Methods for Improving E-Commerce Inventory Management for better Demand Fulfilment in 2022

Methods for Improving E-Commerce Inventory Management for better Demand Fulfilment in 2022

Jun 30, 2022
Entrepreneur Interviews
Methods for Improving E-Commerce Inventory Management for better Demand Fulfilment in 2022

A lot of eCommerce businesses do not have an efficient inventory management process in place. A lack of an effective eCommerce inventory management system can lead to out-of-stock situations and excessive slow moving inventory in your warehouse.

Out-of-stock situations can severely hold back your demand fulfilment process. Over 70% of online shoppers would search for an item elsewhere if it was unavailable, rather than wait any length of time for it to come back in stock. If you’re facing plenty of overstocking and under-stocking situations, you might need to rethink your inventory management strategy.


eCommerce Inventory Management entails all processes taken up by a business to track, store, source and balance an e-commerce business’s inventory efficiently. A strong inventory management process will help your e-commerce business to efficiently fulfill demand while reducing operational costs.

Why you need a strong inventory management process

It can all be a big guesswork when it comes to ordering inventory and having sufficient stock in time. But, as you may already know, it almost always leads to out-of-stock situations, and in many cases, a lot of unsellable dead stock accumulated in your warehouse driving up costs and taking up precious storage space.

While programs like Excel may have certainly brought about a level of organization to your workflow, it is still not nearly accurate enough or fast enough to keep up with the volatile e-commerce market.

Having an uncomplicated and effective e-commerce inventory management system helps you not only see, but understand stock levels and demand. What we mean by that is, you will not only see what is selling fast and slowly in your e-commerce business, but you will also know, when to order inventory, how much to order, how storage of certain items is affecting costs, how you can optimize inventory levels and storage space to fulfill demand better, and improve order fulfillment.


To help set up your eCommerce inventory management process, we have listed some best practices that will lay an important foundation to make a strong difference in balancing inventory levels and improving your order fulfillment.

1. First, know exactly what’s in stock.

Performing an inventory audit is crucial before you make any major decisions regarding optimizing your inventory management process and choosing the right inventory management software. It helps ensure that you have accurate information regarding stock levels and is the first step in preventing understocking and overstocking.

2. Forecast your future demand.

Improving your supply chain’s agility and speeding up the order fulfillment is dependent on how advanced your inventory visibility and demand visibility is. Having little visibility into your inventory and demand will cause you to take uninformed decisions.

Most eCommerce businesses start forecasting their inventory needs using either mere guesswork or tools like Excel. With only historical sales data and the excel workflow, what you have is a manual process, filled with redundancies and bias leading to inaccurate forecasts prone to human error.

An advanced inventory forecasting tool or a warehouse inventory management tool with forecasting capabilities will dynamically predict demand for all your inventory across any channel, taking into account real time market signals, trends, seasonality and stock availability.

3. Make dynamic Safety Stock calculations.

It is a common mistake among many new eCommerce businesses to have more inventory than they need in hand. It is common, because it makes sense to do this to avoid potential out-of-situations, but the problem is that you are probably investing too much in inventory and driving up other associated costs.

Safety Stock is kept to absorb spikes in demand,  but, an over reliance on safety stock increases costs across your supply chain and will sink your bottom line.

Safety stock calculations is not a one and done process, nor should it be exaggerated. Having an accurate demand forecasting process, that dynamically predicts demand, and adjusts safety stock levels based on changes in demand is the surest way to bring down inventory costs.

4. Classify and Prioritize your Inventory

Categorizing your inventory can help you take informed necessary actions to make your inventory management process more efficient. An easy way to do this is to simply start  grouping your stock into categories that make the most sense to your business.

For example, if you group all your fast moving inventory items, you can start prioritizing this group of items and maintain adequate inventory levels. This will ensure you never run out of stock for the most important, high demand items.

This can also help you optimize your storage space. The group of fast moving items can be identified and placed in an easily accessible area in the warehouse while the slowest moving items are placed in another section. This would bring down the time taken to process the order and improve overall order fulfillment rates.

5. Implement a quicker and accurate replenishment process.

A good replenishment practice involves dynamically changing policies for different SKUs based on demand phases, supplier lead times and inventory levels. Manual replenishment will severely hold back your order fulfillment time, as it is time consuming and you cannot keep with changing demand and other logistical disruptions.

An automated replenishment process will calculate reorder points for every SKU, and will dynamically adjust it based on changes in future demand predictions, and will ensure you are always sufficiently stocked.

6. Automate Warehouse Inventory Management.

A warehouse inventory management software can automate the entire inventory management process, starting with inventory forecasting to inventory replenishment with speed and accuracy. It can be overwhelming to switch from your Excel workflow, but the scope of inventory management is huge, and there are easy to use warehouse inventory management softwares that you can implement.

When looking for the right warehouse inventory management software, choose one that can dynamically adjust demand in real time, takes into account all variables that affect demand, track a product through its lifecycle, and has an uncomplicated workflow.

Warehouse inventory management softwares like Crest, can enable your e-commerce business to leverage planning technology equivalent to an army of planners, and perform all inventory management functions, with just a few clicks.

Share this on:
We are world's first automated inventory planning software
Built by supply-chain experts, it brings the same technology used by large global brands to power fast-growing startups. In short, we make supply meet demand, and then help you grow both.
Get Started With Crest