Ecommerce Fulfilment Services

5 Inventory Cost Mistakes to Avoid

inventory cost mistakes
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When you’re trying to balance between keeping your business stocked and navigating the market’s unpredictable twists and turns, inventory management can feel like a challenge. Get it right, and you’re operating a profitable eCommerce business with happy customers and a healthy profit margin. Get it wrong, and you’re looking at unsatisfied customers, negative profit margins and difficult decisions. 

If you want to keep your business on the right track, or you’re struggling with inventory management, these are some of the most common inventory cost mistakes that can put a serious dent in your wallet.

Check out our blog on ‘Inventory Costs: Types, Formulas & How to Reduce’ 

1. Not Investing in Inventory Management Software 

Managing stock levels manually can be incredibly time-consuming and prone to stock discrepancies, missed sales, and unhappy customers. With the power of cutting-edge technology, inventory management systems can dramatically streamline your operations with valuable automation and real-time insights.

They offer lots of different ways to track inventory costs, including: 

  • Automation: It can automate routine tasks, reducing the likelihood of human error and freeing up your time for other business activities.
  • Real-time Tracking: You gain the ability to monitor inventory levels in real-time for quicker responses to stock changes.
  • Integration: This software seamlessly syncs with your existing eCommerce platform and accounting systems, eliminating the need to juggle multiple platforms or manually enter data. 

2. Ordering Too Much Inventory 

Overstocking is a trap many businesses fall into, thinking extra stock is a good buffer. But it can seriously hurt your bottom line with tied-up cash flow, increased storage costs, and expired goods. The main culprit? Ordering too much to prepare for potential demand spikes that never materialise.
If you’re sitting on a surplus of slow-moving products, you can get creative with marketing pushes or discounts to move that inventory. But the real solution lies in smart inventory management software. These systems analyse past data and trends to predict optimal order quantities, allowing you to embrace Just-In-Time (JIT) inventory and only order what you need when you need it. No more overstock nightmares – just a lean, mean inventory machine.

3. Not Demand Forecasting 

Skipping demand forecasting is an inventory management blunder that leads to inaccurate stock levels, unnecessary costs, and lost sales. Proper forecasting means you’ll have enough stock to meet demand without stockouts

If you’re not forecasting demand yet, it’s time to tap into those predictive powers and keep your inventory on point. Analyse past sales data, competitor activity, market trends, and seasonal fluctuations to predict optimal order quantities. If your business sells scarves, you won’t be ordering a lot of stock in August! Forecasting allows you to avoid excess inventory costs and stockout losses, maintaining a healthy cash flow. 

4. Understocking 

Understocking, the opposite of overstocking, may seem like a smart cost-saving strategy, but running out of stock due to understocking leads to backorder chaos, missed sales opportunities, and a straight-up loss of revenue.

When customers can’t find what they need from you, they’ll likely take their business elsewhere – damaging your brand’s reputation and customer loyalty in the process.

To combat the understocking blues, keep a buffer stock of high-demand items on hand to handle any unexpected demand spikes (assuming you have the warehouse space, of course). 

When forecasting demand, leverage data analysis tools to study sales patterns and predict future needs. Keeping your inventory levels aligned with demand is the key to avoiding overspending while minimising the risks of both overstocking and understocking nightmares.

5. Underestimating the value of working with a 3PL

For eCommerce businesses struggling to keep up with demand or facing growth constraints, going it alone is no longer a viable option. Attempting to scale operations solo often leads to inventory nightmares like overstocking, understocking, and negative customer reviews.

By partnering with an experienced 3PL provider like Delta Fulfilment, you gain access to a wealth of expertise, cutting-edge technology, and an extensive logistics network. This powerful combination allows you to streamline inventory management, avoiding common pitfalls that can drain your resources.

With a 3PL handling your inventory needs, issues like excess stock tying up capital or stockouts leading to lost sales become relics of the past. Our data-driven approach maintains optimal inventory levels, minimising unnecessary storage costs and maximising sales potential.

Take Control of Your Inventory Costs with Delta Fulfilment 

Delta Fulfilment provides customised solutions that cater to your business needs, from overstocking to a lack of inventory management software. Our cutting-edge technology seamlessly integrates with leading eCommerce platforms, ensuring real-time inventory sync between your online storefront and warehouse operations. This powerful integration streamlines order fulfilment and enables automated reordering based on sales data, saving you time and money.

If you’re looking to take control of your inventory costs and streamline your fulfilment process, contact us today. We’ll save you from countless inventory cost headaches (and potential bald spots from pulling your hair out).

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