Five Steps to Easier Inventory Management

Running a successful e-commerce business is no simple matter. You have to deal with the technology needed to run your site and ensure you have a strong Internet presence, along with most of the challenges of any other retail or distribution business. One of the most complicated issues you’ll face in running your e-commerce business is managing and controlling your inventory. Although it’s a complex task, managing inventory will have more impact on the success and profitability of your business than any other factor, so it pays to make sure you take the necessary steps to manage it well. Here are some ideas that can help make managing inventory easier:


One of the most important ways to keep track of inventory is to ensure that it’s organized and visible. If you store inventory on site, invest in some high-quality shelving for storage. When inventory is stored in cardboard boxes of varying sizes, the shelves look messy and it’s hard to keep track of what’s there. Small boxes may slide behind larger boxes, and you may not be able to find the inventory when you need it. Re-using cardboard shipping cartons is a common and inexpensive practice, but it may confuse warehouse personnel because the boxes could have multiple item numbers scrawled on them. Invest in high-quality labels and a small label printer to ensure that items are clearly identified, and consider adding bins for uniform storage of small items. Clear bins make it easy to see what’s inside, so your team can tell immediately when stock is low. You might consider adding a highly visible tag or label to the bins where you store your most important items. The extra visibility makes it easy to do a visual check to ensure you have enough stock on hand.

Off-site storage

Your startup may be in cramped quarters, with little space or resources for storing inventory. You might want to consider an off-site warehouse for inventory management. Most third-party warehouses provide visibility into the on-hand balances and transactions, so you don’t have to give up control of the inventory or the insight into your business. In addition, third-party warehouses have skilled personnel who understand best practices for inventory handling, and some off-site storage warehouses even offer affordable value-add services such as assembly, monogramming or special packaging.


As soon as your e-commerce business grows beyond one or two people, you should give up the idea that you can run your business on Microsoft Excel. While many companies try it, it leads to inefficiency and higher costs. Manual processes allow errors to creep in, and that can adversely affect your customer satisfaction. Invest in simple inventory management software, and consider looking for a cloud solution to provide the insight and control you need without the complexity of managing IT systems in-house.

Go lean

It seems counter intuitive, but adopting lean inventory techniques may improve your on-time delivery performance, reduce the number of backorders, and strengthen customer satisfaction. When you have less inventory to manage, you can focus on improving forecasts, and you don’t have to worry about excess or obsolete goods in stock.

Going lean requires excellent communication and collaboration with your suppliers, but the rewards are worth the time you will invest up front. If you’re not familiar with lean concepts, there are many ways to learn, and not all of them require a lot of time or money.

Adopt best practices

Learn about inventory management best practices. For example, you can spend time recording every transaction manually so you know when you’re running low on product. A simpler alternative is to use a Kanban card or two-bin system that alerts you to re-order signals. A Kanban is simply a card that you place in a bin. When the bin is empty, use the card as a visible reminder to re-order. The two-bin system involves placing a quantity of an item in a separate package or container. When the primary storage location is empty, you dip into the secondary stock to cover requirements during the re-order period. Institute a cycle count process so that you review your on-hand balances against your records on a periodic basis. Cycle counting helps ensure your counts are accurate, but more importantly, it can help identify flaws in your process. Correcting the flaws will help eliminate future inventory issues.

Remember, inventory management doesn’t have to be a burden. By adopting simple processes, like the five steps above, you’re well on your way to a more efficient e-commerce business.

About the author:

Don Amato is Vice-President, Sales of Chicago Tag & Label ( in Libertyville, IL. The company offers solutions to streamline your business processes and keep your inventory organized and up-to-date.