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Mastering Inventory Management in E-commerce: Steering Clear of Stockouts and Overstocks

  • Linkage Retail Solutions Limited
  • Jun 25
  • 2 min read

In the fast-changing world of E-commerce, effective inventory management is essential for success. Issues like stockouts and overstocks can seriously affect customer satisfaction, cash flow and overall profitability, so they must be avoided.

 

What is Stockout?

A stockout occurs when a business runs out of a product that a customer wishes to buy, leaving no inventory to meet the immediate demand.


What is Overstock?

Overstock happens when a business accumulates more inventory than it can sell within a reasonable timeframe, leading to a surplus that surpasses customer demand.


Both of these issues stem from inefficient inventory management, typically resulting from inaccurate demand forecasting, supply chain delays, or incorrect inventory data.


Strategies to Prevent Stockouts and Overstocks in E-commerce


  1. Demand Forecasting

Demand forecasting relies on sales history, market trends (such as those identified through social media, promotions, and seasonal patterns). Accurate forecasts assist merchants in steering clear of stockouts and overstocking, enhancing customer satisfaction and lowering costs.


  1. The Pre-Order Model

In this model, payments are collected from customers before the actual purchase, which is particularly advantageous for international transactions. This method enables precise inventory forecasting. However, for this to work effectively, the merchant must have a certain level of credibility, and the products offered should be appealing, either through competitive pricing or unique features, to maintain competitiveness in the market.


  1. Maintaining Strong Relationship with Suppliers

Merchants need to establish and nurture strong relationships with suppliers through effective communication, mutual trust, and fair dealings rather than aggressive bargaining. Once a solid relationship is established, lead times can be shortened through negotiation, the latest market information can be obtained from suppliers, and in times of product shortages, suppliers are more likely to prioritize customers with whom they share a strong relationship.


  1. 3rd Party Logistics Partner for Storage and Order Fulfillment

A third-party logistics provider (3PL) is an external service entity primarily responsible for warehousing and order fulfillment. When a customer places an order, the 3PL partner arranges the pick, pack, and shipping of the product on behalf of the merchant for order fulfillment. Most 3PL providers utilize advanced Warehouse Management Systems (WMS) to provide real-time inventory updates and integrate with E-commerce platforms, enhancing inventory and order fulfillment accuracy and efficiency.


  1. Utilizing Inventory Management Software

An Inventory Management System is a software solution crafted to efficiently oversee and monitor the entire logistics process and cost management within warehouse operations. It enables merchants to centrally manage their products across the entire supply chain—from Suppliers → Warehouses → Store Shelves or Customers—significantly boosting inventory transparency. This makes it simpler for merchants to monitor and control stock levels.


The primary functions of an inventory management system encompass inbound management, outbound management, product information, and stock quantity control. These functions aim to uphold optimal inventory levels and ensure a healthy and stable cash flow for operations..


Time to Consider….


An accurate Inventory Management System can decrease product costs. By automating processes, the system reduces manual work, allowing merchants to allocate the saved time to marketing and enhancing customer relationships. Are you ready to address your stockout and overstock challenges effectively?


Contact us today and we will provide you with professional consulting and technical assistance. 

 

 

You can reach us by:

WhatsApp: +852 3157 1384



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