A major part of the world has transitioned from traditional brick-and-mortar stores to e-commerce-first shopping. With new and emerging technologies, processes, and business models taking precedence, a lot has changed with this transition. But one essential aspect that remains just as important to the functioning of a retail business – be it online or offline, B2B or B2C – is efficient inventory management and order fulfillment.
Understanding e-commerce fulfillment
E-commerce fulfillment spans the entire process, starting from a customer placing an order until they receive it at their doorstep. Managing this process effortlessly involves many moving parts such as order management, picking and packing, sorting and storage, management of inventory, transportation, logistics, order tracking, as well as management of returns.
Whether you run an online store or a brick-and-mortar one, managing your physical inventory in a warehouse, third-party fulfillment center, or any other stockroom can make or break your chances of success. A practical way for smaller e-commerce businesses to manage order fulfillment is to work with marketplaces and leverage their platform and services. That’s why we’ve put together a few best practices to follow when managing inventory and fulfilling orders on e-commerce marketplaces.
Best practice #1: Forecast and analyze the total requirements of stocks
At a time when consumer demand and supply chains are volatile, accurate forecasting of inventory is a necessity. And while inventory forecasting and analysis is an investment that requires time and resources, the benefits far outweigh the effort. With this practice, you can get significant cost savings by optimizing inventory, boost repeat business with strategic restocking to delight customers and suppliers, improve back-end and supply chain functioning, and gain strategic and actionable insights to boost performance and improve margins.
Some essential data points needed for better forecasting include existing inventory levels, historical trends, outstanding purchase orders, sales trends, maximum stocks possible, expected demand as well as seasonal demands, customer preferences and response to different products, etc. Once you get this data, you can explore a few distinct approaches to inventory forecasting – by studying trends, graphing historical data, predicting future demand, or through market research and focus groups.
Best practice #2: Identify key regional locations for your inventory
A distributed, decentralized inventory management system can greatly benefit your business. It’s obvious that orders that are stored, picked, packed, and shipped from nearby locations cost less in the long run. By storing inventory in multiple locations based on regional demand, you can streamline your supply chain, reduce transit time, and minimize shipping costs.
Best practice #3: Expand your distribution network to multiple locations
Regardless of the size of your business, it is but natural to want to expand your consumer base. In order to reach more consumers, you will need to make your presence known outside your primary network. A multichannel distribution network allows you to reach a larger customer base, target more market segments, and meet consumer demands with greater ease. What’s more, you will also be empowered to offer consistent and high-quality buying experiences. Naturally, these practices will in turn lead to higher revenues, a streamlined supply chain, and reduced risk.
Best practice #4: Explore marketplaces fulfillment facilities by Flipkart or Amazon
There are many advantages to operating your own warehouse. Along with total control over inventory, operations, and more, you can also offer a customizable experience that boosts brand experience and revenue. You will have complete freedom, autonomy, and flexibility to do it your way. On the other hand, with third party warehouses such as marketplace fulfillment solutions from Amazon and Flipkart, you don’t have to worry about infrastructure and headcount, sales channels, IT infrastructure, geographical reach, shipping speed, or volumes. Everything from operations, inventory management, shipping, returns, and logistics are taken care of.
Best practice #5: Measure your cost per order to determine your warehouse strategy
To know which setup works better for your business – running your own warehouse or choosing third party logistics – consider your total warehouse cost per order. Divide your total warehouse expenses by the number of orders shipped annually. Compare this number when you run your own warehouse as opposed to third party warehouses to find the answer.
So how do you find the answers to these questions?
A central ecommerce analytics dashboard like Tensight can do all the work for you – from showcasing a centralized view of all your KPIs to providing real-time recommendations on product and merchandising, marketing, supply chain, and inventory management, as well as competitor insights. What’s more, you can also get real-time inventory health, regional utilization, and stock-out percentages. That’s not all. With Tensight, you can also prevent over-purchasing and save money and precious space in your warehouse, as well as under-purchasing, which can lead to lost sales opportunities.
Want to take your inventory management and order fulfillment practices to the next level? Get in touch with the experts at Tenovia and explore how Tensight can revolutionize the game for your e-commerce business.
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