If only managing e-commerce inventory was as easy as running a lemonade stand. Low on product? Just make more! The problems arise as you start producing on a much larger scale for a much larger audience. `

Real e-commerce companies must manage multiple moving parts of their business — the most complex of which is inventory management. Keeping inventory updated across multiple channels is hard work, especially during peak selling seasons. The more channels you list on and the more SKUs you have, the more complicated the process can get.

Inventory management for e-commerce sites big or small is crucial for survival. Yet, many businesses lack the know-how and automation to make the process a well-oiled cog of their e-commerce machine. 

Let’s take a look at how efficient inventory management helps online brands and retailers better prepare to meet customer expectations with available supply. 

What Is Inventory Management for E-Commerce?  

Inventory management is the process of sourcing, storing and selling physical products. Successful inventory management requires real-time knowledge of available stock, its price, where to store it and how long to keep it to ensure there’s always enough to fill customer orders. That way, you know:

  • How much of a new item to order
  • What is the average time in warehouse
  • When to reorder stock
  • How much to reorder

What Are Inventory Management Techniques?

Every business is different. That’s why there’s no “one size fits all” inventory management strategy. Different inventory control techniques allow for greater flexibility for brands and retailers of various sizes and industries. 


Under this model, sellers replenish stock as it’s sold so the inventory is directly proportional to the number of sales. While this technique reduces dead stock and storage costs, it can be extremely risky to let real time sales dictate future inventory. 

First In, First Out (FIFO)

This method keeps stock as “fresh” as possible by moving older inventory (first in) to the front to be sold next (first out). The FIFO technique is especially helpful when selling food, but is also applicable to fast-paced industries like consumer electronics, health and beauty or fashion, where a high rotation of stock is necessary. 

Drop Shipping

Keep shipping in the hands of the manufacturer. Drop shipping eliminates the warehouse middleman and ensures sellers never touch the product. This is especially helpful for new e-commerce businesses who may not have the capital yet to invest in warehousing. A multichannel commerce platform can help you manage multiple drop-ship providers in one place. 

3PL or Marketplace Fulfillment

Outsource your fulfillment and skip inventory altogether by letting a third-party logistics provider (3PL) or marketplace do it for you. These vendors are well-versed in inventory management and shipping and can maintain appropriate levels of stock while monitoring compliance. Choose from a vast network of 3PLs and services like Fulfillment by Amazon (FBA) so you can focus on other business needs. 

Benefits of E-Commerce Inventory Management

Inventory management is important because it can cost money and reduce cash flow if not properly monitored. Too little inventory can result in shipping delays and unsatisfied customers, while too much inventory can create poor product turnover and high costs associated with warehousing surplus stock. 

Well-managed inventory can result in benefits like:

  • Faster delivery. Improve shipping flow with exact item locations and real-time inventory updates for faster picking and packing. 
  • Greater transparency. Know exactly when your team receives, picks, packs and ships new items to more accurately predict how much to order to meet demand. 
  • Lower costs. Know what you have to sell and move it faster to reduce storage fees,  handling fees and the insurance costs of protecting products against theft or natural disaster. 
  • Fewer stock-outs. Minimize the number of days an item is out-of-stock with alerts that tell you when product volume runs low. 
  • Increased customer satisfaction and loyalty. Evaluate your available inventory against forecasts for shortages and demand so you’re prepared with what customers need, when they need it. When customers can count on you, it builds long-term loyalty. 
  • Increase inventory turnover. Know which products are slow-moving or high in demand to accurately balance stock levels and optimize the value of goods. 

3 Common Inventory Challenges

Any company can fall prey to the challenges of inventory control if it’s not properly managed. Here are three of the most common inventory challenges and how to address them before they become problems. 

Inventory doesn’t sync across channels.

You know it’s time to revisit your inventory process when you receive an order for an out-of-stock item. This scenario is a common one for brands and retailers that are actively expanding to new marketplaces. Each time you add another sales channel to your portfolio, the risk of overselling increases. And the longer a sold-out item is listed as available, the more likely you are to face unhappy customers, leading to poor reviews and negative ratings.

Automated inventory management across channels ensures customers see accurate stock quantities no matter where they shop. Launch, track and automate your inventory quantity, prices and product data across global marketplaces such as Amazon, eBay, Walmart and more. With a full picture of your inventory on one central platform (instead of multiple spreadsheets), you can eliminate duplicate product data and prevent overselling scenarios.

Stock levels are never “just right.”

Run out of inventory ahead of your next shipment, and you’ll end up paying a premium to get suppliers to speed up delivery. Find yourself with an overflow, and you’ll sacrifice valuable warehouse space or lose profits to closeout pricing. Is a healthy balance even possible?

Accurate demand and inventory forecasting is key to stopping the cycle. This automated technology conducts SKU-level analysis of your sales data to forecast precisely how much stock will be needed to meet demand over the next 30, 60 or 90 days. It’s one of the most effective ways to decrease the risk of overstocking, understocking and paying unnecessary fulfillment fees for extended holds or expedited delivery.

You’re still managing compliance manually.

Managing compliance manually may be possible if you only sell on one or two channels. But if you list across multiple marketplaces and channels, it can become incredibly difficult to keep up with the wide range of requirements — especially when juggling multiple warehouses, shipments and tracking details.

Working with a 3PL provider puts important compliance details in the hands of experts who specialize in various aspects of order and inventory management and returns. Rithum has a robust network of third-party logistics partners. 

Tips for E-Commerce Inventory Management

Is it possible to maintain a balance between too much stock and too little? Absolutely. We recommend these six tips to stay ahead of the game and keep stock moving at a manageable rate:

1. Maintain a stash of back-up stock. Personal finance advisors will tell you to keep a “rainy day fund” in case of emergencies. Back-up stock accomplishes the same result in case demand suddenly skyrockets. This is especially important for commodities that may be susceptible to panic buying during inclement weather or unforeseen circumstances. 

2. Try kitting. Can’t sell individual items on their own? Sell them as a bundle or try a kitting technique like “buy 1, get 1 free” to move more product and increase average order value. 

3. Analyze trends in demand and past purchases. Regularly assess sales to identify what products sell best or worst, and use the findings to predict future buying trends. This insight gives you reliable data to make better inventory decisions going forward. 

4. Store smarter. Implement a labeling and storage system that makes it easy to locate items. Invest in a reliable scanning system to digitize the process and reduce human error. 

5. Implement a minimum available stock level. Set a minimum stock level for each product you sell as a threshold to prevent out-of-stocks. When stock levels reach the set value, an automated inventory management system can alert you to reorder. 

6. Conduct a supply chain audit. Boost confidence in your suppliers by regularly auditing them to ensure more product will be available when you need it. Compare your lead times, costs and quality to those of your competitors about every six months to identify potential supply chain weaknesses. 

Rithum Simplifies Inventory Management 

While inventory management may not be the first (or even tenth) task you tackle, it’s arguably one of the most important — especially if you’re trying to scale your business. It pays to put as many of your inventory processes as possible on autopilot. 

Rithum helps you automate inventory management in the same platform you monitor all your e-commerce data and processes. We help you save time and reduce complexity with features like:

  • Consolidated inventory management. Reduce the possibility of overselling by synchronizing inventory quantity across all of your selling channels. Every time one of your products sells on one channel, the available inventory is automatically updated for all supported channels. Suppress products immediately with inventory blocking functionality.
  • Robust data transformation engine. Use powerful data transformation tools to supplement or improve product data, optimizing for the unique requirements of each marketplace.
  • All items view. View and filter inventory information allocation across the sales lifecycle from a central interface.
  • Variation listings. Relate products as variations to show that a product comes in different colors, sizes or other variables.
  • Bundles. Group individual products into bundles and keep your quantities in sync across bundles, individual SKUs and channels. Variations can also be part of bundled listings.
  • Inventory attributes. Include the characteristics that define a product so that it can be listed and found on a marketplace. Define custom attributes for added flexibility and more accurate product information.

Contact our team today for a demo of the Rithum platform and a look at how we can help you manage your inventory more efficiently.