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April 18, 2022

Why Is Inventory Management Important for Ecommerce Merchants?

Monica Headshot
Monica Daniels

Sr. Content Marketing Manager

April 18, 2022

This blog post was originally published by Deliverr, which is now Flexport. The content has been adjusted to fit the Flexport brand voice and tone, but all other information remains unchanged. With the merging of Deliverr’s services (DTC fulfillment, B2B distribution, and Last Mile delivery) into Flexport’s existing international freight and technology services, we’re now able to provide merchants with true end-to-end logistics solutions spanning from the factory floor to the customer’s door.

Proper inventory management affects your ability to operate a profitable business as an eCommerce merchant. The old ways of having just enough inventory on-hand to meet near-term customer demand are over as current supply chain constraints continue to trouble the industry.

While you may think having extra inventory in a warehouse adds unnecessary costs, the benefits it provides in the long run will save you not only money but headaches as well. Read on to learn more about why inventory management is important and the pros of storing excess inventory for on-demand fulfillment.

Lessen the Chances of Losing Sales

Avoid lost sales by staying in tune with the needs and expectations of your customers. Investing in inventory management systems to analyze sales data allows you to forecast in-demand products for future purchasing decisions. But even with this insight, your brand can’t predict the future when it comes to unpredictable market changes. This is where storing excess inventory can be beneficial.

Consumers don’t like to wait—they expect items to be in stock and ready to ship within a few days. If they don’t see that option available through your business, almost half of omnichannel shoppers will look to the competition for an alternative solution. Items that are out of stock leave consumers disappointed and can prevent the potential buyer from returning to your site for future purchases. By storing inventory in a warehouse network, you can have popular products on hand to quickly replenish your popular items that are at risk of going out of stock.

Increase Customer Satisfaction

Your ability to run a profitable business lies in the hands of your customers. Those who have a positive experience with your brand are likely to extend a recommendation to others and make future purchases. Inventory management plays a critical role in meeting customer expectations.

Investing in inventory management solutions helps you maintain product visibility, including what’s available and what’s about to stock out. This allows for faster fulfillment speeds when inventory can be readily available to be picked, packed, and shipped to the buyer. Aside from delivering fast shipping services, customers also want to know your brand is dedicated to getting the sale right. If a return or exchange needs to be made due to product damage or defect, having inventory available to send a replacement increases customer satisfaction.

Get Access To Purchasing Discounts

Storing inventory also presents cost advantages associated with buying products in bulk as it typically lowers the cost per unit. This allows you to earn more on each sale and improve your gross profit.

The alternative is to lose customers to the competition. If a direct competitor takes advantage of purchasing discounts and you don’t, they can afford to offer lower costs to customers while you have to increase mark-ups to make a healthy profit. In fact, according to Statista, 92% of U.S. shoppers look for deals before making a final purchase.

Ordering inventory in large volumes from suppliers to send to storage can also help negotiate better credit and payment terms. It can even bump your business up in a manufacturer's production schedule—placing you ahead of the competition.

With well-run inventory storage solutions in place, you can manage larger quantities of goods acquired at a reduced price without losing visibility.

Protect Your Business From Order Delays

Supply chain constraints continue to challenge the retail sector. From overcrowded ports, reduced workforce, and production setbacks, your business can no longer guarantee when shipments (especially from overseas) will arrive and be available to fulfill orders with.

While many avoid storage services due to perceived additional costs, the disturbance of the supply chain made it lucrative to dial in an on-demand inventory strategy through storage. Between unreliable suppliers and volatile factors (e.g., the weather or a pandemic), production and distribution may be affected beyond your control. By purchasing items and having them on hand, your business can guarantee items are in stock and ready for fulfillment without fear of stockouts.

On-Demand Inventory Management on Any Channel, Anywhere, Any Time

In a modern logistics infrastructure, you need the flexibility to adjust to rapidly changing market conditions. Flexport Reserve Storage integrates your inventory needs across multiple channels, allowing you to send products across our nationwide network to areas where demand is high. This ensures constant product availability for your customers, without worrying about delays or other supply chain headaches.

The only storage solution of its kind, Reserve Storage takes into account all combinations of inbound and outbound for an inventory flow so flexible it’s a competitive advantage. Your products will get to their destination way faster and at a much lower cost to you than with multiple 3PLs handling this. Whether you’re using Flexport Fulfillment, FBA, B2B, or your own warehousing—it all works with Reserve Storage.

Reserve Storage can also be combined with other stand-alone Flexporrt services to provide a one-stop shop for all of your logistics needs. Because of our expertise and expansive network, we can offer competitive rates to handle everything from storage to inventory management to fulfillment. We take care of the logistics so you have more time to grow your business.

Ready to get a better handle on your inventory management? Talk to a storage expert today.

The contents of this blog are made available for informational purposes only and should not be relied upon for any legal, business, or financial decisions. We do not guarantee, represent, or warrant the accuracy or reliability of any of the contents of this blog because they are based on Flexport’s current beliefs, expectations, and assumptions, about which there can be no assurance due to various anticipated and unanticipated events that may occur. This blog has been prepared to the best of Flexport’s knowledge and research; however, the information presented in this blog herein may not reflect the most current regulatory or industry developments. Neither Flexport nor its advisors or affiliates shall be liable for any losses that arise in any way due to the reliance on the contents contained in this blog.

About the Author

Monica Headshot
Monica Daniels

Sr. Content Marketing Manager

April 18, 2022

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