Multi-Channel Inventory Management: How to Solve the Most Common Problems and Avoid Customer Complaints

Multi-Channel Inventory Management: How to Solve the Most Common Problems and Avoid Customer Complaints

We’ve written before about the massive shift towards multi-channel ecommerce. Simply put, it’s about understanding what sales channels to amplify and limit throughout your marketing mix.

With avenues for selling expanding faster than expected, it is high time merchants started multi-dimensional brand experiences.

People often fear cannibalization, but that’s essentially missing the mark. When you identify your most valuable customers and let them shop wherever, whenever and however they want, you ethically bait them into spending more (channel diversity is the norm for a majority of shoppers). Findings from a Fluent survey are a testament to this statement.

Image via Business Insider

47% of consumers who engage with merchants across 10 or more channels buy from their favorite merchant’s site at least once a week. In contrast, only 21% of consumers who engage across one to four channels buy once a week.

In a nutshell, multi-channel retailing can be a fantastic opportunity for your business … until the complaints start rolling in.

“The product was in-stock when I ordered it, and now you’re telling me it’s out-of-stock?!”

“I paid for this on your website and came to pick it up in-store. What do you mean it’s not here?!”

“Your eBay store lists six items in stock but your Amazon store says out-of-stock. What gives?!”

Successful multi-channel ecommerce involves more than simply listing products on a variety of platforms. It requires an effective multi-channel inventory management solution as well.

For most retailers, it’s hard enough keeping track of inventory and orders when selling on a single platform.

But when you’re selling the same products on a Shopify store, Amazon, eBay, Etsy and in physical locations, inventory management can be a nightmare.

A joint study by CapGemini and Oracle found that 29% of retailers lack the inventory visibility across stores, vendors, and warehouses in order to accurately promise multi-channel fulfillment.

Image via Capgemini

Without proper inventory management, you risk angering your customers with out-of-stock messages, losing money due to overstocking, increasing delays and cancellations due to inefficient fulfillment processes, and problems with human error.

It’s estimated that over-stocks and out-of-stocks cost retailers $1.1 trillion globally in lost revenue, with up to $222.7 billion of that being caused by data disconnect and systems problems such as not sharing inventory information across entire enterprises. Yet despite the obvious importance of inventory management, it’s amazing to think that up to 43% of retailers still rely on pen, paper, and spreadsheets for tracking inventory.

Fortunately, multi-channel inventory management software allows businesses to easily track, manage and organize inventory sales, purchases, and production across all channels. Merchants no longer need to rely on pen and paper or Excel spreadsheets to track inventory.

Instead, you can use systems based on barcodes and radio-frequency identification to see when shipments come in, where they are stored, and when they have been dispatched. Most modern multi-channel inventory management solutions are cloud-based, giving businesses 24/7 mobile access to their inventory data.

Let’s take a closer look at some of the benefits of multi-channel inventory management software.

Easily Synchronize Inventory Across Channels

Inventory is arguably the most important asset to your business. If there’s no inventory going out, there’s no revenue coming in.

However, without knowing how much inventory you have, where it’s located, and what you’ll need to fulfill both current and future orders, it’s almost impossible to run a profitable business.

Multi-channel retailing makes managing inventory an even greater task. At any one time you could have a large variety of products being sold on a number of different platforms, making manual updates of inventory levels virtually impossible.

In a simple scenario, your business might sell a single product on three platforms - Amazon, Shopify and eBay. If a customer purchases two of your products from your Amazon store, you have to log in to both your Shopify and eBay stores, manually adjust the stock levels for your product, and then record the changes on a spreadsheet.

What happens if the customer cancels the order?

You’ll need to log in to each of the platforms and manually adjust the levels again — a frustrating and incredibly inefficient task — and this is just for one product.

Now imagine the poor employee who has to keep track of thousands of SKUs across a dozen different sales platforms by logging into each platform, manually adjusting stock levels for each product, and recording all the changes on a spreadsheet…

For businesses that still rely on manual multi-channel inventory management, the difficulty involved in keeping inventory synchronized across multiple channels may also stop them from expanding their sales to include lower volume channels. If you’re having trouble managing inventory on Amazon, Shopify, and eBay, it’s hard to consider selling on a marketplace like Etsy, despite the possible financial gain.

For instance, Chubbies — the men’s short-shorts company — acknowledged that keeping their customers satisfied is more complicated than hilarious marketing campaigns and radical shorts. Lack was inventory visibility was one of the barriers as the company expanded into new channels.

Incredibly, Chubbies got itself out of a tight spot with the help of Stitch Labs.

Stitch Labs’ real-time inventory management solution Chubbies to move products from their warehouse to their virtual warehouse, which provided them with a threshold of reverse and synchronized inventory. With this preventive measure, they were able to stop customers from ordering something that’s out-of-stock. Also, on their highest volume day, they reduced backorders by 93 percent from the previous year.

Multi-channel inventory management solutions like Stitch Labs are allowing merchants to sync inventory, improve sales, and reduce the time spent in managing inventory.

Avoid Overselling and Out of Stock

Inventory turnover is a key metric for any business.

You want your products to be flying off the shelves as fast as possible, not sitting there sucking up your working capital and taking up valuable warehouse space. It’s important to have the right balance of inventory — not too much, not too little — and to do this you need to know how much product you’ll need and where to allocate it.

For a multi-channel merchant that wants to function at maximum productivity, high inventory turn-over is essential.

It doesn’t make sense to keep a large amount of inventory for every product offered. The overhead required for purchasing and storing large amounts of stock would be very costly, and you can never be completely accurate when predicting the demand for each product.

Because of this, multi-channel retailers will often keep limited stock on hand. For example, a furniture retailer may list five units of one sofa on Amazon, five units on eBay, and five units on their Shopify store, while only having a total of 10 units in stock in their warehouse. With an inventory management system that relies on manual updates, this situation has the potential for overselling.

As the actual number of units in stock decreases, the potential for overselling increases. When selling the last unit of one specific product across a number of channels, you may sell the unit on one channel and receive orders on other channels before you have time to update the stock count. You’ll have to disappoint your customer by explaining why the product they ordered is no longer available. And that often results in lost customers, as indicated by a Stitch Labs’ survey.

If you’re a multi-channel sports retailer, for instance, it would be useful to know exactly how many basketballs were sold on each of your channels during December for the last five years. This would allow you to make informed purchase and marketing decisions for the coming Christmas season.

For a business that relied on inventory management with spreadsheets, collecting this data would probably require many hours of work. With inventory management software, you can collect all the data from all your channels with just a few mouse clicks.

To avoid overselling and out-of-stocks, it’s a good idea to invest in a multi-channel inventory management solution. It helps prevent stock-outs by setting reminders and placing automatic re-orders once stock reaches a certain level.

Also, an efficient multi-channel inventory management software will allow you to scale up during a rush or holiday season and scale down during the off-season. As a result, you’ll be able to reduce costs by not purchasing inventory until it’s needed.

To illustrate, LowCarb Canada — a health food retailer that provides low carbs groceries alternatives for Canadian consumers — used Shopify Plus Technology Partner Stitch Labs to avoid overstocks and out-of-stocks.

With two Shopify websites, two brick-and-mortar outlets, and over 2,000 SKUs, the VP of Purchasing, Andrew Singh, was spending 15-20 hours a week on inventory management. He was making and updating purchase orders manually, some with 400 different SKUs, and was ballparking order estimates to save time.

While ballparking was necessary with so many things going on, it created a scenario where stockouts were more frequent than the company would have liked. Andrew knew there had to be a better tactic to order goods strategically and forecast demand based on historic estimates.

The company selected Stich for its Shopify integration. Lowcarb Canada used Stich’s sales velocity report feature to make intelligent purchase decisions. Andrew revealed:

Using forecasting with Stitch allows our warehouse to run out of products at the same time. I’m buying intelligently and saving money by consolidating our shipments.

Forecasting accuracy becomes even more important as multi-channel retailers scale and subtotals increase by a staggering amount – stock-outs can be even more costly at these levels, so a multi-channel inventory management solution is critical.

Have Appropriate Supply Nearest To the Customer

As a multi-channel retailer, one of the keys to reducing delivery times and associated shipping costs is making sure you ship orders from the closest location to your customer. That location could be an additional warehouse, a retail location or even a dropshipping partner.

Local fulfillment enables you to reduce delivery time to customers by reducing the physical distance between product and customer. While this is vitally important for international customers, it can also help reduce delivery times across wide geographical areas such as the United States, and fragmented geographical areas such as Japan or Indonesia.

Multiple fulfillment centers also help reduce transportation and labor costs associated with delivery, allowing you to pass the savings on to customers by lowering prices or offering incentives such as free shipping.

Amazon, Google, Walmart, Best Buy and other big retailers are great examples to follow - they have hundreds of fulfillment centers around the world, enabling them to save money and offer faster shipping times. But smaller merchants can benefit from warehouse and supply chain optimization as well.

Unfortunately, for multi-channel retailers who rely on manual inventory management, shipping from multiple locations is a big hassle. In addition to the problems associated with manually monitoring numerous sales channels at the same time, communication between staff members at each location would be chaotic. In the best case scenario, just a single order would require multiple phone calls or emails to communicate stock levels, share order and shipping details, and adjust stock levels once the order has been dispatched.

A multi-channel inventory management system allows you to reduce delivery times to a minimum by allowing you to integrate an OMS (order management system). An OMS allows you to check stock levels across multiple locations, pick a fulfillment center closest to your customer, send order details straight to that location, and have stock levels automatically update across all your channels.

This diagram, based on a survey by Software Advice, clearly depicts how an OMS impacts a multi-channel retailer’s business (it even has a positive impact on inventory visibility). Therefore, a multi-channel inventory management solution supports third-party integrations that help optimize the fulfillment process, and keep your inventory, irrespective of all your channels, in order.

Rohr Remedy, an Australian company which sells skincare products based on traditional bush medicines, was having trouble managing inventory across their retail, wholesale and online channels. They were looking for an inventory management system that could easily integrate with their current systems such as Xero and Shopify, and eventually decided to work with Trade Gecko.

According to Emily Rohr, the founder of Rohr Remedy, the benefits of switching to a multi-channel inventory management system were startling:

We’ve definitely, in using Trade Gecko, reduced the amount of time we spend on inventory, and that’s made a massive difference in us being able to supply our customers … we’re getting more orders because we’re more streamlined.

The Multiple Warehousing feature has been particularly beneficial for reducing delivery times and keeping customers happy, as it allows the company to allocate every order to where it has to go from, based on location.

Simple and Fast Multi-Channel Inventory Management Solutions

Incredibly, incorporating a multi-channel inventory management solution into your business is surprisingly simple. Also, most of the top multi-channel inventory management providers offer simple one-click integration with Shopify Plus. Below are some options.

TradeGecko is a powerful cloud-based IMS that combines all your sales channels, locations, and currencies for easy management of products, orders and customers across multiple Shopify stores. It integrates with popular bookkeeping software such as Xero, QuickBooks Online and ShipStation, allowing you to send quotes and invoices with built-in credit card payments directly to your customers. The TradeGecko mobile app allows you to create and manage orders, view detailed reports, and track sales trends while on the go.

Stitch Labs is an inventory operations platform that helps you centralize your orders and inventory across all your sales channels, with the goal of streamlining multi-channel operations, boosting productivity and increasing profitability. The IMS lets you avoid overselling and stock outs by creating alerts and automatically generating orders and stock adjustments based on real-time data. With Shopify Plus insights, you can easily identify which products and channels are driving profitability, while accurately responding to forecast and demand.

Orderbot is an order and inventory management system that allows you to consolidate orders that flow from multiple channels with clear inventory and fulfillment visibility. It contains all the key functionality you need, such as multi-currency, integrated payment gateways, a fully published API, and import/export capabilities. Whether you have a single or multiple warehouses, multiple Shopify stores, B2B channels, or even marketplace integration with Amazon, Orderbot’s focus on visibility helps you keep up to date with both current and future orders.

Throw Away Your Pen and Paper

Whether you’re running an ecommerce store that is currently selling products across multiple channels, or you’re thinking about reshaping your business to incorporate multiple channels, it’s important to recognize that manual inventory management is no longer sufficient for proper inventory management.

Cloud-based multi-channel inventory solutions can help you organize your business, keep your customers happy, and give you the best chance for future growth.

About the Author

Dan Virgillito is a storytelling specialist, blogger and writer who helps digital startups get more engagement and business through online content.

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