How to Manage Ecommerce Inventory

Our independent research projects and impartial reviews are funded in part by affiliate commissions, at no extra cost to our readers. Learn more

The value of the ecommerce space has grown substantially over the last few years. Fueled by developments in technology, infrastructure – and necessity, particularly during the pandemic – it’s no surprise that we now see countless new ecommerce stores ‘opening their doors’ every day.

With powerful – yet simple-to-use – ecommerce platforms now being readily available, it’s easy to think that running an ecommerce store is a walk in the park. In reality, though, managing a successful online store is a juggling act that takes considerable time, effort, and skill.

One often overlooked aspect of selling online is inventory management. This aspect of ecommerce can easily make or break a business if done correctly or incorrectly. So in this article, we’re going to explore the various methods of inventory management – and how to apply them to your store.

What is Ecommerce Inventory Management?

Ecommerce inventory management is pretty much what it says on the tin – it’s all about managing the inventory of your online store. This includes various aspects, such as:

  • Sourcing products
  • Storing products
  • Tracking inventory
  • Shipping orders

Benefits of Managing Ecommerce Inventory Properly

Good inventory management is the cornerstone of long-term ecommerce success. Sure, some online stores may be able to survive for a short while with a poor inventory management system. But as order volume intensifies, cracks will inevitably appear – and lead to considerable issues as they do.

A good inventory management system brings a lot to the table. It:

  • Allows for increased efficiency and reduced costs
  • Reduces the risk of running out of stock
  • Helps improve communication between multiple sites
  • Reduces employee stress
  • Increases customer satisfaction and loyalty
  • Helps eliminate dead stock
  • Allows for optimal stock levels
  • Quickly helps identify missing or stolen stock

More Information

Ecommerce Inventory Management Options

Having the right tools is the first step to ecommerce inventory management success. In this section, we’ll explore some of these options – along with which one’s going to work best for you.

Manual Stock Checking 

You might be surprised by how many stores – despite leveraging advanced technology to sell online – still use manual methods (such as pen and paper) for recording their inventory. For obvious reasons – including human error, the ease with which paper can be misplaced, and the propensity of pens to run out of ink – this isn’t the most efficient or secure method of inventory management!


Spreadsheets – such as Google Sheets and Microsoft Excel – are commonly used ways of managing ecommerce inventory. While it’s not the best option, there are several benefits to this method – particularly when compared to manual management.

When using spreadsheets that are connected to the cloud, multiple employees can access and work in the spreadsheet at the same time. In turn, this makes multiple site management significantly easier. Cloud storage also ensures the safety of your documents, protecting your important inventory management records from getting lost or damaged. Plus, this option is usually far more cost-effective than specialist inventory management software.

However, spreadsheets also have their downsides. As they’re not built specifically for inventory management, they’re often more complex than dedicated software, and lack the same functionality. With multiple people inputting information, they can also become confusing and inaccurate over time.

Inventory Management Software 

Inventory management software is built specifically to help you manage your online store’s stock. These platforms come with an array of functionality, so the one that’s best for you will depend on the ecommerce platform you use, as well as the unique needs of your business.

Some ecommerce platforms – such as Shopify – have their own built-in inventory management systems, although these are often more basic in their functionality than their dedicated counterparts.

Common inventory management software functionalities include:

  • Monitoring stock levels
  • Inventory reporting
  • SKU (stock-keeping unit) generation
  • Tracking inventory from suppliers
  • Order tracking
  • Inventory invoicing
  • Pricing and profit information
  • Monitor returns

Which Management Option is Right for You?

Which of the three options is right for you will depend on your needs, the size of your store, and your business’s goals. With the price of basic technology now super reasonable, there’s little need for manual monitoring of inventory anymore. Spreadsheets offer a much better option for those in the early stages of growing their ecommerce business.

As your business and needs grow, you’ll most likely need to move from a spreadsheet to a specialist piece of software. These dedicated tools are fantastic for larger and more complex online stores, or simply for those looking to increase efficiency, and cut costly mistakes.

If your ecommerce website builder has built-in stock management, it’s always a good idea to use it if costs – or complexity – mean that dedicated management software isn’t a viable option.

Find Out More

Tips for Successfully Managing Ecommerce Inventory

Below, we’ve outlined some top tips to help you ensure your ecommerce catalog management is operating at peak performance.

Audit Your Stock

Regularly auditing your stock ensures that your current records are correct. However good your inventory management system is, there’s usually room for error – especially when humans are involved at any stage.

By scheduling regular stock audits, you ensure that these errors don’t have time to snowball, and potentially become harmful to your business.

Maintain Safety Stock 

‘Safety stock’ is extra inventory that an ecommerce business carries to help protect against external factors, such as growth in customer demand or extended lead times by suppliers.

Calculating how much safety stock you need can be tricky. Many store owners rely on gut feel or a set percentage, such as 20% or 30%. However, a smarter approach involves assessing trends through your inventory management system, and creating a calculation that can more accurately predict your store’s needs.

It’s crucial to monitor safety stock as separate from your normal stock. Otherwise, it can deplete over time, making having it pointless!

Set Reorder Points 

A reorder point is an inventory level that indicates that it’s time to make a new order.

For example, you may know that it takes an average of one month to sell 100 units of a product – and that it takes your supplier, on average, a month to deliver new stock. In this case, you may set your reorder point at 110 units (including a 10% buffer, just in case) to ensure you don’t run out.

Some inventory management software will allow you to set automated reminders for reorder points, making the whole process a breeze!

Build Strong Supplier Relationships 

It’s easy to consider a good supplier relationship as unnecessary. You pay them, after all, so they should deliver what you want.

However, working on good supplier relationships can be highly beneficial when you find yourself in a pinch. For example, if a product you sell suddenly becomes incredibly popular, your supplier may see a massive jump in demand, which they may not be able to meet. When you have a good relationship with your supplier, they’re more likely to prioritize your needs over others – including your competitors!

Planning for Seasonality 

Planning for seasonal spikes and dips in demand will help you manage your inventory more efficiently.

The times of year that are popular for your store, of course, will depend on your products. For example, where an ecommerce store selling flip-flops may see a huge spike in summer, an online business selling Christmas decorations is more likely to see a spike in demand at the opposite end of the year.

Managing Ecommerce Inventory: Summary

A solid ecommerce inventory management system is crucial to continued business success. When you’re aware of your inventory levels and movement, it massively reduces stress, allows for cost-saving through efficiency, and boosts profits by ensuring that you always have what your customers want – so it’s worth getting right!

Ecommerce Inventory Management: Top Tips 

  1. Use a dedicated inventory management system for the best results.
  2. Set consistent reminders to audit your stock.
  3. Plan for increases in customer demand, both predictable (seasonal) and unpredictable (force majeure).
  4. Automate as much as possible, such as setting reminders to reorder when stock reaches a certain level.
Written by:
I’m a content writer for Website Builder Expert. I’m a bit of a business and marketing nerd and love sharing my knowledge and experience to help others achieve their business goals. From complex engineering and brewing to international events and brand design agencies, I’ve worked in marketing roles for well over 10 years now. During this time I developed a skill for turning complex (and occasionally dull) information into exciting, easy-to-understand, and actionable content. I also set up my own content marketing consultancy and launched my own ecommerce business on Shopify.

Leave a comment

Your email address will not be published. Required fields are marked *