If there’s one thing retailers can agree on, it’s that the state of your inventory can make or break your business. Many with a small or burgeoning e-commerce retail company tend to rely on a standard Inventory Management System (IMS) or even use spreadsheets to manually make sales predictions and monitor their products.
This can work just fine for a while – while your team isn’t overloaded, your inventory is simple and sales are slow but steady. But medium/large businesses with multiple warehouse locations, a complex inventory (of core items as well as trend-led and seasonal products), ever-increasing popularity and expanding sales channels thrive when supported by a killer inventory planning tool like Inventory Planner.
At the very least, these companies benefit from the data-led forecasting, in-depth inventory insights and automatic purchasing notifications that a simple IMS just doesn’t provide; offering the only way to scale and stay profitable while maintaining the strong customer service your brand has been built on.
Read on for 5 ways the use of inventory planning software can smash through growth obstacles and open new opportunities for an e-commerce retail business to scale up.
1. Use inventory visibility to boost profitability
When a business gains in popularity and new inventory keeps coming in, it can quickly grow out of control. This can come from forecasting guesswork, an overdependence on ‘safety stock’ (ordering in more than needed to make up for sudden spikes in demand), having too many variants of your bestsellers such as extra sizes, colours and styles that don’t end up selling, or not clearing out dead or outdated inventory until it gathers dust in the warehouse, trapping cash.
With the full visibility that comes with a smart inventory planning tool, you can identify which slow-selling inventory can be shifted, put on promotion or discontinued to release cash; which variants aren’t building your profits, and which stock may be better off moved to a different warehouse location. Inventory is one of the most important investments for a retailer and potentially the biggest blocker to cash flow – having full visibility of what’s in your warehouses is the first step to making profitable decisions in streamlining it and generating cash, allowing you to scale.
Popular online wellness brand Kos sells vegan protein powder – and used Inventory Planner’s powerful insights to release £1.5M in excess stock. While Kos’s inventory shrunk, its sales grew – allowing it to reinvest that cash into growth. President and COO Kevin Dalaeli said:
“We’re seeing explosive retail growth. We’re approaching more than a hundred thousand total points of distribution in retail and we’re also a digital-first business, so we’re gaining there, too.
“For us, the future is all about being able to stay nimble and to build steadily while being ready for the next digital wave – and Inventory Planner plays a key part in that.”
2. Eradicate manual purchasing to free up staff
Staff working in purchasing teams or sales forecasting frequently experience burnout, especially if calculating manual sales forecasts or delving into reams of spreadsheet data during unpredictable sales periods. Trustworthy inventory planning software can help boost staff satisfaction by giving them the right tools to make faster, more accurate purchasing decisions, and swiftly make custom reports with over 200 useful metrics. Not only is this great for staff retention and satisfaction, the time and money saved on formerly manual tasks can be put towards areas of the business that impact growth.
AYBL is a online clothing brand specializing in women’s gym gear. The brand used Inventory Planner to save 100 hours a month on purchasing – the equivalent of three extra hires. Founder and CEO Reiss Edgerton said:
“With Inventory Planner, you can become an instant expert in replenishment – able to do the job as well, if not better, as someone with 15 years experience and in a fraction of the time. As a tech tool, it runs to the heart of our business and has proved critical in helping us achieve fast but meaningful growth.
“It takes care of so much, including automatic replenishment, that I can be quite hands off with merchandising and purchasing. That’s key for me – I don’t want to be getting bogged down by managing day-to-day stuff, I want to be free to focus on the bigger picture.”
3. Use smart forecasting and optimized purchasing
We’ve seen the catastrophic impacts of widespread stockouts and excess inventory all over the retail industry in the last few years. Running out of your bestsellers during sudden sales spikes is certain to halt business growth, as is having thousands trapped in piles of unsold stock (which sometimes accumulates due to blind or over-cautious purchasing). The smart features of inventory planning software – data-led forecasting based on historic sales, automatic stockout warnings and reliable purchasing recommendations – can make inventory planning an easy, error-free experience that takes the guesswork out of purchasing, ensuring you always have the exact amount of inventory that you know will sell.
Other crucial insights can also make purchasing decisions super informed; notifications when you’re at risk of stockouts, which suppliers are performing well, average vs actual lead times per item, and projected lost profits if you don’t replenish in time. With data-driven, automatic insights on your side, the growth-blocking drama that comes from running out of stock, or being buried under it, becomes a thing of the past – and you can quit doing inventory damage control and move towards scaling instead.
US-based oral cosmetics brand, Snow is a $100M dollar business, and used Inventory Planner to beat their issues with stockouts and overbuying. Since taking on its smart features, the brand is able to make better purchasing choices on its route to global growth. Trevor Martin, Vice President of Operations, says:
“As a tool, it can be finely tuned so that it factors in seasonality, trends, promotions and market shifts. It means we can glance at the data and instantly say ‘ok, we need to order 100,000 of that item, not 10,000 – otherwise we’re going to run out in two months’.
“With Inventory Planner on our side, I’m confident we can hit our quarterly purchasing goal this year. Good planning and forecasting will be critical as we expand into 13 new countries, including the UK, which we’re really excited about.”
4. Integrate your inventory planning software with a retail-focused tech stack
Decent inventory planning software should easily integrate with other apps and software you use to run your business, therefore speeding up your processes multiple times over. This could involve syncing with product information apps such as Pimberly to streamline inventory, e-commerce platforms like Shopify or BigCommerce, marketing tools such as Klaviyo, or a flexible retail operations system like Brightpearl.
By connecting inventory to all departments of your business and having the means to cross-reference data in real-time, you can reduce the time and human error that comes from manually consolidating separate systems and see improvements in your business, end-to-end.
5. Use the data to serve nuance across different channels
Data is powerful when it comes to running a multichannel retail business, and how you use it can unlock big scaling opportunities. A mistake a lot of retailers make is seeing ‘inventory’ as a homogenous beast that moves through all channels in the same way. For instance, what sells brilliantly through your website won’t necessarily be your bestseller on Amazon.
With the right technological tools, inventory planning can be broken down via sales channel, demographic or location, allowing businesses to get granular with the reporting that informs their purchasing.
Once you realise the endless potential of where your sales could be amplified and plan inventory accordingly, your route to growth should be significantly boosted.
To see how Inventory Planner can transform your inventory processes and power your business to scale as it has for so many high-growth enterprises, get in touch with us today.