customers happy. But without the proper strategies and tools, managing your inventory can take up a lot of your time and possibly cost you money. 

Not sure where to begin with inventory management? This post explains the different types of inventory, how to manage inventory in retail stores, the importance of retail store management, and more. 

Photo by Alexander Kovacs on Unsplash

Types of Inventory

Inventory management is essential to a company’s daily operations because it frequently serves as a major source of income. These are only a few of the several inventory types available.

• Raw materials, i.e. materials that are used in the production of your goods
• Unfinished goods, or goods that are still in progress and not ready to be sold
• Finished products are items that are normally kept in a warehouse until they are shipped or sold
• Cycle inventory, or goods that are delivered to a business from a manufacturer or supplier, then sold to customers right away
• In-transit products are those that have left the warehouse and are being transported to their final destination
• MRO products stand for “maintenance, repair, and operation supplies” and support the production process
• Decoupling inventory, which are components, materials, or goods saved in case of a slowdown or a stop in production
• Anticipation inventory, or excess stock levels produced or stored before an anticipated spike in sales
• Excess inventory, often referred to as obsolete inventory, are unused or unsold raw materials or products that a business must pay to store even though it doesn’t anticipate selling or using them.
• Safety stock, also known as buffer inventory, acts as a backup in case an unanticipated problem arises or additional inventory is required.

8 Tips on How to Manage Inventory in Retail Store

Despite the fact that inventory can be categorized and characterized in a variety of ways, it is ultimately inventory retail management that has a direct impact on an organization’s ability to fulfill orders.

There are several types of inventory management systems that businesses use. Manual inventory, periodic inventory, and perpetual inventory are three examples. Perpetual systems are the most advanced and exact, whereas manual methods are the least advanced and accurate.

Here are the 8 inventory management tips that will contribute to better retail store management and help business owners improve cash flow.

1. Keep track of all product information

Track the product information in real-time for each inventory item, including stock keeping units (SKUs), suppliers, barcode data, lot numbers, and countries of origin. Consider tracking each item’s price over time so you can be aware of elements like seasonality and scarcity that might affect the price. 

You can also track your inventory turnover rate, i.e. the number of times your business’s inventory is sold throughout a predefined period of time (a month, quarter, or a year). The inventory turnover ratio formula divides the cost of all products sold by the average inventory for the same time period.

2. Do Regular Counts of Inventory

Efficient counts of inventory are the best way to ensure accurate inventory. To ensure accurate stock counts and prevent mistakes, take damage, shrinkage, and returns into consideration. This process can be simplified by retail inventory management software because you don’t have to start from scratch; you just need to double-check your data.

The complexity, size, and type of inventory management system you employ all influence how frequently physical inventory counts are performed in your company. But at the very least, experts advise counting inventories once or twice a year. There are several counting methods you could use, including cycle counts and physical counts.

3. Deal with bad supplier issues

If your supplier is unreliable, you’ll face many inventory problems. So, if you have a bad supplier who consistently makes deliveries late or consistently under-delivers an order, be sure to take action. Conduct a supplier audit and learn what the problem is by talking about it with your supplier. Be ready to resolve issues with suppliers or even change suppliers if need be, or you will have to deal with erratic supply levels and insufficient inventory as a result.

4. Track your sales

Tracking your sales involves much more than simply adding up product purchases at the end of each day. You should regularly update your inventory and be aware of what and how many things you sold. In addition, you will need to analyze this data. When do specific things start to sell more slowly or less? Are there particular things that you sell on a given day of the week? Do some products frequently sell in groups? Maintaining control over your retail inventory requires understanding your sales patterns and figures but also the bigger picture of how things sell.

5. Create a stock receiving process

During the stock receiving process, you will check incoming orders and accurately input the commodities into an effective inventory management system. Verify the contents of each delivery against the purchase order to ensure they are in accordance. Count cartons and pallets, check the types and quantities of the products while noting any errors, damage, or shortages, and follow up with vendors on any issues. After that, add the additional items to inventory counts and store the merchandise. You might put price tags or bar codes on the merchandise, depending on your requirements. The simplest method of controlling inventory is perpetual inventory management, which entails counting products as soon as they arrive.

6. Create a deadstock process

Overstocking inventory drains capital and reduces profitability. Dead inventory comprises faulty deliveries, damaged goods, and unsold seasonal goods. Items that fit this category should be noted and then taken out of inventory. Establish a location for dead stock storage and handle it on a regular basis (weekly, monthly, or as needed for your company). Send pullbacks, or goods you can return to suppliers for credit, as soon as possible. You can take care of the leftovers by selling to outlets, giving, recycling, or disposing of them, depending on your product line.

7. Create a returns procedure

Without a system in place to handle customer returns, you run a higher risk of holding onto unsold inventory or skipping the chance to put a sellable item back on display. When a consumer returns an item, examine it to see if it is broken or defective and then send it back to the vendor, fix it, or write it off. Finally, be sure to re-enter usable inventory in your inventory counts and place it in your store. 

8. Invest in powerful inventory management software

If your company is small, managing your inventory with spreadsheets or paper logs is doable in the beginning. However, as your retail business grows, you’ll have to spend more time managing inventory, which increases the possibility of human error and increases the risk of having your stock out of control. All of these chores are made simpler by an effective inventory management tool. Ensure that you know what you need, that a software solution offers the metrics that are crucial to your company, and that it is simple to use before making your choice.

Benefits of Managing Your Inventory in Retail

Besides “How to manage inventory in a retail store”, another important question is “Why is managing your inventory important?” 

One of the most important benefits of effective retail inventory management techniques is that they enable you to forecast customer demands. Inventory forecasting is crucial in inventory control. Businesses that don’t predict customer demands and impulsively order fresh inventory can end up with product shortages or surpluses. When you have extra inventory, your capital becomes constrained by inventory. When, on the other hand, you don’t have enough of a product that’s in high demand, you’re effectively driving clients to your competition. 

Retailers can get information and insights about past sales using retail management software, and this information helps them forecast how much stock they’ll need at any particular time. Thanks to stock alerts and stock notifications, you will know when there has been a significant change in your inventory levels. Reports on weekly and monthly sales figures assist businesses in purchasing inventory when necessary and help them identify slow-selling items, as well as profitable products and fast-moving items.

A successful inventory management process also results in better cash flow. Businesses can save money in many different ways, such as by reducing the chance of human error, lowering the cost of inventory storage, decreasing the likelihood of carrying slow-moving products, phantom inventory, and dead stock, improving demand forecasting, and making more informed decisions.

Finally, proper inventory management contributes to improved customer satisfaction. In addition to assisting you in giving customers what they want, when they want it, stock management also helps lower the likelihood of picking and shipping errors, as well as the likelihood that customers will receive damaged goods. All this helps build strong relationships and keep your customers happy. 

Retailers can use inventory tracking to keep track of the stock-keeping units (SKUs) they have on hand, as well as their location and number. Additionally, it enables shops to keep track of and identify defective or broken goods so that they are not resold to unaware customers.

Photo by Alexander Kovacs on Unsplash

Warehouse Management vs. Inventory Management

Despite the fact that both inventory management and warehouse management are crucial for keeping track of and managing stock, they differ in a number of ways.

Inventory management is the process of monitoring and controlling the inventory levels in all warehouses, distribution centers, fulfillment centers, retail locations (including the sales floor), and other business storage facilities. It is regarded as the initial action before putting warehouse management into practice.

Warehouse management is a part of inventory management that operates at a more focused level and deals with tracking inventory inside a warehouse or storage facility.

The inventory management system (IMS) keeps track of the inventory present in all warehouses and storage facilities as well as the details of which warehouses house which products. On the other hand, a warehouse management system (WMS) keeps track of the inventory and its placement within a storage space or warehouse. Systems for managing warehouses and inventories are frequently used in conjunction to improve inventory management.

The Bottom Line

There you have it. If you have been wondering how to manage inventory in a retail store, we hope this article gives you a comprehensive answer and actionable tips that will help you create an effective inventory management plan. 

Keep in mind that having a good retail inventory management system in place can help you save money, improve customer experience and customer satisfaction, maintain your company’s profitability, examine past sales data to forecast customer demands and future sales, reduce inventory costs, and help you prepare for the unexpected.

Stop losing money by taking charge of your stock management. Combine effective inventory management strategies with the appropriate retail inventory management software like ApparelMagic, which powers enterprise resource planning (ERP), product lifecycle management (PLM), customer relationship management (CRM), and fashion inventory management for some of the biggest apparel brands. The best retail inventory management software will not only help power your retail store location but will also help you to successfully manage your inventory.

Retail management involves taking responsibility for the successful running of a store. This means that retail managers are responsible for every aspect of the day-to-day operation and supervision of retail outlets, including staff, sales, resources, and inventory management. In addition to this, you’ll need to stay on top of your warehouse inventory. Finally, the list of your responsibilities might include another crucial element – retail pricing. 

Intelligent retail is a crucial success factor in today’s extremely competitive and globalized retail market. Luckily, there are many mathematical retail price formulas that have been proven to work and can assist operations in determining more competitive rates.

In this post, we’re looking at how to find retail price using some of the elementary retail price formulas and evaluating some of the most commonly used pricing strategies that can help managers attract loyal customers, drive business growth, and boost profitability.

Photo by Henry & Co. on Unsplash

The Importance of Calculating Retail Price

The profitability and competitiveness of a retailer are directly impacted by price decisions. Pricing can make or break a company: setting prices that are too high will prevent you from competing with other businesses, whereas if the price is too low, you cannot make a profit.

So, you’d expect that by this point, retailers would have adopted some very clever pricing strategies. Sadly, that’s not the case. According to one study, only 12% of organizations cited price as the primary factor in predicting future profit growth. This is probably the reason why just around half of the businesses have a pricing plan in place. Additionally, those tactics may not be that advanced. According to the Professional Pricing Society, 30% of retail merchants simply match the prices of their closest competitors when pricing new products.

What does this mean for you? It means that learning how to calculate retail price will have an impact on your retail store’s competitiveness and profitability. Pricing is therefore one of the most crucial choices a retail manager must make.

How to Calculate Retail Price Using a Retail Price Formula 

Retailers can get a competitive edge by using some straightforward methods to set prices that suit their particular requirements. Here is a list of the 15 most commonly used retail price formulas:

• Cost-plus is the most commonly used retail price formula which involves assessing your cost of products and adding that to your goal markup, i.e. the percentage added to the cost to obtain the retail price. 
• Contribution margin represents the incremental money generated for each unit sold after deducting the variable portion of the company’s costs. It is calculated as the selling price per unit minus the variable cost per unit.
• Break-even analysis is a calculation that weighs the costs of a new product or service against the unit selling price to determine the point at which you’ll break even. To calculate the break-even point, use the following formula:

break-even point = fixed costs ÷ (sales price – variable costs) 

• Gross margin equates to net sales minus the cost of products sold.
• Gross margin return on investment (GMROI) analyzes a company’s ability to generate profits over the cost of its inventory. It is calculated by dividing the gross margin by the average inventory cost.
• Cost of goods sold is the total amount your company paid as a cost directly related to the sale of goods. It is calculated by adding purchases to the beginning inventory and subtracting the ending inventory for the same period.
• Inventory turnover is the rate that inventory stock is used, replaced, or sold. It is calculated by dividing the cost of goods by the average inventory.
• Profit margin percentage. To calculate profit margin percentage, start out with your gross profit, i.e. the difference between the revenue and the COGS. Then, find the percentage of the revenue by dividing your gross profit by revenue and multiplying the total by 100. 
• Initial markup is the difference between what an item costs from the supplier and what the retail price is that customers pay. The initial markup percentage is calculated using the following formula:  

[(retail price – cost) / retail price] x 100

• Maintained markup is the difference between the cost of goods and the actual retail price of those goods when sold.
• Quick ratio is calculated by dividing an organization’s cash and accounts receivable by its current liabilities.
• Open-to-buy (OTB) is calculated as follows: planned sales + planned markdowns + planned end-of-month inventory – beginning-of-month inventory.
• Reductions are the difference between the product’s original retail value and its final sales value. This difference can result from three major factors: shortages, mark-downs, and discounts.
• Stock-to-sales ratio measures the value of your inventory against the value of sales for a certain period of time. It can be calculated with the following formula: 

average stock value / net sales value 

• Sell-through rate is the percentage of a company’s inventory sold to consumers. You can calculate it by dividing the number of inventory units sold by the number of units received. 

6 Common Retail Pricing Strategies 

Once you’ve got the above formulas figured out, you will want to select a product pricing strategy. Some of the most common pricing strategies:

Keystone pricing

Basically, keystone pricing is when a retailer sets a retail price for a good profit margin by doubling the wholesale price they paid for the product. Although keystone pricing used to be the standard, more fierce competition and the constantly shifting retail environment have led some businesses to switch to other strategies. 

With keystone pricing, you can undervalue your products if they have a low turnover rate, high shipping, and handling expenses, or are special or hard to get in some way. On the other hand, it may be more difficult to use keystone pricing if your goods are highly commoditized and are available elsewhere.

Value-based pricing

Value-based pricing is the practice of determining a product price based on what the customer thinks it is worth. Some general requirements for using this pricing method include a strong brand, high-quality, in-demand products, and innovative marketing techniques.

Value-based pricing works best in markets where a product improves a customer’s self-image or gives a special life experience. For instance, individuals frequently place a high value on premium labels that sell expensive products like Rolls Royce or Gucci. This gives them a chance to determine a product price using value-based pricing.

Discount pricing

Companies are well aware that consumers love discounts, markdowns, retail sales, and other associated promotions. This is why discounts are the most popular product pricing strategy used by 97% of sellers in all industries.

The discount pricing strategy works well for increasing foot traffic to your store and clearing out out-of-season or stale merchandise. However, if you do it too frequently, it could convey the impression that you’re a discount retailer, which might discourage potential customers from paying full price for your goods. Additionally, it has a detrimental psychological effect on how consumers perceive quality. For instance, because of the low prices, Walmart and The Dollar Store’s products are considered as being of lesser quality. 

Photo by Artem Beliaikin on Unsplash

Competitor pricing

Competitor pricing, as the name of this pricing approach suggests, is deliberately setting your prices below those of your competitors while using their pricing data as a standard. 

This approach works well if you can reduce costs and actively market your special pricing while negotiating a lower cost per unit with your suppliers. However, if you run a smaller business, it may be tough to maintain. You will need to sell more than your competitors because lower prices entail lower profit margins.

Price skimming

A price skimming approach is when an online retailer sets its starting price as high as its target market would bear before gradually lowering it. The company reduces the price to entice a new, more price-conscious consumer base as demand from the initial customers is met and additional competitors enter the market. Apple employs this price strategy to pay the expenses associated with creating new products like the iPhone.

Price skimming might result in significant short-term gains when a new, innovative product is introduced. It also aids in preserving a prominent brand’s reputation and drawing in devoted target customers who want to be the first to learn about or experience anything new. The strategy also functions when there are few available products. Products with high demand but low supply, for instance, may be priced higher; when supply increases, prices decrease.

However, price skimming isn’t the best marketing tactic in crowded markets, unless you have some truly exceptional characteristics that no other brand can match. If you cut the price too fast or too drastically after launch, it also encourages competition and can annoy early adopters.

Cost-plus pricing

The simplest method for determining a product’s price is cost-plus pricing, a cost-based pricing approach that’s sometimes referred to as markup pricing. You create the item, add a predetermined percentage to cover the expenditures, and then sell it for the total. The benefit of cost-plus pricing is that it is simple to understand. You already keep tabs on labor and production costs. To determine the selling price, all you have to do is raise it by a certain amount.

Cost-plus pricing can offer consistent profits if all of your costs stay the same. However, it should be noted that the strategy does not account for market factors like competition pricing or the perceived worth of the consumer.

Final Thoughts on How to Calculate Retail Price Successfully

Achieving your profit objectives requires many things, including understanding your company’s cost structure, using advanced technology like inventory management software, and learning how to find retail prices. Keep in mind that the tactics explained in this article should be employed as part of a bigger, multi-factor pricing approach rather than in isolation.

Once you have mastered the formulas, it’s time to investigate more sophisticated pricing strategies. There are numerous pricing strategies, so it could be a good idea to try a few different ones until you find the one that works best for your business.

Selling at the right price is one of the secrets to a flourishing business. If your goods are cheap, you might sell more but find it difficult to make a profit. On the other hand, if your goods are too expensive, customers will shop at competitor retailers, causing you to lose market share.

However, there is no one tried-and-true strategy that works for all retailers when it comes to pricing. You must balance the production costs with customer trends, revenue targets, competitive pricing, and even a little bit of psychology.

If you have ever wondered “What is retail pricing?” you’ve come to the right place. In this post, you’ll learn what retail pricing is, the different types of retail pricing strategies you can use, and how to choose the right one for your products. 

Photo by Alexander Kovacs on Unsplash

What is Retail Pricing?

The retail price is what consumers pay for the finished product when it is sold. These customers don’t purchase the item to resell it but to use it. The fundamental objective for a retailer when setting a price is to maximize the profit while setting a price that customers will be ready to pay.

Retail price, manufacturer price, and distributor price are all different prices in the retail supply chain. The final retailer will have the choice to set their pricing based on supply and demand. A manufacturer can also propose a retail price to match the cost of the product with its overall production strategy.

How Does Retail Pricing Work?

Retail pricing often includes at least two markups, including the price the manufacturer charges the reseller and the price the reseller charges the customer. Sellers take a variety of factors into account when setting retail prices. A seller will often increase the price after covering all of the costs related to the goods to ensure they can turn a profit. On the other hand, certain well-liked products are often offered at a loss in order to attract shoppers. 

The factors that influence your product pricing can be roughly divided into internal and external. 

Internal factors are aspects of your business that are typically within your control. Examples include manufacturing prices, value chain processes, labor costs, retail shipping prices, import fees, overhead costs, and the amount of money you spend on advertising and marketing. These factors are crucial because they help you establish your baseline, i.e. the amount of money you need to make in retail sales in order to remain profitable.

On the other hand, external factors are mainly outside your control. These variables may include competitor price range and proximity or your customers’ purchasing power. Macro trends, such as the state of the national, regional, and worldwide economies, should be taken into account when evaluating external factors because they have a significant impact on consumer buying behavior.

How to Calculate the Retail Price

Determining retail prices can be challenging because there are several calculation methods and a number of variables to consider. One way to calculate your retail price is by using the absorption pricing method. This is a straightforward three-step process to arrive at your suggested retail price (RRP):

1. Calculate your cost price
2. Add together your costs and profit margin to determine your wholesale price
3. Determine your RRP by dividing your wholesale price by 2 or 2.5.

This calculation method is really simple and easy to use. It takes into account all expenses related to the selling price of your goods, including the percentage of your fixed costs and your profit margin. It doesn’t require special training or complex calculation formulas. 

However, it should be noted that this approach does not account for your competitors and their pricing strategies, which might result in price gaps.  

9 Successful Retail Pricing Strategies

Let’s take a close look at a few pricing methods that retailers should employ:

1. Manufacturer Suggested Retail Price (MSRP)

The Manufacturer Suggested Retail Price (MSRP) is a useful pricing strategy to apply if you offer mass-produced goods like home appliances and consumer electronics.

A product’s MSRP is a set price that applies to all sellers of the item. While it removes the element of surprise from the price setting, selling your goods at the same price as other retail stores may decrease your competitive advantage.

2. Keystone Pricing

With this strategy, you double the wholesale cost of each product to produce a sizable profit margin. You may do your calculations easily with a predetermined percentage but you should be careful not to end up pricing items too low or too high.

If you sell highly unique goods or custom items that take a long time to create, keystone pricing is not the best choice because you won’t make enough money. It’s also not recommended for retailers who sell uniform, widespread products. Depending on the item’s availability and demand, it may not be reasonable for a retail shop to mark up goods at such a high rate. 

3. Discount Pricing

Discount pricing is when a retailer marks down the cost of their goods in order to boost sales. The high-low pricing strategy is one type of discount pricing. Products are first offered at a high price point and then marked down when demand declines.

Electronic retail stores employ this tactic most often. Items like computers, smartphones, and video game consoles are the most expensive when they are first introduced. However, when newer models are released, the older ones are discounted. 

If you want to get rid of unsold inventory and boost sales, discount pricing works well. But if you develop a reputation for often offering discounts on your goods, clients will get used to waiting for the cheaper price or they might think your products are of bad quality. 

4. Bundle Pricing

Bundle pricing is another discount pricing strategy that is especially useful if you sell related products that can be packaged together. By combining products, you can customize the consumer experience and enhance sales volumes through cross-sells and up-sells.

Deli bundles and Christmas baskets that include hand-picked wines, meats, and cheeses, are typical instances of bundle pricing. 

5. Penetration Pricing

Penetration pricing is when a company offers a new product or service at a lower price in order to draw in customers. The goal is to entice target customers with a low price so they will be eager to pay full price once the promo period has ended.

This pricing model works especially well for subscription products and it is employed by companies like Spotify and Netflix.

Photo by Edward Howell on Unsplash

6. Psychological Pricing

Also known as charm pricing, psychological pricing is a value-based pricing strategy when sellers charge a price for a product that ends in an odd number. 

For instance, a seller may price a product at $6.99 rather than $7. The brain sees $6 and the consumer is tricked into thinking the price is lower than it really is. This pricing approach is best for non-essentials since it encourages impulse purchases. 

7. Competitive Pricing

Setting lower prices voluntarily in order to obtain a competitive edge is known as competitive pricing. It works best if you are in a sector where there are a lot of similar products and the only thing that sets you apart from your competition is pricing.

The competitive pricing method works best if you’re a bigger shop and can bargain with suppliers for a reduced wholesale price while still making a respectable profit. However, keep in mind that a price battle can force small retailers out of business.

8. Premium Pricing

Premium pricing, which is often referred to as luxury pricing or prestige pricing, is another value-based pricing technique where high-end businesses charge an additional markup percentage on their products to offer their customers a sense of status. 

This approach to pricing strategy is most effective when your product quality and customer service can match the high product price tag. Apple, Ferrari, and Cartier are a few businesses that charge premium prices.

9. Dynamic Pricing

Dynamic pricing is a pricing strategy in which prices are changed in response to variations in supply and demand. The ability to apply dynamic pricing in real-time makes this strategy ideal for eCommerce companies.

When you sell products online, you can use data and technology to sell the same item at different prices based on the buyer.

The Bottom Line

We hope that this article has provided a comprehensive answer on what retail pricing is. The pricing strategies mentioned above are only a few that you should take into account, but they are certainly not the only options. The most important step is to identify the ones that are effective for you.

Retailers must take into account a number of elements when determining their pricing strategy, including their niche, market behavior, the competition, and most importantly, their financial targets. 

No single strategy we’ve discussed will be sufficient on its own. Business owners should experiment and mix different pricing strategies to ensure their company’s profitability and success. 

Learning where to store your merchandise and how to handle it properly is one of the most important skills for eCommerce retailers. Effective eCommerce warehouse management can help you save time and money while maintaining customer satisfaction. 

Planning for storage and warehousing, however, frequently takes a backseat to more exciting activities. In fact, many online sellers tend to store products in their garage or guest room, at least in the beginning. This is where eCommerce warehouse management comes into play.

Keep reading to find out why eCommerce warehousing matters, what you should do to improve it, and how eCommerce inventory management software can help. 

Photo by Nana Smirnova on Unsplash

What is eCommerce Warehousing?

The process of storing products specifically for online sales is referred to as eCommerce warehousing. eCommerce warehouse management includes all of the procedures necessary to run an eCommerce warehouse, including:

• Keeping goods secure
• Managing the staff working in the warehouse
• Inventory management
• Equipment tracking 
• Monitoring all processes in the warehouse from the moment goods arrive until they are shipped out to customers
• Forecasting inventory to avoid having too much stock or running out of stock
• Establishing safety precautions to protect inventory, employees, and equipment
• Building relationships with shipping carriers

How Is eCommerce Changing the Warehouse

As technology advanced to allow the evolution of eCommerce business models, it compelled warehouses to become modernized for greater dependability, efficiency, and a better fit for clients. The following changes have occurred in warehouses over the last 20 years:

Advanced software solutions. Today, numerous eCommerce inventory management software systems are available, ranging from straightforward barcoding systems to sophisticated, real-time data-streaming ones that link everything in a single location. Some eCommerce inventory management software systems may even predict sales and draw conclusions based on the meaning of specific data patterns.

Improved tracking. Modern technology has helped make everything in warehouses easier to track. Each product that comes in, moves around, or leaves is instantaneously tracked with a simple scan or the press of a button. Nearly every employee of the company has instant access to precise location information about each given product. With better tracking, it is simpler to prevent product loss, which helps warehouses run more efficiently and makes it possible to give partners, suppliers, and end-users more information.

Innovative shipping and storage. Numerous eCommerce companies have created new systems in order to be able to fulfill customer orders quickly and efficiently. For instance, Amazon has introduced a “chaotic” storage system where new products are put on any available storage space and are trackable via technological devices. This disorganized method of storing is generally cited as one of the best strategies to approach warehouse inventory management. 

Improved relationships with suppliers. With today’s warehousing technology, warehouses and suppliers may rapidly communicate about demands and the status of various orders. This direct, transparent communication speeds up the process, resulting in fewer mistakes and necessitating less overall human attention.

eCommerce Warehouse Inventory Management Best Practices

Poor eCommerce warehouse inventory management can cause orders to be delayed and cost brands money. If you want your warehouse operations to run well, there are a few best eCommerce warehouse inventory management practices you should keep in mind. 

1. Use a WMS (Warehouse Management System) 

A warehouse management system (WMS) is a piece of software that aids in controlling and managing a warehouse’s daily activities. Inventory tracking requires a lot of labor but thanks to the data your WMS offers, you can easily determine which products are moving the quickest and, as a result, decide how to store products in your eCommerce warehouse. Money-saving advantages come from setting up your warehouse so that your best-sellers are in an area that is simple to get to and that cuts down on the time it takes for your employees to obtain what they need.

The advantages of WMS software include:

• Tracking goods as they are received, stored, picked, packed, and shipped in real-time
• Guiding the receiving and storage of inventory
• Optimizing the process of order picking and shipping 
• Providing guidance on stock replenishment

2. Store Your Inventory Across Several Warehouse Locations

Distribute your goods to several fulfillment centers all around the country so clients can receive their orders from the closest warehouse. In addition to ensuring they receive their products more quickly and enhancing the customer experience, this also lowers the shipping costs.

3. Set Inventory Minimums

Inventory balance is always difficult to achieve. While ordering too few products can result in out-of-stock notices, angry customers, and lost revenue, excess inventory can hurt a company’s earnings and increase inventory carrying expenses. Therefore, setting mandatory inventory minimums is a wise precaution that companies should take. Any reliable inventory management software enables companies to create reorder points so they can be alerted when a product hits a certain threshold.

4. Test Several Different Picking Systems 

There is a wide variety of picking systems available to eCommerce companies. The “one order at a time” picking process may be preferred by small businesses that only receive a few orders each day. Larger eCommerce companies might not find this approach to be the best, though. More sophisticated solutions in an eCommerce warehouse can enable batch picking and automatically generate picking lists based on how close together the ordered products are, reducing the amount of time it takes to pick an order.

Photo by CHUTTERSNAP on Unsplash

Benefits of eCommerce Warehousing

Regardless of the size of your online store, eCommerce warehousing offers a number of advantages. Here are some of the most important ones:

Improved product organization. eCommerce warehouse management can increase inventory control, tracking accuracy, and prevent missing items. With a proper warehouse management system in place, you’ll be able to track inventory levels and turnover rates and preemptively replenish inventory.

Faster shipping. As mentioned before, online shoppers want to receive their orders swiftly and affordably. By choosing to distribute your goods among several warehouses located all over the country, you make your inventory more accessible to more of your consumers, resulting in a shorter delivery time for their orders.

Time savings. Having an effective eCommerce warehouse management system in place allows you to free up valuable time which can be dedicated to expanding your business instead of sorting through boxes of merchandise. 

Reduced stress. eCommerce warehousing encompasses much more than simply stocking shelves with goods; removing the endless list of storage duties from your plate can be a tremendous relief. A better organized approach and the assurance that your products are in capable hands can significantly improve efficiency and reduce stress. 

The Bottom Line

eCommerce warehousing is sometimes overlooked in all the excitement and pressure of establishing and running an online business. However, it is a very important component of eCommerce and has a significant impact on your bottom line.

For your online store, an effective eCommerce warehouse management system can help you exceed customer expectations while saving money and time. Keep the pointers and advice in this piece in mind for a better warehousing experience, whether you store inventory internally or in partnership with a 3PL.

Today, anyone can launch a retail business with a few clicks on a laptop. A powerful brand or a productive supply chain, on the other hand, cannot be created that easily. These are the two crucial factors for the long-term survival of any retail firm, and in order to achieve them, you need an effective supply chain strategy. 

In this post, we’re talking about retail supply chain management, discussing how it compares to the eCommerce and fashion supply chain, and offering tips that can help your retail business bring in sustainable profits.

Photo by CHUTTERSNAP on Unsplash 

What Is Retail Supply Chain Management?

Supply chain management (SCM), which actively streamlines a company’s supply-side operations, can be defined as the control of the movement of goods and services. It is predicated on the notion that almost every product that makes it into consumers’ hands is the outcome of the efforts of numerous organizations that make up the entire supply chain. This includes all aspects, including product development, production, and the information systems required to direct these activities.

Supply chain management aids in maintaining control over costs, inventory levels, scheduling, and product quality. By better controlling internal inventories, manufacturing, distribution, sales, as well as vendor inventories, retailers are better equipped to reduce unnecessary expenditures and deliver goods to consumers more quickly.

What Is eCommerce Supply Chain and Fashion Supply Chain?

Unlike retail, which can be carried out in a variety of ways, including online, person-to-person sales, direct mail, and in a brick and mortar establishment like a shopping mall or grocery store, eCommerce refers to commercial transactions that are primarily conducted electronically through the Internet. The logistical procedures that make up the eCommerce supply chain include the acquisition of raw materials, production of completed goods, warehousing, fulfillment process, inventory control, and last-mile delivery.

The fashion supply chain (or apparel supply chain), on the other hand, describes the process of tracking each stage of the production of clothing, from the location of the factories where the raw materials are turned into garments to the distribution system that transports the clothing to customers.

Retail Value Chain vs. Retail Supply Chain

The process by which companies acquire raw materials, add value to them through manufacturing, production, and other processes to produce a finished product, and then sell that product to customers is referred to as the value chain.

The process of getting a good or service to a consumer is represented by a supply chain, which frequently involves both OEM (original equipment manufacturers) and aftermarket parts.

A value chain is a series of related tasks a firm utilizes to gain a competitive edge, whereas a supply chain involves all stakeholders in completing a client request and resulting in customer satisfaction.

What Are the Benefits of Supply Chain Management in Retail?

Supply chain management is a well-known component of most firms and is crucial to both business success and consumer pleasure. Here are some of the most important benefits of retail supply chain management for retail companies:

Improved inventory. If you’re misusing warehouse space or not replenishing inventory timely and efficiently, you might be losing money and damaging the reputation of your company. SCM gives you the ability to check your inventory levels in real-time to ensure that it matches your needs. Additionally, it helps you and your suppliers collaborate more effectively so that you may concentrate on demand planning and forecasts, stock up on the proper products and stop ordering expired or out-of-season goods.

Reduced costs. It’s critical to identify which procedures cost the most and where money is being wasted, in order to provide goods as swiftly and affordably as possible. Your storage strategy, partnerships with suppliers, analysis of consumer demand, and the efficiency with which supplies are moved are a few examples of these areas. Improving these areas can result in significant cost reductions.

Improved supplier relations. If you want to be successful in the retail sector, your company needs successful connections with its suppliers. The more effectively you can communicate and manage your own processes, the more effectively you can address disagreements or challenges in the future. 

Competitive advantage. SCM was once reserved for large corporations, but with the aid of these systems, even small and medium-sized firms can remain competitive. Smaller businesses can benefit from SCM through third-party logistics in a variety of ways, including process enhancement, finding affordable transportation options, access to better inventory control, on-time delivery, and more.

Reduced risk. Collaboration is essential for risk mitigation. But without visibility, it is impossible to adequately produce or analyze data. SCM aids in process evaluation so you can spot problems early and take proactive measures to fix them.

Increased customer satisfaction. Customer expectations are constantly rising and today’s retail customers demand excellent customer service, which essentially means receiving their orders as soon as possible. They also want open, two-way communication from businesses, so they can explain what went wrong and how they plan to fix it. Negative reviews and damage to your reputation are possible if you can’t satisfy your consumers or quickly fix their problems. By employing technology to handle storage and shipping, customizing the customer experience, and providing better and faster shipment and tracking, customers can have a seamless interaction with your company. 

Photo by Ekaterina Grosheva on Unsplash

Retail Supply Chain Best Practices

Retail merchants and their suppliers are under increased pressure to deliver more goods to more locations faster. Retailers must always be aware of their inventory’s whereabouts in order to reroute shipments, rebalance their stock levels, and quickly adjust to changing customer needs if they want to remain competitive. In addition, they run the danger of losing customers if there is an issue with their supply chain and they are unable to get their products to consumers. So, what steps could retailers take to ensure that their supply chains are operating efficiently? Below are 4 retail supply chain best practices. 

1. Use cloud-based inventory management software 

Balancing long, complex supply networks and unpredictable consumer behavior are two major challenges that retailers are struggling with. As a result, it is more difficult than ever to match supply and demand, which can adversely affect margins and sales.

Implementing a supply-chain network in the cloud that monitors inventory and demand changes, and enables retailers to react to the newest demand signals in almost real-time, is one way to solve this problem. This way, retailers can quickly adjust to things like seasonal trends and other demand changes.

2. Automate warehouses and distribution centers

One of the major cost factors in the retail supply chain is warehousing. The functioning of a warehouse requires a lot of manpower, tools, and systems. Ineffectiveness in any of these areas increases the possibility of mistakes and can clog the supply chain. Through effective warehousing, there are many chances to raise a retail company’s profitability.

For warehouses, there are numerous levels of automation systems available. Amazon was a pioneer in the field of warehouse automation, and today, any company can access a wide range of automation options. For instance, collaborative mobile robots are a simple and affordable system that may connect with your current warehouse layout and provide a quicker return on investment than conventional automation options like conveyor systems.

3. Consider partnering with a 3PL 

Because building an end-to-end logistics operation is time consuming and requires extensive planning, many merchants use 3PLs (third-party logistics providers). There are numerous 3PLs that specialize in everything from warehousing and distribution, to transport and last-mile delivery – ranging from global giants like DHL and FedEx to local 3PL companies.

Many retailers find that using 3PL solutions is more cost-effective, especially when their businesses expand and the needs of retail logistics become too great to handle. By using the services of a 3PL, retailers can concentrate their internal resources on their core strengths and increase their revenues.

4. Reduce risk through regular reviews

Retailers should regularly meet with the supply chain team to review processes and policies to ensure that they are legal, effective, and current. This reduces the possibility of fraud and theft, while also streamlining processes and preventing process bottlenecks.

The secret to risk mitigation is working together with your suppliers. Selecting dependable, capable, and financially stable suppliers is the first step. Next, concentrate on reducing cycle-time variances and shipping times.

Utilize technology to inform key workers when action has to be taken elsewhere along the supply chain. This will help you eliminate delays. Regular process reviews will enable you to identify any supply chain issues and take prompt corrective action.

The Bottom Line

Even if your apparel company is small, you should still think about fashion supply chain management. Larger firms undoubtedly profit from the aforementioned advantages, but your business can also gain from a successful retail supply chain management system.

The advice provided in this article can assist you in building an effective supply chain management system and help your retail business achieve higher, more consistent profitability. Retailers can increase productivity and efficiency for a healthier bottom line, in the short and long term, by making wise investments in systems and solutions that facilitate improved decision-making and automate crucial business operations.

Inventory management is one of the foundational elements of a successful retail organization. Retailers and online merchants can cut expenses, increase customer satisfaction, and see an increase in sales by using effective inventory management strategies.

Poor inventory management, on the other hand, causes inefficiencies because you don’t have correct inventory information. This increases the risk of costly business mistakes, such as reordering excess inventory from suppliers or selling nonexistent stock.

This is why we at ApparelMagic have created our retail inventory management system with robust tools and inventory management formulas you can take advantage of in order to make your inventory work for you. And it is why we’re thrilled to impart some of our experience to you in order to help you organize your inventory without stress and make more informed decisions.

In this post, we’ll discuss the significance of retail inventory management, share inventory management tips, and talk about how inventory management techniques can be aided by retail management software.

Photo by Artificial Photography on Unsplash

Inventory Management Meaning: How Does It Work?

In essence, retail inventory management is the process of ensuring that retail companies have the appropriate products, in the appropriate quantities, at the appropriate times. This entails being aware of when your suppliers will deliver products, identifying slow-selling items as efficiently as fast-moving items, determining how much of each item you have on hand in-store, when you’re running low on stock in your distribution centers, how to decide when and what to reorder, and precisely track products—all while keeping your pricing strategy in mind.

The goal of retail inventory management is to maintain the right amount of desired product in stock—neither insufficient inventory nor excess inventory. By effectively managing their inventory and having accurate stock counts, retailers are able to meet customer demand without running out of products and boost customer satisfaction. 

Retail inventory management methods and tools provide retailers with more real-time data with which to manage their businesses, such as product locations, quantities of each product type, which stock sells well and which doesn’t, profit margin by style, model, product line or item, the ideal amount of inventory to have in back stock and storage, how many products to reorder and how frequently, etc.

The Importance of Inventory Management in Retail

The days of customers having few shopping options are long gone. In the current situation, a consumer has access to a second brand if they cannot find the requested goods at one retail store. As a fashion retailer, you cannot risk losing even one consumer; retaining current consumers by offering exceptional customer experience and luring new ones are both crucial goals. 

When there is no inventory available and the shelves are empty, customers have a negative first impression of the store, making customer returns virtually impossible. Stock management is what prevents this kind of situation, making sure you always have sufficient stock to offer and maintain high levels of customer loyalty and customer satisfaction. 

From a strategic point of view, proper inventory management increases efficiency by:

• Minimizing out-of-stocks
• Simplifying processes
• Decreasing inventory costs
• Improving demand forecasting and inventory forecasting
• Improving performance on multiple sales channels
• Preventing spoilage and obsolescence
• Easing supply chain management
• Improving order fulfillment
• Improving profit margins
• Improving customers satisfaction

Best Practices for Retail Inventory Management

Best practices in inventory management set the stage for retailers to achieve higher profit margins, better stock accuracy, reduced expenses, and less shrinkage. So, how then can you control the inventory in your retail space? Here are the top 5 retail inventory management strategies.

Choose your suppliers carefully. You must carefully choose your providers because they are integral to your retail inventory management system. To avoid issues with them and ensure you don’t end up with a bad supplier, conduct a thorough supplier audit, taking into account the cost, stock quality, reputation, and effectiveness of each candidate. Establish early expectations and build a strong relationship with your vendors to manage them effectively. Make it obvious that you and your vendors are partners because your success depends on their efficiency.

Set up stock alerts. You can avoid product shortages at your physical stores by setting up stock alerts. When you set up stock alerts, you can specify a minimum inventory level for each of your products and you will receive stock notifications when the inventory level is getting low.

Apply SKU management techniques. To satisfy customer demand, businesses keep expanding the variety of goods they offer. But that doesn’t imply you should keep excess stock in your retail location, because doing so can actually reduce your business profitability. The practice of SKU (stock keeping unit) management is examining the carrying costs of each SKU item to ascertain which goods are most beneficial to your company. Consider removing some SKUs from your retail store location if they aren’t performing well financially in order to avoid issues like dead stock/dead inventory and phantom inventory. 

Adjust the size of your orders. Make every effort to ensure that you place the right stock order at the appropriate moment to meet demand and delight clients. Setting data-backed levels for your safety stock and par stock, being aware of reorder thresholds, using economic order quantity (EOQ) to optimize order sizes, and using the open-to-buy technique to plan purchases are all necessary.

Invest in inventory management software. Manual inventory management can be time-consuming and error-prone. You can automate the tracking process and save a ton of time by using inventory management software. In order to see your physical inventory count in real-time, look for software that interfaces with your shop POS.

Photo by Korie Cull on Unsplash

How Retail Inventory Management Software Works

If you want to be successful, you can’t manage your inventory with spreadsheets. Retailers who use retail management software and retail point-of-sale systems have a number of advantages over those who do not, from managing daily business operations to maintaining effective store inventory control and enhancing stock management. Here are a few ways that retail software can improve your company’s operations and inventory control procedures.

1. Helps you categorize items in your inventory

Keeping track of the items you already have on hand is the main goal of inventory control. In order to help businesses discover their most significant and popular products, the classification of physical inventories is essential. It stops them from wasting too much time and money handling unimportant items.

The ABC technique, based on the Pareto principle, which states that 20% of a retailer’s inventory generates 80% of its sales, is a popular and efficient approach for classifying inventory. It is divided into three groups according to the ABC classification: Group A, which includes the 20% of products that produce 80% of total revenue; Group B, which includes the 30% of products that produce 15% of total revenue; and Group C, which includes the 50% of products that produce 5% of total revenue.

This kind of categorization is crucial because it enables retailers to determine which products fall under certain categories and how to rank inventory purchase requests. ABC analyses can often be automated by retail inventory software solutions, freeing up retailers’ time for other crucial business processes. To categorize things, the software takes into account variables like storage value and frequency of sales.

2. Helps you track all types of product information

There are several ways to identify a product, such as SKUs, suppliers, lot numbers, barcode inventory systems, etc. However, suppliers frequently assign their own SKUs and attach a different product ID to items, which can make monitoring products and placing purchase orders more difficult.

With the aid of inventory management software, you can generate distinctive product IDs and descriptions and keep track of all kinds of product data. Retailers can quickly and easily identify the products they’re looking for thanks to this, which also enables them to tell apart objects that appear similar on the surface.

3. Helps you track and monitor inventory metrics

Attempting to generate inventory metrics using simply a calculator is not a good idea. Using software to actively track inventory metrics will help you make sure that your inventory operations are efficient. If they aren’t, the algorithm points out where they can be improved.

Key parameters such as the stock turnover ratio, GMROI (gross margin return on investment), item fill rate, product performance, and shrinkage can be tracked via inventory management software. These crucial KPIs will show the general health of your company as well as the effectiveness of your inventory management procedures.

4. Helps you set maximum and minimum stock levels

Software for retail inventory management conducts all the legwork to ensure accurate inventory counts. 

Some systems create automatic notifications for the maximum and minimum quantity levels that are specified by the user, preventing capital from being locked up in excess inventory or slow-moving products and upsetting customers with insufficient inventory, while others automatically send purchase orders to vendors when you reach a certain stock level or at predetermined intervals.

5. Helps support the right inventory management system 

There are many different types of inventory management systems, and as a fashion retailer, it is up to you to decide which one is best for your operation.

As an illustration, some companies decide to track physical counts utilizing the periodic inventory method, which does so at the conclusion of an accounting period (which can be on a weekly, monthly, quarterly, or annual basis). This is perfect for shops that sell products with limited volume and high ticket prices. 

The right retail inventory management software will support your chosen inventory management system, contributing to higher efficiency, less warehouse space, and strong sales. The software also promotes better information sharing between the retailer and the supplier, which helps drive down costs for both, as well as for the customers.

The Bottom Line

Spreadsheets and other paper-based inventory management techniques belong to the past. A proper inventory management system is powered by software.

Effective inventory management is no longer only for the larger retailers. Top retail software like ApparelMagic will make your apparel retail business more efficient – regardless of its size, by assisting you in successfully managing your inventory and making informed inventory decisions. Thanks to fashion inventory management integrations with the industry’s best apps and service providers, it can also be used as eCommerce inventory management software. Retail relies on having the appropriate inventory available at the appropriate time, and the more you can automate inventory-related tasks, the simpler fashion inventory management becomes.