What Is Inventory & How To Manage An Online Store Inventory
An inventory is a detailed record or a list mainly used to keep a tab on goods and materials you have in stock at your business. It’s a system used by all sorts of businesses, ranging from manufacturing to industrial factories and more.
The inventory also takes a major role in retail businesses, stores, and eCommerce businesses as well. In this post, we’ll explain the different aspects and definitions related to a business inventory, including:
- What Does An Inventory Mean?
- What’s Included In An Inventory?
- How To Manage An Inventory For Online Store
- Best Software For Managing An Inventory
What Does An Inventory Mean?
Every business sells some sort of product. For many online stores and retail stores, it particularly involves selling physical goods. The inventory refers to all the stock you have of the products you sell.
Simply put, inventory is a list of all the items you have in stock. It can also include the stock of all the materials you use to create your products or the products you’re currently developing.
For example, if you have a store that sells clothing items, then all of the clothes you sell and have in stock should be included in your inventory. But, if you’re also making those clothes by yourself, then your inventory will include all the materials you use to make the clothes and the items that are already being made.
The general idea of having an inventory is to keep track of your stock. It greatly helps you manage your stock and avoid running into problems such as processing orders on your website when you’re out of stock. Or taking in batch orders when you don’t have enough materials.
What’s Included In An Inventory?
An inventory can contain many different types of items and goods. As we’ve explained earlier, it depends on the type of store or business you have.
The followings are some of the items and categories you could track and include in your own inventory.
- Goods: These are all the finished products you have in stock. It should include different variations of the products you have in stock as well
- Materials: All the items and materials used to produce goods
- In Production: This category includes products that are currently in development
- Items In Transit: All the products, materials, and goods you import from other distributors, factories, and overseas
- Returns: Items that are returned by customers. It can also include items or materials you return to manufacturers
- Reseller Items: Items you have on sale on other platforms (eg: eBay, AliExpress, etc)
In addition to the items and stock, you should also add all the costs in your inventory including tax, shipping costs, transport costs, etc.
How To Manage An Inventory For Online Store
It doesn’t matter if you have an online store selling a single product or a massive retail store selling multiple products, every store should have an inventory. It’s the best and the most efficient way to keep your business up and running.
Take a clothing store, for example. A clothing store usually has separate items for different genders and for children. And each of those clothing items come in different sizes and colors. Keeping track of such stock will be a nightmare without an inventory.
How exactly do you manage your inventory? Well, there are a few different approaches you can take.
On-Demand Inventory Management
One of the easiest ways to cut down your inventory management is to create a strategy to develop and deliver products according to your current orders, pre-orders, and demand.
With this method, you’ll only have to order materials that are required to make a batch of your product. For example, you can order materials to make 100 handbags at a time and ship it out to your customers.
In fact, there are on-demand warehouse and inventory management companies that handle this type of orders. It basically removes the need to have an inventory of materials and stock. However, it will put pressure on you when it comes to keeping up with the demand.
Another great way to manage your inventory stock is to setup a barcode system for your products. This is how many retail stores manage their inventory. With a simple scan of the barcode, it allows them to update the inventory and even know how many items are left in the inventory. Barcode systems are easier and cheaper to setup as well.
Use A Software
Managing an inventory is not something you should do with pen and paper. Even using an Excel spreadsheet is a bad idea. Instead, consider using inventory management software. These software allows you to easily track and manage your stock using your computer or your phone.
Best Software For Managing An Inventory
Here are some of the best software you can use to manage your inventory whether you have an online store or a brick and mortar store.
1. ATUM Inventory Management (WooCommerce)
- Price: Free
One of the many benefits of setting up an online store using a software like WooCommerce is being able to add any option or feature you want using plugins. ATUM is a simple yet powerful add-on for WooCommerce that lets you easily manage your inventory directly from your WordPress dashboard.
The plugin includes all of the options you need to create a fully organized inventory with suppliers, SKUs, locations, prices, and more. You can also easily add and edit items as well.
- Price: $29 per month
Shopify has a built-in system for managing your inventory. However, it’s mainly limited to managing the inventory of your product stock and not for materials.
But, with the help of Shopify apps, you can make the default inventory system much more useful. For example, there are free apps that allow you to add stock alerts to notify customers when new stock is available, sync and update products directly from suppliers, and more.
3. Square POS
- Price: Free
Square’s Point of Sale system is actually an eCommerce solution made for retail stores. With this system, you can accept payments anywhere using the Square Reader magstripe. It’s a simple gadget that fits into the headphone jack on your phone or tablet for accepting credit card payments. With this system, you’ll be able to accept payments on delivery as well.
Square POS also includes a very simple and beginner-friendly system for managing inventory. This is a great software you can use as a first step to add eCommerce solutions to a brick and mortar store.
- Price: Free or $99 per month
VendHQ is similar to Square POS and it also comes with tools for point of sale. But the best part of this app is its store and inventory management tools, which lets you easily organize your inventory in product varients, barcodes, SKUs, and more.
This system is most suitable for a brick and mortar store or retail business. The software also works on phones and tablets as well.
Even though it’s now easier than ever to start an online store, as a businessman, it’s important to invest some time to learn about how your store operates and what kind of steps are involved in running your business smoothly.
So keep learning and search for ways to make your business better and more profitable. If you’re still not sure how to start an online store, check out our complete step-by-step guide on how to setup an eCommerce store all by yourself.