How Ecommerce Businesses Benefit from an Efficient Inventory
Management System

One of the biggest challenges of running an eCommerce business is the need to effectively manage inventory. Unfortunately, as your business grows, so does the challenge which, in turn, makes using an inventory management system a necessity.

A Few Perks of Disciplined Inventory Management

Muhammad Ali hated every single second of his training. But his discipline ensured that he went through every second with perseverance which made him a champion. The same goes for any business function and process, especially inventory management, where maintaining physical stock and stock ledgers demands the utmost discipline yet yields several perks in return:

Optimal Stock levels

Overstocking and understocking are twin challenges. Overstocking means you end up paying for goods you don’t need immediately. Maintaining this excess stock means additional costs in the form of warehouse rent, maintenance, labor to safeguard it and more – plus the potential risks of spoilage, damage and theft.

Understocking, on the other hand, is a deprivation of stock quantity. There is a market demand for your goods, but you are unable to meet them. A disciplined inventory management system that works out the right stock levels can ensure your business does not fall into either of the twin challenges. It helps keep stock at optimal levels for the business to function.

Better Management of Carrying Costs

Poor planning of inventory requirements can lead your business to incur the expense emergency purchases. Emergency purchases will cause your business to lose out on the cost advantage, quantity discount as well as several other factors that facilitate a price negotiation. The end result will be higher carrying costs like administrative costs for each order, logistic charges, taxes, duties, etc. for each individual order.

On the other hand, proper inventory management will provide the information needed to plan for the timely procurement, storage and distribution of stock in an organized fashion. This helps keep carrying costs to a minimum.

Quality Maintenance of Products

There is no denying the fact the manufacturing productivity and efficiency get better with the right supply of inventory. Irregular supply of inventory can hamper the smooth flow of inventory and put a roadblock on timely product releases, not to mention the possibility of jeopardizing product quality.

Great product companies always keep a tab on inventory management to maintain product quality. Disciplined inventory management gives room for quality assurance and testing at each individual level before the raw material is sent for production.

Retention of Product and Business Competencies

Poor quality makes your product incompetent in the market. Inventory management helps you to accurately identify, procure and store the right product in the right quantities at the right locations. This makes a world of difference to the production efficiency. In other words, if your business is to meet and exceed customer expectations, you need to have a solid inventory management process in place.

Minimize Technological Obsolescence

Do you know why brands like Apple always produce in limited stocks? Technology-based products like smartphones, computers, laptops, etc. are prone to technological obsolescence within a short time span. They might be in vogue for some time until a more advanced technology enters the market, which usually happens in a year or even less.

In such situations, stocking too much of inventory can backfire. The need of the hour is optimal inventory planning that determines the exact quantity of stock required for a short period of time, ideally for the next quarter or half-year. To be on the safer side, set aside specific sums of money for procuring inventory, but give it time before procuring it in advance. You can always resort to methods like Just-In-Time purchasing to keep the inventory levels healthy without the risk of technological obsolescence.


Poor inventory planning undermines the success of any eCommerce business. Efficient inventory management is key to sustained profitability and adequate supply of inventory ensures order fulfillment levels are always maintained.

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