Online retailers and brick-and-mortar shops alike depend on good inventory management to run an efficient business. Having the products customers want, when they want it, can be the determining factor in who makes a sale. Because warehouse space is limited and shipping takes time, merchants need to optimize their inventory processes.
David Sasson, president and co-founder of overstockArt.com, described the challenges and best practices for effective inventory management in Practical Ecommerce. It's important to hold stock, he noted, but usually inefficient to buy a lot of items in bulk. In fact, retailers have the highest return on investment when they maintain revenues while holding the least inventory.
Businesses can use retail customer intelligence to anticipate what consumers will want to buy before the demand peaks. In Entrepreneur magazine, Ronald L. Bond, a retail business owner and consultant, advised store managers to watch for indicators such as:
High-selling items with limited stock availability
Slow sellers and seasonal goods that can be replaced with more popular items
Hot sellers with rising sales
Retail management software can help merchants identify trends and better track the inventory they have on hand. Integrated systems can also take advantage of technology such as RFID tags to maintain more accurate records of product location.