December 7, 2023

Inventory Management Challenges & Solutions

70% of customers would rather look for a not-in-stock item in the competitor's inventory than wait until it’ll be back-ordered.

Written by
Serhii Uspenskyi

Table of Contents

What’s the point of having things if you don’t know where they are or how much do you have or even doubt if you actually have them. While in personal life some sloppiness in this aspect is fine in business it can lead to anything but a failure.

If you think that you can handle your inventory without the strict system you should be able to answer the following questions without any doubts:

  • During the last supply were the exact required amount of goods delivered to your warehouse?
  • How many items are on the shelves or in storage right now?
  • How would you rate your staff considering goods handling and reliability?
  • What items need to be restocked soon? What amount?
  • How many items are waiting for shipment?.. And so on and so on.

Perhaps if you have only one or few items to sell with some skills you can handle that with a couple of spreadsheets. But even then the whole process is much less secured to data loss and simple typos that can result in the best case scenario a few lost hours to find that mistake.

Bringing in the intelligence to this business aspect is not an option, but a must-do. Inventory is the basis of your online store that’s why it should have a solid organizational structure and efficient management to ensure proper operation of your eCommerce business.

Inventory management basics

The approach implies taking control of items that are the subject of a potential purchase. All other things like equipment, business supplies, etc. should have a separate tracking system to avoid overcomplication and confusion.

The ultimate goal is to provide the business owner and management with 24/7 knowledge about the following characteristics about each available item:

Type. The official product name including a specific identification label (for instance, code).

Diversity. Available product variations (color, material, size and other features).

Amount. The exact total amount as well the possessed quantity of each subcategory.

Location. The place where these goods currently are (warehouse, store, road, etc.).

Price. The present number established by actual quotation and politics.

The aim could be achieved only with the integration of a digital inventory management system that allows automating the significant part of routine tasks including reporting and being more transparent and efficient in order fulfillment and customer support. It also helps to define the products to focus on using diverse business remedies including marketing.

Another advantage is the ability to be more precise in strategic planning to discover gaps in existing processes and growth opportunities at the appropriate time. Having data visualized with an inventory management dashboard can help uncover current trends and actual customer demand.

Inventory management goals

However no matter how advanced the chosen digital solution is it won’t help if your inventory doesn’t have physical organization and well-established management workflow. All of the successive aspects should be properly taken care of in advance:


Assigning available storage space for certain items is all about prioritizing. Though the more clear guidelines you have once you establish efficient data flow processing initially you should have the vision of products that you’ll place your stakes on.

Evidently, they deserve initially bigger room to be filled if it does pan out. Taking the approach of an equally small amount for all items can work out for testing. But in the long run with raising numbers, it can lead to dead stock and not timely gaps in the inventory.


Item to item, label to label. Searching for hours for required goods to be shipped, recounted or validated it’s irrational time spent. Besides not every day and situation gives you the possibility to be wasteful with this valuable resource.

The proper organization means that you and anyone of the dedicated staff can easily identify lying around items, access or move them in any amount. Minimizing the efforts required for these tasks allows focusing and improving the store running operations.


Any logistics-related processes should be maintained since they are significantly affecting the warehouse workflow and inventory in general. The internal system should be efficient enough so it won’t become vulnerable during any new integrations.

Both in and out operations should be tracked and controlled whether you own the storage by yourself or it belongs to the separate business (dropshipping). The inventory metrics should be updated after each change to avoid gaps.


Poor management is not the only reason for losses in items, money and time. The low-level of security and staff raising the related risks by opening the possibilities for thefts, lesions, and damages that not always can’t be timely uncovered.

That’s why setting security systems, as well as proper recruitment and training of staff, are no less important for the inventory management optimization. If you outsource the product handling you should be sure in your partner's trustworthiness since in any way you remain the responsible party from the customer angle.

The inventory obviously significantly affects your store revenue. It’s always more efficient to resolve the reason than constantly fight against its consequences. By repairing gaps in the fundamental aspects like this one you establish a solid ground to operate and grow.

Inventory management techniques

Let’s go over more specifically about approaches and techniques you should apply not to have to deal with customer displeasure and headaches.

1. Maintain and forecast

Constant not-in-stock signs will fill only your book of complaints. Therefore the IM 101 is setting the minimum amount (Par Levels) for all goods after reaching which they should be restocked. Such precaution allows operating while the filling process is on.

Another technique to apply is Just-In-Time that implies the constant replacement of goods that have been already sold. It allows concentrating more on order fulfillment than the inventory management process. However, it’s mostly appropriate for small business due to rising transportation costs.

However, in some cases, even these approaches won’t allow handling the situation without losses. That’s why you shouldn’t avoid demand forecasting to make adjustments to the set number as well as checking and validating the current amount of goods.

2. Prioritize and centralize

Ordering other items just because at the moment a certain kind is selling well it’s not as cost-efficient as you might think. As well as understocking can be comparatively equal in harm for your business making you reevaluate existing approaches.

Applying ABC analysis allows focusing on your prior goods without neglecting other items. It implies labeling items with the first three alphabet letters - A (best-sellers), B (avg sales, high-cost storage), C (all remained) - and taking care of them in the presented order.

It’s important to have a unified centralized system to avoid mistakes and misunderstandings. Digital solutions allow ensuring that even if you don’t have established infrastructure using cloud storage enabling not-location sensitive access.

3. Audit and reconsider

Inventory management eCommerce software isn’t an almighty pill that allows for avoiding all possible mistakes. Being maintained by humans it’s an impossible level to reach. That’s why regular examinations should still take place after the integration.

Whether you follow FIFO strategy (First-In-First-Out) or any other regular checks allow not only ensuring conformity with it but prevent estimated and unexpected risks. If it’s possible you should also arrange external audits to eliminate the pre-judgment on your part.

These inspections aren’t just about counting and reporting. All of them will be useless if you don’t process the received data to identify the weaknesses of the existing system and make adjustments to improve its workflow and management.

4. Communicate and evaluate

Digital solutions allow raising productivity by minimizing the required arrangements including verbal. However, communication is still the way to establish efficient cooperation within staff and departments as well as between you and partners or customers.

Finding the balance between flexibility and your needs is a prior goal in this aspect. Relationship maintenance should be thoughtful and timely to build trust and long-term engagement with benefits for both parties.

Nevertheless, you shouldn’t follow constantly apply the same approaches to take advantage of inventory management benefits constantly. You should regularly analyze the situation and select the options (for instance, switch to dropshipping) that allow you to improve your services providing.

Being the result of the digital transformation of retail, eCommerce operations still require optimization since mostly only stores got to the digital space, not the workflow. Being available 24/7 marketplaces require even more precise maintenance to satisfy customers.

Any retail business has inventory management challenges that should be on the top clauses of the to-do list. Properly placing, organizing, securing and of course timely restocking the items are the necessary basics to ensure the appropriate level of business running.

Customer retention is the key

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What are the most relevant factors to consider?

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Don’t overspend on growth marketing without good retention rates

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What’s the ideal customer retention rate?

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Next steps to increase your customer retention

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