Importance of Inventory Management in the Marketplace
November 15, 2023
Online marketplaces have transformed shopping behaviors. With the rise of eCommerce, more buyers opt for online shopping than ever before. In 2022, 75% of consumers shopped online at least once a month. Experts estimate that global online retail sales in 2022 were over $5 trillion, showing the massive impact on shoppers worldwide.
The endless online marketplaces give consumers many options. Businesses need seamless online experiences and top customer service to set themselves apart from competitors. One crucial aspect of marketplace success is inventory management. Your management approach directly impacts customer satisfaction and overall supply chain efficiency. Enhancing your techniques can help your business optimize its success.
Why Is Inventory Management Important for the Marketplace?
Your online marketplace reflects your products and services to customers. It also displays your brand image and the general values your business cares about most. Strong inventory management can help you maintain the most accurate and helpful site possible.
Here are four other reasons behind the importance of inventory management:
1. It Minimizes Costs
Effective inventory management approaches can cut costs from many different sources. The two primary cost savings are in storage and waste:
- Storage: If your organization sells products, you likely maintain storage space to hold them before distribution. The more goods you have, the more you must spend on shelving space. Inventory management techniques help you keep a balanced amount of stock. When you only buy what you need, you can reduce monthly storage costs. For instance, many companies use the just-in-time strategy to organize their inventory. This method keeps the lowest amount of inventory on hand instead of maintaining a large stockpile of products, helping keep storage prices as low as possible.
- Waste: Inventory management also helps you limit waste. Without an accurate inventory, you can lose track of products and allow them to sit past their expiration dates. You would dispose of the item instead of selling it, which wastes the manufacturing resources, storage costs, and potential profits you could have earned. Heightened accuracy helps you monitor every inventory item throughout every supply chain stage.
2. It Increases Customer Satisfaction
Your online marketplace can be a consumer’s first glimpse at your brand, making accuracy crucial. Incorrect listings are highly frustrating for customers — placing an order, then finding the product is unavailable can be enough for them to never return to your store. If your inventory stock falls too low, you could need to manage backorders and increased customer service inquiries.
Customer satisfaction is a crucial component of business success. The smoother their buying experience, the more likely they will choose your brand in the future. With so many online options available, consumers can quickly turn to another store to fulfill their needs. Robust inventory management strategies improve your marketplace’s accuracy, helping set your business apart from competitors.
You can closely monitor shipments moving through the supply chain, ensuring everything remains on schedule. Inventory management software provides real-time updates across all ordering areas. As soon as a customer places an order, the system shows the updated stock number across all applications. Customers can see when an item is running low or out of stock instead of falsely ordering it.
3. It Boosts Efficiency
Another crucial aspect of inventory management is organization. In addition to tracking products through the supply chain, you can create a coordinated system for inventory storage. The more organized your inventory is, the more efficiently your team can work. You can locate products and distribute them much more quickly, cutting back on order processing times.
Quicker processing allows you to manage higher sales volumes. As certain products grow in popularity, you can handle more customer requests and boost profits.
4. It Helps Track Trends
Inventory management methods can also help you forecast upcoming industry trends. By watching product flows more closely, you can anticipate customer demands and plan accordingly. You prevent your marketplace from suddenly running out of specific items or miscalculating available storage space.
Software tools can also enhance trend forecasting. Advanced technology tracks real-time sales data and lead times to predict future buying behaviors. It monitors stock levels at each location and with each partner, evaluating availability in all locations. Then, it recommends precise reordering times so your business can keep sufficient stock on hand and meet upcoming demand. You can meet customer needs more closely by anticipating their upcoming buying patterns.
How to Improve Marketplace Inventory Management
If your business struggles with inventory management, you can choose from various techniques to alter your approach. Your management needs depend on your product type, amount of storage space, number of partners, and business goals. For instance, the ABC analysis inventory approach prioritizes reordering by the most profitable products. Drop shipping eliminates the need for storage space, shipping to consumers directly from suppliers.
Your team can select the management strategy that aligns most closely with your needs and goals. Analyze whether your team meets desired performance metrics, such as order processing times. Training and internal processes play a direct role in your inventory management success, so getting everyone on the same page is crucial.
Even with a new technique, manual processes can limit your inventory approaches. Using multiple applications or manually logging inventory updates can impede efficiency and make it harder to reach business goals. By committing to new technology, you can avoid these obstacles and operate at optimal speed.
For instance, vendor managed inventory (VMI) solutions use advanced technological tools to transform your inventory procedures. VMI software allows suppliers to share real-time inventory data, enabling more accuracy in the entire supply chain. The technology evaluates ongoing buying trends and historical data to recommend the best reordering techniques. It can also eliminate manual data transfer and typing, letting your team focus on higher-priority tasks. You can improve visibility, boost efficiency, and create better customer experiences.
Enhance Your Inventory Management with VMI
Inventory management is a comprehensive approach that aids with customer contentment, location efficiency, and cost management. It plays an essential role in all areas of marketplace success. Your online marketplace should provide a seamless customer experience, and accurate inventory levels are vital for progress.
A VMI solution helps your business improve all aspects of inventory management. No matter your technique, VMI provides increased accuracy and demand forecasting. You can optimize your on-shelf techniques and boost customer satisfaction on all levels.
TrueCommerce offers integrated VMI solutions that can transform your inventory management. You can connect critical systems and automate various fulfillment processes. Our rapid implementation times allow you to see results quickly. To learn more, request a free TrueCommerce demo today.
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