9 Best Practices For Managing Inventory In E-commerce

Inventory management is among the inevitable tasks involved in running a business. It’s even more mandatory if you’re an eCommerce business owner.

Unfortunately, many eCommerce business owners don’t approach it with the seriousness it deserves and end up bearing unprecedented losses. If you’re serious about running your eCommerce business long-term and watching it grow, you must put more effort into effectively managing your inventory. 

This post will enlighten you on some of the best practices for managing inventory in eCommerce to help you maximize your ROI.  

What’s Inventory Management and its Benefits in eCommerce?

Inventory management is the process of tracking, storing, and organizing inventory to make it efficiently accessible whenever needed. It involves tracking products— raw materials, packaging materials, intermediate products, and finished goods— from the moment they enter a warehouse until they are shipped out to customers.

Inventory management includes tasks like managing orders, tracking stock levels, monitoring supplier performance, and tracking shipments.

As an eCommerce business owner, some benefits you can reap from efficiently managing your inventory include the following:

  • Increased efficiency and productivity
  • Reduced errors in order fulfillment
  • Improved customer service— helps to maintain customer satisfaction and loyalty
  • Accurate data collection to inform decision making
  • Cost-efficiency: Saves time and money in the long run

9 Best Practices For Inventory Management in E-commerce 

The strategies you adopt for managing inventory in your eCommerce business significantly determine your success. 

Here are some of the best practices for efficient inventory management in eCommerce:

  1. Use the first-in-first-out (FIFO) model

The FIFO model is one of the most common inventory management techniques. This model ensures that the oldest items are sold first, and new items are sold last. 

It helps to minimize losses due to spoilage, obsolescence, or expiry. This model will also ensure customers receive fresh, high-quality products on time. 

  1. Study and analyze data regularly

Data analysis can help you make informed decisions about your inventory levels. That’s why it’s important to regularly study and analyze data related to your inventory levels, stock turnover rates, sales trends, customer preferences, etc.

This will help you make informed decisions about restocking and identify potential gaps before they create problems.

  1. Track inventory levels and stock turnover rates

Tracking your inventory levels allows you to stay ahead of demand. You can predict when certain items will need to be replenished. This ensures enough stock is always available without overstocking items or running into issues with storage space constraints.

Tracking stock turnover rates can also help you adjust supply according to customer purchase patterns.

  1. Have an accurate fulfillment system

Ensure you have a system to track customer orders from start to finish and allow easy returns and exchanges if necessary. An accurate fulfillment system will ensure your customers receive their orders quickly and accurately without any issues or delays.

However, if setting up such a system seems too daunting for your business, you can always outsource order fulfillment services to help you handle orders with less hassle.

  1. Set your minimum viable stock

Setting a minimum viable stock level allows you to maintain adequate stock levels and restock items before they run out complexly.

This helps to prevent delays or lost sales due to inadequate supply. It also keeps customers happy and satisfied with fast delivery times, even during peak seasons.  

  1. Use Automated Inventory Management Software

Consider investing in automated inventory management software to stay on top of your competition.  

Automating the process can help you stay on top of your inventory levels and fulfill orders more efficiently. Use inventory management software to streamline processes like tracking orders, forecasting demand, and managing returns and exchanges. 

  1. Conduct Periodic Inventory Audits 

Periodic audits of your warehouse are essential for continuous efficiency. As the business owner, conduct regular audits on stock levels to help you:

  • Ensure every item is accounted
  • Identify cases of human error
  • Track down any lost items
  • Identify and investigate gaps
  • Assess customer demand patterns
  • Update pricing information where necessary 
  1. Create a Quality Control Checkpoint

To maintain quality, implement at least two quality control checkpoints along the order fulfillment chain.

This could include inspecting incoming shipments and randomly testing items from current stock before they are shipped out. Quality control checkpoints ensure your customers receive products that meet or exceed their expectations, which leads to higher satisfaction and repeat purchases. 

  1. Always Have a Backup Plan   

No matter how prepared you are, there will always be unexpected events (e.g., supply chain disruptions or sudden increases in demand).

Such incidences could leave your business without enough stock to fulfill demand. That’s why it’s always advisable to have a backup plan.

For instance, consider partnering with multiple inventory suppliers instead of just one. This will save you time, money, and headache if your usual supplier closes down or cannot supply materials when needed.


Inventory management is essential for any e-commerce business looking to grow and increase profits. The process can be complicated and tiresome if you don’t have enough know-how or resources to handle it. However, with careful planning and strategic decision-making, you can efficiently manage inventory and increase your revenue.

If you’d like to outsource your order fulfillment, Contact Codirect Courier, and we’ll help you handle every bit of it.  

At Codirect, we lift the weight off your shoulders so you can focus on other important aspects of your business, like marketing.

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