You’ve built a growing Shopify store and want to take your business to the next level? Want to know your costs? Do you need a way to manage purchasing and vendors? Would you like to forecast sales and inventory needs so that you have the right products in the right place at the right time?
Of course you do.
Inventory Planner is a Shopify app that can do all of that – based on sales history from your store – to put you in charge of your inventory.
See Your Costs
For all of Shopify’s many features and capabilities, one of the most head-scratching things about the platform is that there is no field to input and track costs. So how can you track your costs?
Inventory Planner can track costs for your products and variants. If you order from multiple vendors that have different prices, you can also see those costs.
Same variants, different vendor, different prices:
Your bookkeeper will also thank you when you can report total stock costs by the day. You can use this for updating your Balance Sheet at the end of the month.
Not knowing costs ties one hand behind your back. You have to know costs to get the most out of your business. Inventory Planner puts you in control of that information.
Know Your Margins
Now that you know your costs, it’s time to dive into margins. Afterall, if you’re not making a profit, eCommerce is an awfully expensive hobby!
With cost prices available, you can now see profit, markup and forecasted profit.
You can sort variants to see what is making the most profit…
…And what’s not.
Forecast Sales and Customer Demand
Seeing sales history is helpful, but as a business owner or purchasing manager, you need to be prepared for the future. Forecasting can help anticipate demand from customers and supports your efforts to manage cash flow.
What factors go into a forecast?
The forecast is the projected sales in units for a set period of time. The forecast is computed using:
- The sales velocity – the rate of sales excluding out of stock days.
- Seasonality – Is the sales trend best considered using performance from the most recent months or the same time the prior year?
- Sales trends – are sales steady month over month or are they increasing?
Replenishment Recommendations
Now that you have a forecast, you can see replenishment recommendations.
Filter discontinued items from the forecast
To create your store forecast, first filter items that are discontinued. Other non-replenishable items to filter may include dropshipped items because you do not need to order quantities to have on hand.
Vendor lead time
What is the amount of time from placing a purchase order with your supplier until those items are received in your warehouse? That is the vendor lead time. The replenishment needs to consider both lead time and future sales forecasted for your store. After all, it doesn’t do you any good to get a month’s worth of inventory three weeks into that month. The replenishment recommendation helps you work ahead so that you have products on hand when you need to sell them.
Days of Stock
How much inventory should you have on hand and how much time should that cover? When determining the days of stock, think about:
- Stock turnover – how quickly can you convert the purchase of that stock into cash that can be reinvested into other opportunities for your business?
- Lead time – generally speaking, you don’t want shorter ‘days of stock’ than you have lead time. If your lead time is 14 days, your days of stock should be at least 14 days.
- Space – how much room do you have on hand in your store or warehouse? If you have a large space, we don’t advocate filling it with inventory just because you have the room. Space considerations may be more relevant for when you’re short on storage for your stock.
Current stock level
Replenishment recommendations must take into account how much stock is already on hand. Is there enough inventory to cover your days of stock? If so, then no replenishment is necessary.
Manage Purchase Orders
As your store grows and you add products, you may also need to manage several vendors. Inventory Planner uses your sales forecast and vendor lead time to create replenishment recommendations. You can easily convert those recommendations into purchase orders and send them your suppliers all within Inventory Planner.
Managing several vendors, you’ll need to keep track of what purchase orders are open, closed and which ones are partially received. Sort, filter and view purchase orders to see ordered products.
Operational Organization
Another benefit of entering all vendor information into Inventory Planner is that it makes operational details available to anyone in your company who uses Inventory Planner. Do you need to hire someone to take over purchasing? Does your purchasing manager ever take a vacation? Do you plan to sell your business? With vendor pricing, terms and discounts in one place, your business is stronger operationally than if that information is only in someone’s head.
Identify Overstock
Creating a sales forecast shows what customer demand is likely to be in the next 30 days. With future stock needs identified, what if you have too much stock on hand? You need to know which items are overstocked and how much overstock you have.
Overstock is the inventory on hand beyond the days of stock for your forecast period considering your sales velocity and seasonality. For example, if you are forecast to sell 100 shirts in the next 30 days, but you have 300 on hand, you have 60 days of overstock. Inventory Planner shows exactly how much overstock is available in your warehouse.
Inventory Planner also provides insights to help you identify what is contributing to the overstock. Connecting your account with Google Analytics can show if there is no traffic or low conversion rates on that product page on your website.
Now that you have identified what and how much inventory is overstocked, you can make plans to clear out excess inventory to create cash for your business.
In-depth Reports for Better Analysis
While Shopify provides some limited reporting capability, you need more information to better analyze how your store is doing and what should happen next.
Inventory Planner provides an array of reports including:
Viewing stock assortment by vendor, product category, or even tags you assign to SKUs in your Shopify store.
One place to see what products are on order (in transit from a vendor) and the value of those items on your purchase orders.
Year over year analysis for your entire store, by product category, or even on a SKU-by-SKU basis.
Bottom line
Shopify is a user-friendly platform to create a beautiful eCommerce site. Inventory Planner is a powerful partner for Shopify stores. With sales forecasting, replenishment recommendations and in-depth reports, you have the tools to make better decisions to optimize your inventory and build your business.