Ecommerce Tip: 3 Steps to Master Inventory Management
Inventory management has always been a challenge for ecommerce brands.
This past year, as the pandemic wreaked havoc on the global supply chain, it became even more apparent that we have not yet solved for those challenges.
Going into this past Amazon Prime Day, for instance, half of small and medium-sized businesses that sell on its platform were expecting inventory shortages. Even more (75%) of SMBs say they are still experiencing supply chain disruptions on a regular basis, and more than two-thirds of the NRF’s 16,000 members have admitted they’ve been forced to add 2-3 weeks to their supply chains.
Being short on stock is one problem, but the opposite issue – overstocked – can be just as damaging to your bottom line, as the costs of long-term storage in today’s environment of low supply and high demand of valuable warehouse space.
The good news is, you can strike an ideal balance! It simply requires a seamless connection between your inventory system and marketplace listings, strong data consolidation and powerful AI technology to drive insights and decision-making.
Step 1: Aggregate and Harmonize Data Across Channels & Functions
Tradeswell enables sellers to merge inventory and marketplace data in a single platform, breaking down silos to get a unified, single view of your business, from sales to finance to marketing and operations. With all of that data (across channels and functions) consolidated and mapped – even down the SKU level – you get the interconnectivity you need for accurate predictive modeling and forecasting.
Step 2: Demand Forecasting to Protect Sales and Maximize Ad Spend
Being short on stock has multiple negative outcomes on your business. First the obvious one: losing customers and sales. While the latter might be the more immediate concern, disappointing customers has long-term impact on loyalty, which erodes lifetime value of each customer as they try new competitors or switch brand allegiance.
Inaccurate or delayed forecasting also wastes ad dollars. On some marketplaces, like Amazon, when you are out of stock online, it affects your search rankings. Customers get frustrated and quickly navigate away from your product page, and those higher bounce rates push you lower in search, both organic and paid media.
We’ve seen this happen way too many times, which is why we built our AI system to forecast at 90% accuracy, so demand planning ensures that no item will be out of stock and the end-to-end customer experience you’ve worked so hard to deliver remains top-notch.
But the AI doesn’t stop there. Insights into future forecasted sales also empowers brands to automatically know when to pause their paid media campaigns. This slow demand, mitigating the risk of a stockout and enabling the brand to temporarily redirect ad budgets to other products, or other marketplaces that will benefit from that investment.
Step 3: Reap Long-Term Benefits of Machine Learning
Forecasting is of course essential for business to quickly adapt to short-term changes in consumer behavior. Our forecasting algorithm, for example, takes into account external factors that most algorithms calculate, such as weather, consumer trends and local economic indicators. But it also can “see” the entire value chain of your business, so forecasts and PO predictions extend across all channels.
Outside of the speed of AI (e.g., real-time), the other primary benefit is its ability to remember. That is, when trends are tracked over time, AI notes consistent increases in consumer demand, such as spikes that occur at predictable moments during the year. These increases or decreases are not one-offs, but rather enduring consumer behaviors, and brands can use those to inform future operations, such as increasing replenishment orders.
While these might seem like small adjustments, the results built over time, helping brands capture market share and create positive consumer experiences to fuel long-term growth of the business.
Want to learn more about our platform and the Tradeswell advantage? Let’s set up a time to talk.