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What is Inventory Planning? Importance, Challenges, and 5 Best Methods of Inventory Planning for eCommerce Businesses in 2022

What is Inventory Planning? Importance, Challenges, and 5 Best Methods of Inventory Planning for eCommerce Businesses in 2022

The ethos of the eCommerce industry is the placement of products in storage so that they can eventually be sold. There is a lot of strategic supply chain planning behind every successful eCommerce firm, especially when it comes to inventory planning and management. Inventory is the most valuable asset for eCommerce sellers. With good inventory planning, you can fulfill orders by efficiently forecasting demand and enhancing the customer buying experience. When inventory planning is done correctly, it helps online sellers in saving money and time and streamlines their entire eCommerce supply chain. Customer expectations will be constantly met and enterprises will remain prosperous. If you struggle to plan your inventory, you need to identify the tactics and tools that will help you to improve your operations in inventory planning. What is Inventory Planning? Inventory is the greatest asset of an eCommerce business whether it is a retail, wholesale or manufacturing unit. If we set aside store management and human resource expenses, sellers invest a considerable amount of capital in inventory planning. Inventory planning is the process in which an organization determines the optimal quantity of listed products with respect to time and other factors.  It is an integral part of a company’s supply chain management strategy alongside order management, accounting, warehouse operations and customer management.  Inventory planning is unavoidable since it allows businesses to run continuously. Having low levels of inventory can result in unfulfilled orders which ruins a brand’s reputation. On the other hand, having too much stock is detrimental to a healthy cash flow and stifles corporate growth because money held up in excess inventory cannot be spent in other parts of the company. It entails anticipating demand and determining how much inventory to order and when to order it. This allows businesses to meet demand while also lowering costs. In other words, by keeping the correct amount of inventory in the right place at the right time, organizations can lower their overall storage costs, improve inventory planning and control and ensure that there is always enough stock to fulfill demand (whilst avoiding obsolete surplus stock). [contactus_uth] The Importance of Inventory Planning Increases Sales Sellers will be able to stock up on products that appeal to their target demographic, resulting in increased sales and revenue. During seasons of high demand, they will have enough inventory available to fulfill as many orders as possible. Improves Cash Flow Practising inventory planning ahead of time might help eCommerce sellers to avoid problems like having too much capital locked up in their inventory. They will be able to keep inventory moving while also freeing up cash to reinvest in the company. Utilizes Storage Holding inventory costs a lot of money and if it is a perishable product and needs special conditions and temperature then the cost instantly multiplies. So here, tiny storage space can cost more than the business receives in profits. Inventory planning takes care of inventory space and utilizes it to the best of its ability.  Forecasts Demand Better demand forecasting helps to make better and more informed decisions about inventory planning and revenue that will be generated in the future. Placing an order during high demand can cost more than procuring it during price slumps or discount periods. It not only assists a seller in meeting customer demand but also in making better financial decisions that affect profit margins, cash flow, inventory allocation, warehousing, staffing and overall logistics spending. Improves Customer Satisfaction Customer satisfaction is the best selling point. Buyers are always choosy but they will be satisfied if the seller has the right products at the right time. People often pay more to get a better experience and quality products. They are more inclined to return to the same seller if they can count on getting the things they need and want. Satisfying these desires will help them get a positive outlook on your brand which will reflect in their feedback Minimizes Overstocks and Stock-Outs Inventory planning aids retailers in avoiding overstocking or understocking. It aids in the optimization of inventory storage and precise control over each item. Overstocking can hold up business capital for an extended period of time whereas understocking can disrupt the supply chain process, resulting in more expensive procurement and result in an inability to fulfill orders. What are the Challenges of Inventory Planning? Managing Huge Amounts of Data When a seller runs flash sales, their sales velocity increases and they store a ton of data obtained from buyers. This data is instrumental while running campaigns, checking for follow-ups and sending personalized offers and benefits according to customers’ gender, last purchase, amount they spent previously, etc. Managing this useful and colossal data is a challenging task and needs a good inventory management application that not only stores data but also takes care of qualified leads by marking them as future prospects. In the absence of a cohesive view of the past, current inventory levels and any other essential sales data, sellers may find themselves floundering in the dark when it comes to making inventory-led decisions. This is why implementing a real-time inventory tracking system is non-negotiable.  Finding Reliable Data Real-time data is required for a smooth and efficient supply chain process. However, information is frequently not maintained in a meticulous manner, especially when it is done manually. Even when it is kept track of, it is distributed throughout a number of different systems. This makes it challenging for merchants to consolidate all of the data to get a complete picture of their inventory. Using a real-time inventory tracking system guarantees that sellers have reliable data as they expand into new sales channels and further develop their distribution network. There are various inventory apps available that make it simple for online retailers to keep track of their inventory. WareIQ not only stores the seller's inventory at their preferred domestic fulfillment sites but the seller also gets access to inventory data via a single dashboard. That way, sellers can save the time and effort associated with updating many spreadsheets while also reducing human error. Developing Inventory Management Software Customers have high expectations for the speed with which their orders are processed and shipped. However, getting bogged down in planning and managing inventory can have a negative impact on supply chain efficiency. There is no surprise that more and more modern merchants are turning to Inventory Management Software to help with their inventory planning requirements. Inventory management software can help eliminate time-consuming manual tasks while also increasing inventory accuracy. It is common for online firms to use inventory automation to automate inventory planning processes that are time-consuming and prone to human mistakes, such as mispicks and inventory shrinkage. For the smooth running of operations, a seller needs an inventory management system. This requires a huge one-time investment for developing an IMS and technical staff need to be employed to manage it. This becomes a hurdle for small and medium-scale sellers. They are already short on capital and have limited profit margins to compete with established eCommerce giants. Third-Party inventory planning software can help them with their requirements. Instead of investing in their own inventory management software, working with a third-party logistics (3PL) supplier like WareIQ can save time, effort and money. Lack of Trained Resources The warehousing process will most likely slow down or fail if the employees are not appropriately trained. Sellers must equip personnel with knowledge of the newest procedures, data analytics, distribution metrics and technology involved in supply chain management to bring value to inventory planning. However, investing in training and technology implementation can be costly and time-consuming. Though many online firms have team members who oversee logistics, it is commonplace for online brands at all phases of development to collaborate with a 3PL that can provide the technology, data and knowledge needed to efficiently plan and manage inventory. Best 5 Inventory Planning Methods to Consider Now that we’ve discussed the challenges, benefits and fundamentals of inventory planning, let’s talk about how to actually implement it. There are a handful of inventory planning methods. To consider the right one depends upon your products, business type and processes involved. The Work in Progress Model (WIP)  Merchants who deal in partially finished items, finished goods, or goods-in-transit should use this model. This inventory model emphasizes inventory holding, and there are three reasons for this: Purchasing raw materials in bulk saves money and lowers per-unit costs.It helps avoid stockouts and provides precautions against demand uncertainty.It encourages holding inventory to reduce the chances of price hikes of materials and labour. The Self-Consistent Inventory Model Economic Order Quantity (EOQ) The economic order quantity (EOQ) method is used to determine the best inventory quantity to order. It takes into account product demand, unit pricing and holding costs to assist sellers in figuring out how much to order.  The goal of EOQ is to assist sellers in determining the number of products that will allow them to meet demand without overordering and inflating their holding costs. To make this strategy work, a seller should have a firm grasp on the following: Order costs – Expense per merchandise orderDemand rate – Units sold during a particular time periodHolding costs – expenses involved in holding the product The EOQ formula is : EOQ = Square Root of [{ 2 (Order Costs) X (Remand Rate)} / Holding Costs ] Minimum Order Quantity (MOQ)  The minimum order quantity (MOQ) is a method of estimating how much inventory a seller should order at any given time. This is perfect for sellers that wish to be careful with their ordering habits or who want to maximize their cash on hand while avoiding excessive inventory spending. There is not a set formula for MOQ, but a seller can calculate the right MOQ for their eCommerce business by: Calculating Demand: It takes into account the seller’s historical sales data as well as current patterns to figure out how much inventory they will need.  Being Aware of Holding Costs: Calculate the costs of storing a product. Keeping small and miniscule objects in a warehouse will be less expensive than keeping them in a climate-controlled setting. Knowing the Breakeven Point: Calculate how many products are needed to sell to reach the breakeven point before buying the product. Determining MOQ: The criteria listed above will assist sellers in determining the proper minimum order quantity for their products. FIFO or LILO First-in, First-out (FIFO) and Last-in, Last-out (LILO) are supply management methods in which products that are purchased first are also sold first orvice versa. An ideal formula for retailers who sell perishable products, FIFO requires keeping track of the purchase date of each product and dispatching inventory according to it. The main motto of this is to monitor the expiration dates of perishable products. Structure the stock in the warehouse in such a way that makes it easy to implement FIFO or LILO. Setting Reorder Points Reorder points are crucial tools in inventory planning since they assist the store in avoiding stockouts. The optimal reorder point is determined by product demand, sales velocity, order lead time and safety stock levels. Calculating the reordering point requires two components: Safety Stock: (max daily orders x max lead time to get it) – (average daily orders x average lead time to get it)Lead Time Demand: the average number of units sold daily x the lead time of a product  To determine the reorder point, add lead-time demand to safety stock. Use the following formula: Reorder Point = Safety Stock + Lead Time Demand  Just-in-Time (JIT) Model Just-in-time ordering is an approach in which items are ordered just when they are required. Because it allows a seller to avoid sitting on too much stock at any given moment, this strategy can help them save a lot of money on holding expenses. It requires trustworthy supply chain management. Sellers will need a quick ordering process and dependable vendors who can deliver products on schedule for JIT to succeed. Here, the idea is to decrease waste and increase efficiency by ordering products as per demand and never prematurely. Conclusion: Inventory Planning with WareIQ A retail business that makes smart inventory decisions in advance will almost certainly succeed. The main problem is that it requires monitoring bulk orders while keeping a careful watch on data and upcoming inventory trends. Without adequate inventory planning, substantial consequences might arise, ranging from increased transportation costs to catastrophic stockouts and shipping order delays. WareIQ can help you save money on inventory planning. WareIQ provides the tools, experience and support you need to make smarter business decisions and grow your organization faster, from inventory planning to real-time inventory management. Be a part of our sophisticated Warehousing Management System by partnering with WareIQ while maintaining control and visibility over your multi-location inventory across the nation and supply chain. With WareIQ’s inventory planning platform, brands experience 80%+ regional utilization & 40% lower holding costs. Inventory planning FAQs How to develop an inventory plan?To develop an inventory plan, understand your reorder points, the time taken to order products and any potential impediments. When you have a plan in place to receive essential goods fast if needed, set up a broad refill schedule for things you'll use frequently. What are the 3 primary inventory management techniques?They are:The pull strategyThe push strategyThe just in time (JIT) strategy How does WareIQ help in inventory planning?WareIQ’s inventory planner helps in smart inventory placement using a ML based prediction engine. WareIQ helps eCommerce & D2C brands to forecast inventory & optimise stocks for warehouses by enhancing regional utilization. What is an inventory strategy?An inventory strategy is a method for ordering, managing and processing products in your warehouse on a daily basis. Inventory management is an easy task for a small business but as your volume grows, you'll require a strategy. How is Excel useful for inventory planning?Excel spreadsheets can be an intelligent approach to start tracking inventory management when you're short on resources. It's also an easy-to-use solution for getting you up and running with a simple method to manage inventory. What is the difference between inventory and stock?Inventory contains both finished goods and components that make up a finished product, while stock is the supply of finished goods that are ready for sale. To put it another way, all inventory is in stock but not all stock is inventory.

June 10, 2022

Opening Inventory: Definition, Importance & 4 Methods to Calculate Opening Stock with Opening Inventory Formula

Opening Inventory: Definition, Importance & 4 Methods to Calculate Opening Stock with Opening Inventory Formula

The beginning of a new accounting period, like the latest financial year, brings along new levels of supply chain inventory. Inventory is an important aspect of every eCommerce business and the amount of opening inventory available at the start of an accounting period can provide insights into a company’s performance in the previous cycle. In this article, we will take a look at what opening inventory is, the methods to calculate it and its importance. Keep reading. What is Opening Inventory? Opening inventory is the book value of inventory that is available at the beginning of an accounting period. It also includes the stock value carried forward from the previous period. It is counted as a current asset in the financial books. Furthermore, it helps calculate the average inventory value during a specified time period and helps to determine the cost of goods sold. It is also called the beginning inventory value of a company. Its calculation depends on several factors. [contactus_gynoveda] 4 Methods to Calculate Opening Stock Find the Cost of Goods Sold for the Previous Accounting Period The cost of goods sold (COGS) is the expense that you incur for manufacturing products and preparing them for sale. It is the sum of beginning inventory and inventory bought during the last accounting period, excluding the ending stock in the same period. It is also the total per-unit cost to a company for each sale. The lower the COGS and higher the product cost price means higher revenue margins for the company. All gross profits and expenses on product sales qualify as inventory metrics. Opening inventory formula = [Beginning inventory + inventory purchased during the last accounting period] – ending inventory of the same period Find Your Ending Inventory Balance This figure depends on the opening inventory, net purchases for the last accounting period and the cost of goods sold. Here's the formula: Ending inventory formula = [beginning inventory of the last accounting period + net inventory purchase in the same period] – COGS Determine the Cost of Purchases Made It is the money spent on buying additional inventory. This number helps decide your working capital requirements. It depends on the value of your opening inventory and ending stock in the previous accounting period and adds the cost of goods sold. It is calculated as follows: [Ending inventory – beginning inventory in the last accounting period] + COGS This formula doesn't work well for labour-intensive sectors, like manufacturing, where the cost of goods sold depends on factors other than the inventory. Such elements make the calculation of actual goods sold trickier. Use the opening inventory formula There are two opening inventory formulas to calculate opening stock: For manufacturing enterprises: Opening inventory formula = cost of raw material + value of WIP goods + cost of finished goods When we know the cost of goods sold, closing inventory and sales data: Opening inventory formula = [COGS + ending inventory in the last accounting period] – inventory purchased in the same accounting period Or Sales – gross profit – [COGS + closing stock] You may also be using one of the following methods for inventory valuation: FIFO First in, first out is a common method of pushing out the inventory that entered the warehouse first. The first manufactured or purchased stock is sold off before the others. It uses the same disposition as supermarket stores, where you may observe that the oldest products are displayed upfront. It is mainly used by sellers of perishable products. LIFO As opposed to FIFO, the last in, first out method suggests selling off the newest inventory first. Auto dealers commonly use this method to lure customers in with new models and sell them off before the old ones. Weighted Average Method The average cost of items purchased is used to calculate the COGS and ending inventory value. Many manufacturers use this technique of inventory valuation, so they can avoid differentiating between product batches. Importance of Calculating Opening Stock Calculating opening stock helps in the estimation of various critical factors to ascertain your business performance. Cost of Goods Sold You can use the formula mentioned above to calculate COGS. However, to ascertain this, you should include unsold ending stock for prior accounting periods in the gross profit figures. Opening stock creates the opening balance of a new accounting period and forms the basis of COGS. Gross Profit Once you have determined the COGS, compare it with the revenue earned to find your gross profit margins. Equating COGS with sales tells you whether your operations brought you a profit or a loss. Average Value of Inventory This is an average of beginning and ending stock. It can be calculated as [opening inventory + ending inventory] / 2 Inventory Turnover It measures how frequently you sell your inventory in a year and if you can replace it in a timely manner. Inventory turnover indicates the operational efficacy of a company. A slow turnover suggests weak sales and a quick turnover shows healthy sales figures but insufficient inventory. Most retailers with high volumes and low margins experience one of the highest inventory turnover rates. Here is the most commonly used formula: Inventory turnover = COGS / average value of inventory Although inventory turnover can be calculated by dividing COGS by sales, most analysts and businesses don't use it. This is because sales figures include profit margins that can skew the inventory turnover figure. 7 Important Use Cases of Beginning Inventory Here are some primary use cases for beginning inventory: Recognises Inventory Management Disputes A higher number of leftovers or a supply crunch signals inventory management disputes. Frequently evaluating the opening inventory can help identify these issues at the right time. More negligible beginning stock shows lapses in the merchandise ordered during the last period. Calculating opening stock helps highlight these issues, so you can take timely actions to restore balance. Identifies Logistical Issues Owning more or less inventory than forecasted inventory indicates supply chain gaps. As a result, a demand or supply mismatch could lead to logistical disruptions. Knowing the opening inventory balance at the beginning of every accounting period helps you ascertain the loopholes in the chain. Spots the Shrinkage Inventory shrinkage occurs due to a difference in the stock accounted for in the books and the actual quantity in the warehouse. It is a logistical nightmare for retailers and suppliers and occurs for various reasons. Damaged or stolen goods or human errors are the most common causes of shrinkage. Monitoring the beginning inventory level can highlight gaps in the figures and help prevent or reduce shrinkage. Highlights Demand Changes Variations in the opening stock levels indicate changes in your business' supply and demand. For instance, a sudden growth in sales leads to a reduced beginning stock and vice versa. So calculating the opening stock helps in understanding your business performance. Controls Your Taxable Revenue Opening inventory helps determine the average stock level. Combined with sales forecasts done right, the opening inventory level can help you understand how much stock you need. Thus, you can decide when and how much to pre-order. This can also help you reduce your taxable income. Analyses Your Business Performance Opening stock is a current asset that forms a part of your working capital. It is to be held temporarily and assists in estimating the liquidity levels of a business. Statutory Compliance The AS-2 and Ind AS-2 guidelines mandate disclosure of inventory levels of your company. Information like the carrying amount of inventory and the related expenses need to be revealed.  Some of the stock-related data you need to provide are: Inventory accounting policies.Carrying amounts for all inventory stages such as raw material, WIP and finished goods.The written-down amount of any inventory counted as an expense or a reversal of that amount and the conditions that led to it.The cost of inventory is counted as an expense, like COGS. Conclusion Inventory valuation deeply affects supply chain efficacy. And the stock levels decide the demand and supply gaps which influence your business performance. Numbers are everything for an enterprise; managing the inventory becomes critical for success if you deal with tangible products. Your logistics and operational prowess can break down if the inventory is not managed correctly. The simple formula of opening stock tells you where you stand at the beginning of a new accounting period. Pay close attention to what the stock numbers say as it determines how well you can meet customer expectations. Evaluating opening inventory is critical to deciding your expenses and the gross profit you earn in every cycle. It is a metric of your business's success. You can utilise skilled staff and technology to monitor the inventory levels closely. Of course, inventory monitoring demands some time, but your products need it. If you require inventory monitoring, order management or any other logistical task, WareIQ can be of assistance. WareIQ is one of India’s fastest-growing eCommerce companies that centralises the use of technology in all our core offerings. In addition to helping you monitor opening inventory levels, we also provide inventory and order management through our custom WMS, a country-wide network of fulfillment centers and partnerships with more than 20 of the largest shipping aggregators in India to ensure that your orders will always get delivered at the fastest pace and the cheapest rate.  Opening Inventory: FAQs Can opening inventory be considered an asset?Opening inventory is considered a current asset when mentioned on the balance sheet. It includes both items that are in production and ready for sale. Is opening inventory a debit or credit?Opening inventory is the amount of inventory that has been left over in the previous year and is carried forward to become the opening stock of the next financial year. It is considered as a debit balance. What are considered purchases in relation to opening inventory?Any finished item, raw material that goes into the creation of a product or any other material that is used anywhere in the manufacturing process can be considered a purchase. How can WareIQ help you to manage your opening inventory?WareIQ has a custom WMS that takes care of all inventory-related and order management activities across multiple platforms and fulfillment centers.

June 10, 2022

Inventory Levels: Definitions, 5 Strategies & Benefits for Having a Minimum Inventory Level

Inventory Levels: Definitions, 5 Strategies & Benefits for Having a Minimum Inventory Level

An inventory is the life of any business. It is immensely important in producing and selling products or services. There are many different types of inventory levels and you need to understand them to help run your business cost-effectively and efficiently. What are Inventory Levels? A company holds stocks of products in its inventory, which are its business assets. Hence, inventory levels need to be at the optimum. None of the products can be left unaccounted for, or unattended to, as such breaches can cause heavy losses and create confusion over a period of time and across the supply chain. Inventory levels are classified as Minimum level, Maximum level, Danger level and Average level. [contactus_gynoveda] What are the Different Levels of Inventory? Minimum Level A business always needs to maintain a minimum inventory level to ensure that a sufficient amount of raw materials are readily available for production to continue without any interruptions. Whenever the level dips below the minimum inventory level, it can lead to a production outage. This may cause a dip in the stock levels and sometimes a business can run out of stocks completely. Based on the demand and consumption rates, and the average production time to produce goods, the minimum inventory level can be easily calculated based on a simple formula: Minimum inventory level = Average usage x Average lead time (reordering level) The minimum inventory level can vary depending on the type of business. However, the following supply chain elements need to be taken into account: Material Type: If there is a standing order that requires a specific type of material, there is no need to keep a minimum inventory level.Purchase Time: This refers to the lead time or the time taken by a business to acquire supplies for the manufacturing process. The time is calculated from the order placement stage to the arrival of the supplies.Consumption Rate: The material consumption rate is calculated based on the trends in a particular industry but also depends on the data analysis of production history over a specific time period.Reorder Level: The stock reordering level depends on the replenishment requirements of the business, which are based on production volumes. This level hovers between the maximum and minimum inventory level and can be easily calculated with a simple formula: Reorder level = Rate of maximum consumption x Maximum reordering period Maximum Level While the minimum inventory level has to be maintained at all times to avoid the production process getting affected, the maximum inventory level should never exceed the set level since it can lead to overstocking and raw materials lying idle for an extended period of time. Moreover, maximum inventory levels result in higher storage costs, pilferage, discrepancies in quantities of stock and other inconsistencies. It is easy to calculate the maximum level using the below formula: Maximum Inventory level = Reorder level + Reorder quantity - (Minimum usage x Minimum purchase time) The reorder level can be arrived at using a simple formula: Reorder quantity = Average daily consumption x Average purchase time The key factors to consider while calculating the maximum inventory level: Daily consumption of raw materials (on average)Average purchase time required to replenish stocks of raw materialsAvailability of storage spaceReordering quantityCost of holding inventoryRisks involved such as damage, pilferage, materials turning obsoleteFluctuations in raw material pricesShelf life of raw materialsFluctuating consumer preferences Danger Level A business can never afford to have its inventory levels reaching the danger level at any time. This is because it means that the stocks of raw materials are running out at a dangerously fast speed. Whenever the inventory levels breach the danger level, the company has to source materials quickly. More often than not, procuring materials from other sources on an emergency basis increases the cost. Danger levels must be avoided at all costs, as businesses need to look for new, unqualified or unverified vendors, which affects the overall quality of the end product. Moreover, ordering on an emergency basis increases the freight cost, leading to an overall increase in inventory costs. It is wiser to calculate inventory levels in advance to prevent them from reaching dangerous levels. The danger level can be arrived at by using a simple formula: Danger Level = Average consumption x Lead time for emergency procurements Average Level As the name suggests, the average level refers to the level of raw materials available in the inventory at any point in time. The average level is usually consistent and does not vary unless there is a spike in demand or stocks lie unused due to some extraneous circumstances. It can also dip to the danger level if the procurement of raw materials is affected for any reason whatsoever. It is easy to calculate the average level with a simple formula: Average level = Minimum stock level + 0.5 x Order quantity How to Calculate Inventory Levels for Optimum Use? Lead Times of Inventory Production The lead times of inventory production can be calculated on reordering delays. While considering the lead times of inventory production, the time involved in processing the purchase order and the time the supplier or vendor takes to accept and process the order need to be considered. If the supplier has a practice of accepting orders only once a week, it is advisable to place purchase orders well in advance (at least four days earlier). The extra four days is the buffer time to cover any delays in supply. The delay in supply is calculated by adding the sum of the supply delay to the reordering delay. Availability of Safety Stock Safety stock can be easily calculated. It is the sum of maximum daily usage x the maximum lead time or the maximum time a vendor takes to effect deliveries. From this result, subtract the average product usage (daily) and multiply it with the average lead time. The formula is somewhat tricky: Safety Stock = (Maximum daily usage x Maximum lead time) – (Average daily usage x Average lead time*)   * Lead time is calculated as the number of days Forecasting Demand Forecasting demand, also known as demand planning, is arrived at by referring to the past data, current trends and upcoming requirements, all of which help to forecast demand for the future. Accurate forecasting is essential for a business to maintain sufficient buffer stock to fulfill customer orders without having to keep large amounts of inventory lying idle. Forecasting demand is not just about setting a reorder schedule, it is also about using data analysis to help identify set patterns and trends. It helps in adapting to the prevelant dynamic conditions and to meet or exceed customer demands or expectations. 5 Best Strategies for Maintaining Stable Inventory Levels Implement an Inventory Tracking System An inventory tracking system, like a barcode scanner, is useful for manufacturers to track and manage inventory. Your inventory management system can seamlessly integrate with barcode readers to track the products in stock or transit. You can also store and analyse the data to create reports that provide valuable insights into your inventory’s performance and can help to maintain optimum inventory levels. Determine Reorder Points A reorder point (ROP) is the minimum stock a business needs to hold in inventory to avoid stockouts and be able to fulfill orders smoothly. The reorder point’s goal is to maintain inventory levels to meet supply demands. Hence, each time the inventory levels hit the reorder point, an alert is triggered to replenish stocks of raw materials for the specific item. The reorder point is determined based on daily sales volumes or the number of product units sold per day. It also considers the vendor’s lead time, which is the time it takes for materials to arrive. The simple formula for calculating a reorder point is: Reorder point = Lead time demand + Safety stock Use an Inventory Management System If you deploy the relevant technology to complement your supply chain at all stages, it ensures that your distribution network operates smoothly and without any glitches. Implementing an inventory management system helps sync SKUs and orders to monitor fulfillment centers, sales channels and inventory levels in a centralised location. An efficient inventory management system helps in tracking and managing inventory levels accurately to save precious time. Communicating Clearly With Your Supplier You must make your expectations clear by communicating effectively with your vendors. Efficient inventory management depends on maintaining proper stock schedules. Holidays, power disruptions, transit delays, etc., need to be taken into account to avoid delays in scheduling. The finer details of your vendor’s operations need to be integrated with your inventory management system, as vendors play a critical role in the supply chain. Monitoring your vendor’s performance over a period of time is crucial in achieving the best results. Carry Out Inventory Audits Inventory audits, or warehouse audits, may take more of your precious time than you bargained for. However, when a huge amount of inventory is involved, mere manual use of spreadsheets to keep track of it just won’t do. You need to automate and digitise your inventory audits to make them consistent and reliable. You can think of syncing your inventory with a reliable inventory storage system to make it more efficient. Benefits of Having a Minimum Inventory Level Maintaining a minimum inventory level is a common objective for most businesses, as it makes sense. Higher inventory levels mean additional management and higher costs. A right balance needs to be struck between inventory and demand. Here are the benefits of maintaining minimum inventory levels: Reduced Storage Costs Holding stocks for long periods of time costs money. The costs include utilities for space and the manpower deployed to manage the inventory. Moreover, holding minimum inventory helps to pay vendors promptly instead of holding huge stocks in inventory, which will lie idle even after the payment has been made. Easy to Manage It is always easy to manage minimum inventory levels, as the time involved in organising and retrieving inventory is reduced drastically. Moreover, the replenishment process is also simplified and is more efficient if the inventory is shortened. If your business has a high inventory turnover rate, holding minimum inventory levels is beneficial in the long run. More Cash at your Disposal Having minimum inventory levels leaves you with liquid cash, as acquiring inventory is a costly process. If your business involves expensive products, having heaps of money stored in idle inventory leaves you with hardly any cash to deploy for meeting other expenses. When you replenish inventory levels at almost the same rate you sell your products, the cash inflow matches what you pay for the inventory. More Space Becomes Available Due to space and inventory being inversely proportional, you will have more space by having lower amounts of inventory. Businesses should be concerned with holding maximum inventory levels, as the cost per square foot of shelf space increases if there is any space lying unused. Maintaining lower inventory levels requires less demand for space and helps you manage your inventory levels more efficiently. How can WareIQ help achieve a Minimum Inventory Level? Live Updates to Changes in Inventory Levels With WareIQ, you can track inventory levels and receive functionality reports. WareIQ can share real-time updates on stock positions from its dashboard. It allows you to make the right decisions as to when stocks need to be replenished to prevent stockouts. You can have the following critical information at your fingertips: Current inventory held by the businessData on historical inventory levels for any period/locationThe next reorder due for a specific productWhether a flash sale will cause a dip in inventory levelsIf the current product demand is in sync with historical dataDetermines the fastest-selling productsDetermines which products are moving sluggishly causing additional inventory costs Reduces Cost of Inventory WareIQ makes your expansion plans a lot easier. You can even expand globally, while still keeping track of your expenses on storage. You can use WareIQ to ask questions such as: How much is the per-unit storage cost I incur?What is my average cost to fulfill an order?How many pallets/shelves/bins am I being charged for?When I change my inventory locations, how much can I save on shipping costs? Further, WareIQ helps you automate your inventory levels by suggesting the appropriate infrastructure and expertise, along with technology integration. WareIQ also helps optimise your storage to enable cost savings. Mitigates Wastage of Inventory WareIQ uses cutting-edge technology and demand forecasting to help you maintain optimum inventory levels, thus reducing the risk of holding too much inventory. The inventory forecasting tools help you decide on the optimum level of inventory based on demand and also take care of seasonality wastage, products passing expiration dates and other factors that result in diminished sellability. You can have tight control over your inventory levels, which helps prevent inventory shrinkage. Automates Notifications for Replenishment of Low-Stock Items WareIQ helps retrieve historical inventory data to help you calculate precise reorders to replenish stocks quickly. It helps you to consider lead times and inventory replenishment times as well. The inventory automation tool triggers alerts whenever stocks reach the threshold level that has been pre-determined. Counts Inventory at the SKU Level WareIQ features an advanced inventory tracking software that lets you view inventory on SKU levels on demand. You can also monitor the performance, along with the ‘unit sales per day’ details. You get to know what is available at which locations, letting you make quick changes whenever required. Access to a Nationwide Network of Fulfillment Centres WareIQ lets you gain access to a nationwide network of fulfillment centres to enable you to scale and grow. You can expand your customer reach, reduce shipping costs and hasten last-mile delivery without incurring additional costs. The technology-driven nationwide fulfillment network lets you know which is your best-selling product and at which location and allows you to place inventory at the most intelligent locations based on customer demand and access to transport, among others. Conclusion As you scale your business, you must keep track of your inventory levels, especially when your plans include opening new warehouse locations and selling across multiple channels, which can become pretty challenging over time. WareIQ is here to lend a helping hand with matchless fulfillment solutions that enable you to maintain optimum inventory levels and track inventory across multiple locations. Inventory Levels: FAQs  How do you determine the optimum inventory level?Proper inventory planning and forecasting involves setting a minimum and maximum threshold to ensure that there is never overstocking or understocking. It is calculated as average inventory divided by average sales. What is an ideal inventory level?An inventory turnover ratio of anywhere between 5 and 10 is generally considered ideal for most industries. This indicates that your business restocks its inventory every 1 to 2 months. How can you consistently maintain inventory levels?Some key strategies to manage your inventory levels are listed below:Streamline your forecastingUse the FIFO methodIdentify low-return stockAudit your inventoryUse inventory management softwareTrack your stock levels constantlyReduce equipment repair times How can WareIQ assist with maintaining optimum inventory levels?Users can take advantage of our advanced WMS to be able to analyze past inventory and order data across multiple platforms, forecast demand and supply levels for a specified time period, and manage inventory levels across multiple warehouses.

June 10, 2022

What is Inventory Accuracy? Importance, Formula, Challenges and 5 Strategies to Achieve High Inventory Accuracy for Operational Efficiency in 2022

What is Inventory Accuracy? Importance, Formula, Challenges and 5 Strategies to Achieve High Inventory Accuracy for Operational Efficiency in 2022

Inventory is one of the key aspects of an eCommerce business. It is what allows them to make sales and generate revenue. Because of this, inventory management should be handled with utter care and in the most efficient way possible. One of the main ways that a business can understand more about its inventory is by measuring its inventory accuracy. This allows retailers to understand how accurately their supply chain processes really are. In this blog, we will get a clear understanding of accurate inventory, its importance and how WareIQ can help increase it. Read along. What Is Inventory Accuracy? A metric that measures the difference between your warehouse records and your actual stock is known as inventory accuracy. Keeping track of inventory accuracy is critical in order to prevent stockouts, shortages, shrinkage and to control inventory quality, maintain happy customers and give them a great shopping experience. Any issues in maintaining inventory accuracy can cause massive problems in your supply chain. Your supply chain can suffer when there are inaccuracies in your inventory records. A registered product that does not exist might be sold. Your records may show plenty of stock when there’s could be practically no stock in the warehouse. This is why it is imperative to place importance on inventory accuracy. [contactus_gynoveda] Inventory Accuracy Formula Used in Calculations To calculate inventory accuracy using the inventory accuracy formula, count the number of items currently in stock, divide it by the stock count on file and multiply by 100. The result will be your inventory accuracy rate. However, before calculating your inventory accuracy rate and using it as a KPI, make sure that you have a reliable manual count to compare your inventory records with. The count must meet the following requirements:  Multiple employees must perform and confirm the count or it can be done through inventory management software which  reduces the possibility of human error. The count is done meticulously over several days with a focus on accuracy and an emphasis on precision. Here is the inventory accuracy formula: Counted units/Units on record X 100 = Inventory accuracy rate The average inventory accuracy for businesses while using the inventory accuracy formula is between 65% and 75%. This covers businesses that manage inventory using SKUs and barcode scanning. However, such a low (or even lower) percentage is bad for the company.  Most organizations that want to enhance their inventory management should aim for a score of 97% or higher.  Why is Attaining a High Level of Inventory Accuracy of >99% Important for Operational Efficiency? Your inventory records must reflect your actual inventory in order to run an efficient business and optimize your inventory. If you don't, you could risk the following consequences: Customers Can be Lost if Product Orders are Delayed  If their delivery is delayed for more than two days, the majority of clients will not shop with that business again. It could take weeks for a consumer to receive a box if they order a product that exists in the database but not in the warehouse. Imagine how the person will react to a much longer delay. Keeping accurate inventory counts will help avoid stockouts like these in the future.  Inventory That Has Not Been Registered Will Not be Sold  A business almost certainly has merchandise that isn't on the books. This inventory will not be able to be sold or moved. Sales of a product will be significantly slowed, and inventory may be hampered as a result. From order fulfillment to inventory stock control, every process will be affected badly. Customers can be lost if product orders are delayed. Every business is aware of this fact. Overstocking and Additional Holding Expenses Can Occur  Bad recordkeeping can lead to unwise judgments, such as purchasing too many inventory goods based on inaccurate consumption data. This will result in excess inventory, higher carrying costs, and unsellable items filling the warehouses. Accurate digital records are required for a successful inventory procedure. If not, it'll be tough to keep track of actual stock levels. Real-time tracking is a good solution along with WMS (Warehouse Management System), which uses barcoding and RFID to track arriving and outgoing items in real-time. Every delivered or received item in the warehouse is scanned swiftly and added or removed from the system automatically. Human errors are greatly reduced through automation. Instead of manually entering data for new shipments, everything is automatically uploaded to the records. 3 Reasons Why eCommerce Businesses Struggle to Maintain Inventory Accuracy Many businesses struggle to maintain inventory accuracy for the 3 following reasons: Fulfilling orders directlyLack of proper inventory managementUse of outdated technology Fulfilling Orders Directly Many eCommerce retailers desire to be as self-sufficient and cost-effective as possible by taking care of the entire process of inventory management and order fulfillment on their own. When inventory is not professionally stored or handled at a warehouse, it might result in inventory accuracy issues.  Without the proper equipment and a devoted, skilled workforce, inventory storage becomes increasingly difficult as the company grows and expands its range of products and services which leads to lower inventory accuracy.  A business can track inventory on paper or spreadsheets if its inventory management system is sub-standard or non-existent. However, this inventory accuracy formula won’t be very tenable for long. Integrating with an advanced inventory management software makes it easier to keep inventory records up to date, simplifies accounting processes, prevents stockouts and expedites manufacturer purchases. Lack of Proper Inventory Management Without proper inventory management, the entire supply chain process suffers, including picking, packing and shipping. If inventory accuracy is not maintained, the wrong product could easily be picked, which means that the order is destined to fail from the beginning. This will then have a spiral effect on processes further down the supply chain until it finally reaches the customer, who will be furious that they have received the wrong product and will initiate an RTO request, which will cost the company even more money.  In a similar way, if there isn’t a concise process available, the driver could easily drop off the wrong product to the customer. To mitigate all these issues, retailers need to invest in getting as close to a 100% inventory accuracy rate as possible. One way to remove the threat of driver error is to install shipping apps where the logistics company can give routes to drivers automatically. With the push of a button, drivers can access the order list and obtain directions. There's no chance that they'll mistype or misinterpret an address.  One may also track drivers' movements and deliveries in real-time through the app. When the driver arrives at an address, the app will immediately reflect if the package has been successfully delivered or not. The software then sends this information to the dashboard, along with the user's current GPS location. Hence, the app shows the status of all deliveries, including ETAs and expected delays. Use of Outdated Technology Most inventory accuracy happens at the warehouse and the only way to reduce problems that may arise at the source is to invest in good inventory management software to take care of updating and keeping track of inventory.  Companies that rely on old and manual methods of tabulating inventory levels and updating inventory every time an order is placed are bound to make more miscalculations than firms that employ advanced inventory management software to maintain a high level of inventory accuracy. The use of technology instantly makes any manual mistakes and errors redundant and results in an impressive inventory accuracy rate of over 99%. Comprehensive analytics addresses issues such as faulty or delayed delivery. If there is a problem with a certain week, day or depot, one can investigate the information to discover the source of the problem causing issues.  5 Strategies to Increase Inventory Accuracy by Using a 3PL Like WareIQ Optimizing Warehousing Processes If a business wants to scale up sustainably, it needs a solid warehouse management system. Traditional warehousing systems are simple, prone to errors and lack the functionality firms need to succeed in today's eCommerce environment. However, investing in a functional WMS can help you to optimize warehousing processes and make the entire operation more efficient. The new and improved modern warehouse management systems can assist in the following ways:  Makes sure a business is never under or overstocked Maintains inventory levels down to each item Syncs inventory across all sales channels Compiles inventory data in real-time, in order to generate data-driven insights and provide accurate inventory data Concise Labeling of Inventory In addition to labeling actual products, one must also mark the storage location for each item. Sections, rows and shelf numbers must all be included in the label, in addition to important information about the product itself. If a company has a large storage area, it's a good idea to assign zone numbers or even room numbers, if necessary. The following points can help you to accurately label your inventory to achieve higher inventory accuracy: Empty storage spaces should not be overlooked. Even if a section is not being used for storage right now, it should still be named for future usage. This saves time and eliminates the possibility of inconsistencies in the labelling scheme. Labels should be easy to read. The text colour should contrast with the label colour to make it more readable.To minimize misinterpretation, no apparent reference labels can be the same. Include arrows pointing to objects the label refers to, which is especially handy when shelves are layered. Maintain consistency in labelling by using letters and numbers (sometimes both) consistently and in the same order throughout. Start at the top, for example, A or 1  and move down.Each item comes with its own description. A label's name should begin with the item's name (a noun). If all item labels begin with the colour of an item, then searching and tracking will be difficult. The item should then be described with adjectives. Start with the most crucial descriptive term. When labelling products, make sure that you keep them in accordance with these guidelines.Print out photos or photographs of the products inside plain or assorted boxes to help you determine products without having to open them. On the label, only provide information that will assist in identifying and locating the objects.When adding size, measurements or weight to an item's description, attempt to use abbreviations that everyone understands and in lower case letters.To boost your efficiency, identify your products and storage areas in a realistic, concise, and organized manner. Clear Internal Policies Clear internal policies necessitate the establishment of quality standards and policies for employees to follow. Here are some tips to create clear internal policies to increase your inventory accuracy: Choose Management Quality Control Techniques: Inventory control is only one aspect of improving inventory management. With a management approach that workers can commit to, you can enhance business operations from the ground up. Using Kaizen, Lean and Six Sigma are just a few examples. Optimize Purchasing Procedures: Using data and forecasting to regulate purchasing procedures is one of the trademarks of good inventory management and clear internal policy. Identifying metrics by monitoring consumer demand, removing obsolete stock, adjusting safety stock and reorder points are all parts of this process.Manage Supplier Relationships: Managing supply chain relationships correctly is crucial since working closely with suppliers may often prevent and fix problems. Suppliers, for example, can offer your company a negotiated minimum order size, take back things that aren't selling and assist you in fast restocking when sales for a given item pick up. Create Automated Reports: Because stock control and management systems generate massive amounts of data, companies must figure out where to evaluate, report and how to use it. Inventory status, stock logs, reconciliation, historical stock, ageing inventory and inventory financials are all reports that many systems create automatically. Furthermore, firms should select where in their supply chain this information should be used so that suppliers can effectively prepare.Perform a Risk Analysis: Whether you have an unanticipated sales increase, a cash shortfall, insufficient storage facilities, a stock underestimation and slow-moving or discontinued products, problems will inevitably arise. Make a risk matrix to figure out what your biggest threats are or how to deal with them if they arise. Audit on a Regular Basis: This is to ensure that your real stock and reports are in sync. Physical items, spot-checking and cycle counting are the three methods for conducting an audit. Physical inventory entails counting all of your stock and it should be done at least once a year and more frequently near the end of the year to coincide with taxation reports. Checking for flaws on the spot is a good idea.Forecast Inventory: Use techniques such as ABC analysis and other inventory forecasting techniques. Accurate Counting Per Cycle Cycle counting is the technique of counting items in parts on a regular basis in order to keep track of stock levels without disrupting normal operations. This method entails breaking down the stock in warehouses into smaller groupings of products that need to be counted. This segmentation could be based on a variety of factors, including the product category, manufacturer, warehouse location and so on. When using a good inventory management system, segmentation becomes simple.  However, for the greatest cycle count results, it is recommended that two unique segments are created: High-risk counts: These are groups of products that have had the most inventory discrepancies, errors or inventory write-offs in the past.High-value counts: These are product groups with the highest cost or sales potential. Because these are the most expensive items, it is critical to keep accurate track of them. Utilise Technology for Inventory Management Inventory management software that is up to current standards can have a significant impact on improving inventory accuracy. Inventory management software includes everything you need, including an intuitive user interface, efficient order administration, precise stock management and real-time inventory insights.   Here's what it can do for an eCommerce business:  Tracks inventory in real-time and reconciles at the SKU level. Analyzes previous sales trends, predicts demand and suggests the appropriate inventory levels accordingly.Sets a reorder threshold to prevent stockouts by automatically replenishing goods. Conclusion Maintaining inventory accuracy is a key component of the success of a business in today’s day and age. It reduces the number of errors that could occur further down the supply chain and ensures that customers receive accurate orders so that they will have a positive opinion about your business. As discussed above, there are many ways to achieve a high level of inventory accuracy, but partnering with a 3PL fulfillment company like WareIQ is the most seamless. WareIQ can help your business achieve an accuracy rate of more than 99% with our state-of-the-art WMS that assists in accurate inventory management and order fulfillment. We also help in the automation of multiple warehouse processes and order fulfillment operations to ensure that manual errors are mitigated across the supply chain so that you and your customers can have the best possible experience. Inventory Accuracy: FAQs How important is inventory accuracy to your business?Inventory accuracy is extremely important to your business because it ensures that the right amount of inventory is tracked and maintained so that there is no confusion or dispute regarding the amount of inventory available for sale, which is the key component for all eCommerce businesses. What is an acceptable level of inventory accuracy?An average inventory accuracy rate that many businesses maintain is between 60% to 70%. However, it is preferable to have an inventory accuracy rate of above 97% to avoid any unwanted errors and mistakes. Which stakeholders measure inventory accuracy?Many stakeholders keep a close eye on inventory accuracy including:Owners and shareholdersTop managementWarehouse managerShipperStrategic plannerInventory analystFinancial analyst How can WareIQ help you to achieve a plus 99% inventory accuracy rate?WareIQ helps users accurately and efficiently manage their inventory and track orders accross multiple platforms through our custom WMS.

June 10, 2022

What is Direct Fulfillment? How is it Different from Amazon FBA?

What is Direct Fulfillment? How is it Different from Amazon FBA?

eCommerce retailers are constantly striving to offer the best services to their customers at the most competitive rates to out-shine their rivals. There are many important decisions to be made, especially in terms of order fulfillment because that is the most visible aspect to the customer and they get to experience it first hand. There are many different methods of order fulfillment and today we take a look at one of the more unconventional ones - direct fulfillment. Read further to understand what it is, how it works and if it would be the right fit for your business. What is Direct Fulfillment? Direct fulfillment is the process of shipping goods ordered by a customer directly, using the company’s own facilities and resources, and not relying on a 3PL fulfillment company for any aspect of the fulfillment process. Another process is that wholesale sellers make a large number of product purchases, obtained from the producer, after which separation of the goods into distinct categories occurs, in order to sell to retailers. The distributor then sells the products to the end consumers. This is known as Indirect distribution. Fulfillment By Amazon (FBA) is a service provided by Amazon that helps their clients with storage, packaging, shipping guidelines, and other aspects of the fulfillment process. This reduces the burden on sellers. Sellers ship their products to an Amazon fulfillment center, where the products are stored in warehouses, according to their demand, expiry date, etc. The products are then shipped whenever they are needed. When an order is placed, the employees in Amazon are always physically getting ready to prepare, package, and ship the products. [contactus_uth] What are the Benefits of Direct Fulfillment? There are many benefits in the process of direct order fulfillment, especially during the inception of an online retailer, where customers would be fewer and demand would still be on the lower side. A few benefits of direct order fulfillment are Ability to consolidate important information on client purchasing habits.Ability to separate yourself from the competition.First-hand look as to the performance of certain products and client feedbackFaster supply of your goods to your customer'sRemoval of payments and credit to a third-party distributorDirect relationship with your clientsExpanded number of ASINsBuy request no neededUnavailable assuranceHassle-free reverse logisticsNo outbound delivery costs How do I get started with Direct Order Fulfillment? Direct order fulfillment starts with the following steps: The online retailer gets client requests and orders.The company checks stock and by the same token, acknowledges or dismisses the order request.The company initiates the fulfillment of each order from the area allocated by Amazon (commonly a stockroom) and drops the request if they don't have stock in that area.The company satisfies the order request by utilizing the chosen transporter and transport strategy during the arrangement. If you are currently an Amazon vendor 1. If it's not too much trouble, record a help case in your Vendor Portal mentioning the desire to be set up on Drop Ship Central and Direct Fulfillment. If you are not currently an Amazon vendor Train your onboarding contact that you would like the "DF (Direct Fulfillment)" box checked during arrangement on Vendor CentralDuring the Vendor Central arrangement process, you will get a challenge to pursue Drop Ship Central, the administrative entry for dealing with your immediate satisfaction queries.As a component of the guided setup process, you will be asked to (1) pick your conveyance name preference (utilize Amazon's transportation mark as opposed to giving your delivery name); (2) provide your fulfillment warehouse data; (3) provide your hours of operations, occasion, and termination plans; and (4)select a transporter.In around 48 hours, you will get the last guidance to transfer your stock feed data into Drop Ship Central. What are the Advantages and Disadvantages of Direct Order Fulfillment? Advantages Of Direct Fulfillment You can oversee your own branded shipping, stock, and orders.As long as you have the space, can print address names, pick and pack, and stand in line at a mailing station, you can satisfy orders on your behalf.It functions reliably, assuming your clients are nearby, the operations are sensible, and the transportation costs are negligible, particularly when order volumes are relatively low.Rather than most 3PLs, you can store and transport transitory or perishable merchandise, such as blossoms or lithium batteries.You can be located closer to your clients since this choice accompanies more client contact.  Disadvantages Of Direct Fulfillment This strategy requires a lot of staff to oversee customer service and other eCommerce fulfillment processes. This is likely removing diverting your attention away from developing the business.You need to have adequate warehouse space to store items.To ensure quick international shipping, would require a lot of capital and resources than partnering with a 3PL fulfillment company.Human blunders can happen when orders expand in size and complexity, particularly on the off chance that you are not utilizing automation to assist in dealing with your stock. Read our blog about Seller Fulfilled Prime to get a better understanding of other services Amazon has to offer. What are the Main Points to Keep in Mind while Choosing Direct Fulfillment? Fulfillment companies new to direct order fulfillment and multi-level marketing (MLM) organizations might battle with one or more of the extraordinary prerequisites needed to successfully serve their customers. Nature of Business Retailers with expanding business operations are best suited to benefit from direct order fulfillment. Such businesses have the monetary means and available manpower to take on the process of fulfilling customer orders on their own, without needing to bank on Amazon’s fulfillment services. Retailers that seek to reduce their order fulfillment and logistics costs can do so by distributing to customers directly and don’t need to pay any fees to a 3PL fulfillment company. Reduced Delays Retailers who rely on Fulfillment by Amazon frequently face challenges relating to inventory receiving times. The receiving process, which would initially take 5 days, can now take upwards of 30 days. This lengthy delay can severely reduce the availability of inventory. By independently taking care of order fulfillment processes, companies can make use of their entire inventory, which would result in an increase in sales. Benefit to small businesses Small businesses generally find Fulfillment by Amazon to be a useful tool and can adopt Amazon’s offerings as their main fulfillment strategy with Direct Fulfillment as a backup. Retailers who make use of Fulfillment by Amazon have access to standardized shipping devoid of any hassles. Amazon takes care of the storage of inventory, packing, and shipping aggregation for all orders that come in. Smaller businesses can also use direct order fulfillment as a backup option to transfer more of their products. Fulfillment by Amazon (FBA) vs Direct Fulfillment: What are the Differences? Given the benefits, it shouldn’t shock anyone that most third-party sellers on Amazon utilize its Fulfillment by Amazon (FBA) service. With FBA, sellers' items automatically qualify for Amazon Prime and Super Saver Shipping. They can likewise exploit Amazon's customer service experience, and this all means acquiring more deals than contending with non-FBA sellers. Notwithstanding, not all that sparkles is gold. Amazon's FBA has its disadvantages as well, and numerous sellers frequently select to deal with this aspect of eCommerce logistics themselves.  If you're a third-party seller deciding on direct order fulfillment, you might need to enlist external assistance to help you in dealing with the logistical portion of your business. Fulfillment, direct or otherwise, has become well known and has progressed as necessities have ascended over the last ten years. Innovation is a major tool in terms of dealing with the entire cycle and monitoring individual shipments as well as the stock in the warehouse. For the vast majority of businesses, the goal is to get to the same level of assurance that Amazon Prime offers in terms of reliability and quality. The differences between direct fulfillment and FBA are listed below: [table id=5 /] Conclusion Direct order fulfillment facilitates your enterprise to manage expenses and mitigates dangers while at the same time enhancing your capacity to serve customers. You get all the recognition for providing professional services but conversely, you also get all the blame if something goes wrong. It is a primary step and doubtlessly, a hard one. If you feel that your business needs to outsource its fulfillment requirements to a 3PL company, WareIQ can definitely be of service. WareIQ, is a full-stack eCommerce fulfillment company for some of the most reputed brands in India. WareIQ offers a full-stack platform for eCommerce companies to enable same-day delivery and next day delivery to customers – an Amazon Prime-like experience but accessible to everyone. Why You Should Choose WareIQ's Fulfillment Centers for FBA Prep Service? Comply with Amazon’s scheduled delivery Prep services ensure proper packaging and preparation which helps to reduce delays in receive time. Taking scheduled appointments in the Amazon Fulfillment Center is a hassle because of the complex checklist of items to be executed. There are chances of missing the time slot leading to stock rejection. Stock preparation needs to follow Amazon guidelines which is a thorough process that WareIQ staff is trained in. WareIQ offers FBA prep services that ensure quality control, streamlining and adherence to Amazon standards whether it comes to fragile item preparation, repackaging thousands of SKUs to simply labelling products correctly with barcodes. WareIQ’s automated order fulfillment system ensures efficient and accurate picking and packing. Save operational costs Keeping track of a lot of different stock keeping units or SKUs that require different prep services can be tricky. You have to ask yourself if your business can afford to have its products returned or be billed a non-compliance fee for failure to meet FBA standards. Outsourcing FBA prep is a cost-effective way to move inventory. With WareIQ’s smart technology, SKUs are mapped across sales channels for efficient fulfillment. Also, with WareIQ you’ll only pay for what you use, which means if you ship only one product in a month, you’ll only pay a pick and pack fee for that one. WareIQ books slot for clients on their behalf and offer bulk shipping with multiple sellers thereby ensuring cost efficiencies. Save space FBA doesn’t just take up mind space, it takes up a whole lot of physical space as well. De-palletizing and repackaging, and storing packing materials such as poly mailers, fragile item wrapping, or labels can take up a lot of space, which most vendors do not have. In this case, a fulfillment center may be a great option. WareIQ has the bandwidth to fulfill 1 to 10,000+ orders each day. Save on resources Think about what you could be doing with the resources it takes to manage FBA prep. Outsourcing to a fulfillment centre can help you focus on growing your core business. [signup] Direct Fulfillment FAQs (Frequently Asked Questions) What does direct fulfillment order mean?The term "direct fulfillment" refers to sending an order directly to the customer. Direct fulfillment is when your eCommerce company sells D2C (direct to consumer) and ships orders to your customers. However for wholesalers, if you are selling products to other online retailers, you will ship the orders of your products in large quantities. What are direct fulfillment centers?A direct fulfillment center is a site where products and orders are shipped directly to customers  or individual shoppers. These multi-million-square-foot warehouses store products, pick and pack orders, ship orders, and manage product returns. What is Amazon’s direct fulfillment program?Amazon Direct Fulfillment is a backend service of Amazon fulfillment. A vendor that is a part of the Amazon direct fulfillment program can ship products directly to consumers when Amazon runs out of product. What is the difference between FBA and Direct Fulfillment?In FBA, Fulfilled by Amazon, You ship a portion of your inventory to Amazon fulfillment centers, where it is held until a buyer decides to purchase it. However,  in the case of Direct Fulfillment, vendors ship their products directly to the customers.

June 09, 2022

What is Inventory Forecasting? Top 4 Inventory Forecasting Methods, Tools Used & 5 Best Practices

What is Inventory Forecasting? Top 4 Inventory Forecasting Methods, Tools Used & 5 Best Practices

Inventory forecasting is critical to the financial viability of your business, whether you run an eCommerce site or maintain a physical retail outlet. If you have insufficient merchandise on hand, you will lose sales. Excessive inventory on your racks means you're tying up income that could be utilised to grow your firm in other ways. So, how can you find a balance between maximising stock levels and controlling cash flow? Inventory forecasting may be a valuable tool to assist you with this task. What is Inventory Forecasting? Inventory forecasting anticipates consumer demand for a certain item of inventory over a specific period of time. To achieve the best inventory control, accurate inventory forecasting allows a corporation to maintain the optimum stock quantity without overstocking or understocking. Forecasting inventory demand is frequently made using historical data patterns and an understanding of how market demand might change. A precise inventory prediction is vital, particularly in today’s scenario when supply chains and customer demand are continually shifting.  A combination of data analysis, industry expertise and consumer insights are involved to successfully gauge demand and match it with the required quantity of inventory. [contactus_lilgoodness] 4 Inventory Forecasting Methods Although instincts and experience can play a crucial part, the most efficient inventory forecasting methods are based on data and calculations. All inventory forecasting methods consider both rising and declining trends in consumer demand. Profits are directly affected by the accuracy of the model you choose; therefore, it is essential to select an inventory forecasting method that will aid in proper inventory forecasting. There are several inventory forecasting methods to be considered that help in demand planning. As each inventory forecasting method has a particular application or focus, they should be combined and matched to predict future outcomes. The most common methods of inventory forecasting based on various formulas are as follows:  Trend Forecasting A trend is a shift in product demand over a specified time. This approach anticipates prospective trends by using historical sales and growth data while removing seasonal impacts and discrepancies. More comprehensive sales data supports this inventory forecasting method by suggesting how certain customers and customer categories are expected to purchase in the future. This data can assist analysts in developing new strategies for marketing and selling. It is a strategy for forecasting future sales trends based on previous sales or market growth data. The trend for a given product is identified and demand is forecasted based on the outcome. Trend data helps you forecast future sales and adjust your inventory management strategy accordingly. Graphical Forecasting The same data forecasters analyse for trend forecasting may be plotted into a graph to highlight sales peaks and valleys. Some forecasters favour the graphical technique because of its visual character and available information. They may recognise patterns in data points and add sloping trend lines to graphs to investigate potential paths that might otherwise go unnoticed. The troughs and crests assist you in identifying prior inventory exploration, trends and patterns, allowing you to forecast more effectively. Qualitative Forecasting When faced with a lack of historical data, several firms look to their consumers for important information. Focus groups and market research are two complex data collection strategies utilised in qualitative inventory forecasting. Forecasters then use this data to develop models. Qualitative forecasting is employed when historical data is no longer useful, relevant, or available.  Inventory forecasting based on current and future market economic demand is part of this technique. Inventory planners repeatedly run this prediction model using sales data, human intuition, market research and panel consensus.  Quantitative Forecasting Quantitative forecasting employs historical numerical data and is thought to be more accurate than qualitative research. The more data a corporation has, the more accurate the projection will be. Time-series forecasting is an example of quantitative forecasting since it employs periodic quantitative data to build a model that predicts future trends. This forecasting methodology is typically more accurate since it analyses historical sales data to estimate future demand. This strategy works well for established firms because it is based on prior sales data. It may be generated using data from the preceding quarter or year.  Best Practices for Inventory Forecasting Involve Other Teams It is not advisable to attempt inventory forecasting on your own. Your task will be made simpler if you work in a group. You'll be able to manage your inventory with more precision and efficiency if you incorporate the help of operations, finance, marketing, product development and other essential players. Take Notes and Revisit Them for Future Planning Future planning is critical for any business as it assists you in determining the number of items you require for your inventory. To effectively plan for the future, you should make notes and store present information. The prior year's notes can simply be used to forecast your inventory for the current year. You can also list holidays and special days when demand will be heavier than usual. Conversely, you can note down periods of low demand for accurate demand forecasting. Utilise Available Data To reorganise your inventory, you must first analyse its historical data. Data is critical for any small, medium or large firm. However, your previous sales and inventory data should inform your future actions and aid you in being proactive. Your inventory forecasting method may then be repeated and employed for a consistent timeframe in the future. View Real-Time Stock Levels To correctly estimate future demand, you need real-time data. This real-time data can aid in inventory forecasting. Real-time data allows you to examine actual stocks at any moment and determine if your estimations were accurate or far off. If they were inadequate, look into the underlying reason. Understanding why this occurred will allow you to learn from the past and modify your forecast. Choose the Right Software When you operate a business, you have a lot on your mind. The absence of good management might result in pandemonium. And amid this pandemonium, resolving inventory issues might be nothing short of a conundrum. As a result, ensure that the system you're utilising has all of the capabilities necessary to handle your company's size and complexity. There are many inventory systems that are ideal for small to medium-sized organisations. Tools to Perform Inventory Forecasting As a business expands, it becomes increasingly difficult to forecast inventory. Hence, businesses need tools to carry out inventory forecasting in an easy and hassle-free way. Microsoft Excel Basic spreadsheets might be useful in firms with only a few standard commodities. They may be used to load formulas, make assumptions and do simple computations. Although spreadsheets can be used as an inventory forecasting method, they are not very effective since they represent a static snapshot in time and are not linked to other tools or updated in real-time. Inventory forecasting should be extremely dynamic, bringing in data inputs from several sources for the most up-to-date information. 3PL Companies Third-party logistics organisations, or 3PLs, frequently employ statistical modelling experts to fulfill the demands of developing enterprises. As your company expands and you start expanding the items in your inventory to satisfy demand, inventory planning becomes more complicated and necessary. Many eCommerce firms outsource fulfillment to a 3PL provider, so they don't have to construct the infrastructure, allocate resources and engage in the handling of inventory and logistics themselves. Inventory Management Software Inventory management systems incorporate forecasting capabilities if you manage order fulfillment yourself or if your 3PL does not supply the necessary software. This allows you to keep track of your inventory and units sold in real-time, run reports to determine which SKUs are your best sellers and keep a pulse on how your business is doing. When deciding on the best inventory management system for your business, look for platforms that include incorporated forecasting features. The most modern systems link with other aspects of your business through enterprise resource planning (ERP), so your inventory is handled from the same digital portal as your supply chain, customer relationship management, accounting and other functions. Inventory Forecasting Tools Apart from 3PLs and inventory management softwares, solutions for inventory forecasting with distribution indicators, graphical representations, sophisticated analytics and inventory reports on sales and stock metrics are available. This allows you to connect upstream purchasing and production operations to downstream sales and product demand. Benefits of Using Inventory Forecasting Inventory forecasting could make the difference between generating a profit and sitting on mounds of unutilised goods if you can anticipate it accurately. You may save money on storage, keep your customers happy and plan for prospective trends more effectively if you do this right. A forecasting program requires a significant amount of initial effort, but it may pay dividends in several ways after you've acquired the essential data. To begin with, you may save a lot of money. You can keep safety stock at a reasonable level if you can order the proper amount of merchandise at the right time. As a result, you'll have less money for unsold goods. It helps reduce the quantity of out-of-stock goods displayed online to improve the user experience. Easy Access to Information Inventory forecasting helps you have easy access to relevant details of the quantity of stock, product types, etc. With inventory management and stock information, you can readily notice sales patterns and track recalled items or expiry dates. Simple to Measure SKU velocity  You can obtain out-of-the-box reports, data visualisations, inventory summaries and adjust date ranges with a good inventory forecasting system. Some points that will help are: Examine how much you've sold throughout various periods.Calculate the number of days until an item will be out of stock.Save the reports by downloading them to a .csv file. Summary of Inventory Levels Inventory management provides a thorough perspective of inventory across all departments. This reduces duplication when updating inventory and the ability to buy in bulk will save your business money. When you combine inventory software with accounting and back-office operations, you will enjoy even more benefits. You can avoid stockouts, which translate to lost sales revenue. Inventory forecasting prevents this by properly projecting future demand. Using this information, you may determine when to refill and how many units to order. Discerns Your Location Distribution Many growing businesses prioritise geographic distribution. Having inventory forecasting systems that answer the following questions assists companies in optimising inventory placement and shipment to reduce transit times and shipping costs. Some common questions you need to consider include: Where do my customers usually ship to?Which delivery options are the most popular with my customers?How long does it take for my orders to be delivered?Which states receive the most orders from me?How should my inventory be distributed over the fulfillment network?What would my shipping expenses be if I increased the number of fulfillment centers from one to two (or two to three, and so on)? Easily Integratable with Other Software When deciding on the best inventory management system for your business, look for platforms that include incorporated forecasting features. The most modern systems link with other aspects of your business through enterprise resource planning (ERP), so your inventory is handled from the same digital portal as your supply chain, customer relationship management, accounting and other functions. So it is essential to have a system that can be integrated with other systems for the efficient functioning of your business. Additionally, it should be integratable with eCommerce selling platforms to be able to sync and consolidate inventory levels across all of them. Conclusion Nothing is definite in life. However, uncertainty may provide a significant opportunity for those who are prepared. Forecasters do not deal with certainty. Instead, they seek undercurrents in the market that might lead to various conclusions so that they can plan appropriately. Forecasts are based on facts and reasoning, and models built from historical performance and other criteria are modified over time, typically using advanced technology. Inventory forecasting may help your business succeed by ensuring that you have the proper merchandise to fulfill client demand while not tying up cash in unnecessary inventory. If you require assistance with inventory forecasting and any other eCommerce related processes, you can check out WareIQ. WareIQ has emerged as one of India’s most rapidly growing eCommerce fulfillment companies that uses an advanced WMS to assist in inventory forecasting, inventory management across multiple platforms and warehouses and any other task associated with order fulfillment. Inventory Forecasting FAQs Can a formula be used for forecasting?There is a formula for sales forecasting which is as follows:Sales forecasting = total value of current deals in sales cycle x close rate What is the main goal of inventory forecasting?The main goal of inventory forecasting is to analyse various metrics from past sales cycles, among multiple other factors, in order to predict future demand and supply levels so that the most optimum level of inventory can be stored at all times, which results in reduced storage and operational costs. What are the factors that generally affect inventory forecasting?Dynamic business and global factors can affect inventory forecasting. Some of them are listed below:- Economic condition of the country- Population- Distribution of wealth- General customs and traditions- Seasonal fluctuations- Preferences- Per-capita income- Government policies What are the limitations of inventory forecasting?Inventory forecasting, just like other forms of forecasting, is essentially a well-informed guessing game. There are many dynamic factors at play that can constantly change the outcomes of the forecast so it can never be a 100% accurate. How can WareIQ help provide inventory forecasting for your business?WareIQ utilises a highly advanced IMS that tracks every important metric related to inventory and order management and is capable of using this data to predict supply and demand levels for the future and therefore, also the optimum amount of inventory that is needed.

June 09, 2022

10 Best Inventory Management Software to Streamline eCommerce Fulfillment in 2022

10 Best Inventory Management Software to Streamline eCommerce Fulfillment in 2022

Research that has been conducted recently suggests that India will have more eCommerce users by 2025 than the total population of the United States. The Indian eCommerce market is predicted to develop at a 23% compound annual growth rate (CAGR), reaching half a billion dollars by the end of this decade. Bernstein, a private wealth management firm, reports that India’s internet buyers will number 330 million by 2025.  For thriving small and medium eCommerce businesses, the challenge is being unable to fulfill orders because of inventory level miscalculations and mismanagement. For SMBs, keeping track of multiple different processes can get difficult, if they use outdated technology such as maintaining spreadsheets. Tying data about inventory levels into all of the other data that a business measures requires a dedicated software solution called inventory management software. Inventory software has become a very important tool to stay relevant in the game. This highly efficient software has started a revolution in the eCommerce marketplace. Inventory management software helps sellers to track the exact location of inventory and measure the levels of available products in real-time. Deciding on the right inventory management apps for your business can be difficult as sellers need to strike a balance between the required features and the most cost-effective pricing. What is Inventory Management Software? Inventory management is the term used for ensuring the adequate amount of stock levels that need to be maintained to avoid product shortages in a business. Businesses need to manage their inventory around the clock according to their demand and sales. In the context of online selling, businesses need to have an easy and effective inventory management tool for facilitating and streamlining their day-to-day inventory processes. Inventory management software encompasses much more than just monitoring inventory levels. It helps organizations streamline inventory management and organize order fulfillment operations effectively. Inventory management apps help businesses optimize their inventory and improve supply chain efficiency. Advanced features of inventory software provides real-time inventory tracking, control and auditing functions. A good inventory management software system includes the following: Inventory Details It is a count of the total quantity of a specific product that is in stock at multiple locations. When a seller checks for the item in their inventory management software, it will prominently display details such as the quantity, the duration from when it has been in storage, expiry date, etc. Order Records This is an authorized record of the sale or purchase of items from a specific merchant/manufacturer or from customers. Within inventory management software, a seller can place sales orders and/or purchase orders and prevent overstocking or understocking of goods. Product Identification Inventory management software helps a seller to instantly and uniquely identify each item. Within the software’s dynamic inventory feature, a seller can identify products using barcodes, name, SKUs or custom fields as per business requirements. [contactus_lilgoodness] Who Uses Inventory Management Software? Offline Retailers In order to categorize products, offline retailers import item barcodes and manage item pricing points across their inventory. For this, retailers employ inventory control software. Managing product levels give retailers insight into which products are in great demand. These analytics alert shops to autofill orders on high-demand items, ensuring that the product is always available. In addition, if a product is overstocked in another retail location, the software can advise stock transfers so that each location's inventory is more evenly distributed. Read our blog on inventory vs stock to under a few differences & also how to manage both efficiently. Wholesalers Inventory software is used by wholesalers who use online distribution channels to handle bulk inventory, manage suppliers and customers, and automate fulfillment processes. Kitting, sales order and warehouse fulfillment, lot tracking for perishable products and bin management are all aspects that wholesalers commonly employ. Manufacturers In the manufacturing industry, inventory control is a crucial element for day-to-day operations. When a customer purchases a large quantity of a product, the makers must determine if they have sufficient raw materials on hand to fulfill the order. These orders are made up of a range of components that the manufacturer must combine to make a single finished product. To execute an order, the manufacturer may need to buy more stock from several other sources. Earlier, manufacturers would use spreadsheets to keep track of inventory, which was a crude approach that was also prone to error. However, with specialized inventory management software, each item has a barcode that is linked to the software. The manufacturer can thus correctly analyze if they have adequate material on hand, track orders from suppliers and complete orders more quickly. eCommerce Sellers Businesses that sell products on online marketplaces need to keep track of their inventory. Returns are handled by inventory software, which also automates restocking, shipping and virtual stock inventory for eCommerce sellers. How do Inventory Management Systems Work? Inventory Management Systems work by organizing all of the store's goods in one virtual location and providing relevant information to customers and managers. Products are at the centre of any inventory management system. Size, cost, pricing, number of units and other characteristics accurately describe products. Product owners, buyers and even vendors use these traits to make informed decisions. Some attributes, such as IDs and names, are static and aid in communicating the product's identity. Inventory management is concerned with determining stock levels and the location in warehouses. Inventory management apps track the flow of products from suppliers to customers through the manufacturing and order fulfillment process. Inventory management at the warehouse keeps track of stock receipts, picking, packing and shipment. For growing businesses, other variables such as cost, price and quantity are dynamic and constantly evolve. Inventory management is a way of efficiently arranging all of this product data in order to accurately depict it. Features That an Inventory Management Software Must Have Real-Time Inventory Tracking To cut expenses and avoid fraud, inventory tracking should be in place to check available items in stock and where they are stored across warehouses, in real-time. The most significant feature of inventory management software is that it allows for proper inventory control through inventory tracking. The inventory management software should provide sellers with extensive real-time visibility into essential supply chain management components. This will assist them in avoiding stockouts, placing automatic reorders and receiving automatic stock updates when sales occur. Barcoding Software Integration The barcode technique is the most prevalent method of inventory tabulation. Businesses can use barcode technology to enhance accuracy and speed while lowering costs by integrating barcode software into their inventory management apps and acquiring widely available barcode scanners. A barcode scanner is a device that reads printed barcodes and converts them into alphanumeric characters. The scanner sends the information to a computer database, where it is saved, using barcoding software. Each number corresponds to a distinct item in the inventory and scanning the bars provides access to a wealth of information about SKUs such as price, stock on hand and description. Integrating barcode scanning software into inventory management can be extremely beneficial. This streamlines the inventory tracking, stock-taking and stock-organization processes, making them considerably more efficient. Businesses can arrange inventory or asset identifiers automatically to make tracking easier. It reassures sellers that they have the most up-to-date information at their fingertips and aids in the better management of out-of-stock SKUs and revenue optimization. Control Over Purchasing and Order Fulfillment The accuracy with which inventory levels are managed is influenced directly by the purchasing decision method of a company. When a purchase order is made, inventory management software guarantees that the inventory is automatically updated. With all of the relevant supplier information at one's fingertips, the software can figure out when to give purchase orders. When items are low on stock, the inventory management software can generate purchase orders automatically, receive partial orders and track backorders. From start to completion, it keeps track of all purchase orders and notifies sellers about each purchase order sent. User can also calculate shipping costs automatically using shipping zones or cargo weights, connect shipping services with eCommerce stores to display shipping charges and automate the entire workflow from order creation through fulfillment, order tracking, and order return, for all selling platforms. Integrated CRM Softwares A CRM helps save customer data securely in a customized manner so that a seller has access to their preference details and purchase history to predict future behavior. It is further observed that data has enough potential to change an inquiry into a sale. CRM tools also help in storing order history, personalized marketing, offers for an individual buyer, customizing taxes and default address setting and building a price card for individuals taking care of each pricing strategy. Inventory Reports Inventory management metrics provide a detailed report of how the inventory has performed over time. These metrics are: Inventory Control: Knowing how much inventory a seller has in their warehouse at any given time is vital information for any organization to fulfill orders swiftly. Inventory Management: To manage inventory, there are a lot of factors to take care of. A seller can use multiple accounting methods to evaluate inventory such as First-Out (FIFO), Last-In, First-Out (LIFO), or First-Expired, First-Out (FEFO). Inventory Forecasting: The difference between actual demand and what is expected at the business level is reflected in the accuracy of demand or inventory forecasting. This is derived from inventory management software through data customization. Fulfillment Quality Index: This will determine whether suppliers are functioning at their highest capactiy or whether there is potential for improvement. Scale the return rate, as well as the "on-time products, received" report. Inventory Performance Report: To obtain a general picture of how the business is performing, keep track of how much profit products are bringing in to guarantee that it is operating at maximum efficiency. Benefits of Using an Inventory Management Software Making Informed Decisions For eCommerce businesses, generating a profit depends on having enough in-hand inventory. It allows users to make informed decisions based on real-time data from the software, through a wide range of built-in inventory tracking faciltiies. Inventory software provides tools for sellers to forecast future sales accurately by giving sellers an insight into sales performances from the past. Every aspect of a business's ability to make a profit is contingent on having enough inventory on hand. The inventory management system provides users with a variety of built-in reports that enable them to make informed decisions based on real-time data from the software. By providing a seller with a snapshot of past sales success, the software will give a seller the tools to properly estimate future sales. Increasing Efficiency and Productivity The inventory management system assists in increasing efficiency and production by lowering the amount of time spent on mundane and difficult processes. Inventory management systems offers a user-friendly interface that allows users to quickly report, search and input data, as well as manage inventory. Improving Accuracy of Sales and Purchase Orders The inventory management system allows users to store available stock at multiple locations to meet customer demand. A sophisticated inventory system can improve the accuracy of sales and purchase orders. Users can reserve available products across various locations with an inventory management system, ensuring that client expectations are met. Tracking Inventory Across Multiple Locations As companies thrive and expand into multiple branches, sellers should be able to keep track of inventory levels at each branch. Inventory management systems have powerful tracking models that allow users to monitor inventory levels across multiple locations. Avoiding Out of Stock Situations Retailers can avoid stock shortage by using low stock alerts to notify the seller when products are below the running-out threshold. Users will also have access to the low stock report, which gives sellers a breakdown of all items that need replenishing and can be broken down by location. Reducing Risk by Properly Managing Product Recalls Inventory management software gives the facility of being able to track the precise location of products by serial numbers, batch numbers and lot numbers, in real-time. The feature becomes helpful if a seller needs to facilitate a single item recall for a batch of items. Automating Inventory Tasks The days are gone when businesses maintained inventory in books or spreadsheets. Such conventional methods are time-consuming and result in multiple glitches and errors. Inventory management software automates the management of inventory using advanced tools. Businesses can now integrate the software with their books of accounts and sales can be automatically integrated with warehouse records. Companies can now easily know when they have to buy or sell and the exact number of items that are available in stock. Factors to Consider When Choosing Inventory Management Software for Operations Integratibility With Accounting Applications Accounting software integration powers inventory management software and inventory audit management, which are critical activities. Always seek software that has inbuilt integration capabilities with accounting which will result in easy and smooth functioning.  Features and Pricing of the Application Depending on product support, data storage, implementation, training, additional features, upgradation and other factors, different vendors charge different prices for specific inventory management software. Always keep an eye out for the pricing that come with the benefits. Before a seller buys inventory software, they should figure out how much it will cost them. Cloud-Based Storage Features The majority of advanced inventory management software has cloud-based features. This may not be necessary if sellers are purchasing inventory management software for smaller firms. Cloud-based software, on the other hand, might be beneficial for medium and large-scale businesses. Users can view inventory details regardless of location, so sales figures and inventory updates will not be limited to a single location. 10 Best Inventory Management Software for eCommerce sellers WareIQ Source WareIQ is a full-stack fulfillment platform allowing eCommerce sellers to truly offer Amazon-prime like experiences to their customers. The full stack SaaS platform works as a command center for all the logistics operations needed by eCommerce & D2C businesses. WareIQ’s inventory management software helps businesses segment inventory as per the following categories and improve sell-through rates: Regular Products: Stored closest to the customer to enable faster delivery due to continuous demandIrregular Products: Product storage is consolidated at a few locations to enable availability for times of high demandSporadic Demand-Based Products: Long-term storage, with a focus on affordable delivery at acceptable speedsSeasonal/Just-in-Time (JIT) Products: Prediction-focused, to enable the availability of stock on time WareIQ’s inventory planner is an ML-based prediction engine that leads to smart inventory placement. It helps online brands in the following ways: Manage Replenishment for Multiple Warehouses Combine your sales from Amazon & other websites in a consolidated inventory planner and reorder products based on the overall performance Identify Trends Powerful reports show you what's happening in your business so you can put your time and money in the right places Automate Replenishment Recommendations Save time by automating your reordering process. Compute the sales forecast for thousands of products in minutes Create Purchase Orders in One Click Save time on purchasing. Send POs directly to your suppliers from the inventory planner. Keep track of outstanding orders, expected arrival dates and received inventory Zoho Inventory Source Zoho Inventory is an inventory management software that helps businesses optimize their operations by allowing them to manage inventory and purchase orders and shipments more effectively. When a sale, purchase, invoice or bill is generated, the GST-ready inventory management software remembers the business GSTIN and populates it automatically. Zoho Inventory is an AI-powered feature-rich inventory management system with item-kitting capabilities. Additionally, a few features are listed below:  Zoho Inventory aids with easy sales management on digital marketplaces like Amazon, Shopify, eBay, and Etsy.With this integrated order management system, the sales force can now properly manage both offline and online orders.Zoho Inventory's end-to-end tracking features allow sellers to follow each item's travel from the warehouse to the salespoint.Zoho Inventory provides its customers with real-time shipping rates and in-transit information.New clients can get a free demo of the business inventory software, which will help them evaluate the most important features.Makes invoices and allows teams to operate their firm properly.Monthly and annual subscriptions are available for Zoho Inventory. Clients can sign up for a free trial plan to test out the features before purchasing. NetSuite Source Using inventory and order management software like NetSuite, a seller can manage and improve their worldwide supply chain. App creators have given this program as a virtual present to firms who have tried to locate the best product management and order management software. NetSuite's capabilities extend beyond supply chain management to include product data management, inventory planning and scheduling, work order management, manufacturing execution systems, product distribution, product supply planning and execution, warehouse management and inbound-outbound logistics. Some features of the software have been listed below: Comes with a number of unique tools and capabilities that aid in inventory tracking across many locations, maintaining safety stock, reorder points, demand planning and product distribution planning.It creates product catalogues based on categories, quantities and types, automatically.Eliminates stock counting errors, promotes item counts and standardizes inventory accuracy.Backed by highly professional customer support that guides sellers for each feature and helps in proper integration. ShipMonk Source ShipMonk is a software package that combines order and inventory management and warehouse administration into a single, easy-to-understand interface. It was created with the idea of expansion in mind, so small and medium-sized eCommerce businesses can actually take their brand to the next level with trustworthy and user-friendly technology. Additionally, it has the following features. ShipMonk provides eCommerce business owners with next-level support for crowdfunding campaigns and subscription boxes, allowing merchants to seamlessly grow into new business initiatives without missing a beat.With only a few simple clicks, merchants can submit SKUs, monitor inventory levels, do inventory tracking, calculate shipping rates, export vital data and much more.Merchants are immediately greeted with a complete dashboard of their current activities upon signing into their accounts, with nearly everything they might need right at their fingertips.With over 60 connections with online marketplaces, shopping carts and solution providers, every eCommerce business owner can almost certainly sync their online POS systems with ShipMonk.ShipMonk can handle the operations of clients who sell on Amazon, Shopify, eBay, Etsy, Target, Walmart, etc. Zenventory Source Zenventory is one of the top corporate inventory management programs available, offering a time-saving, efficient and cost-effective cloud-based solution for managing orders and stocks. Zenventory allows sellers to choose warehouse locations based on their business needs, avoid the needless bulk of pick process errors and remain on top of stock levels via stock level alerts. Some additional features are listed below: Comes with extensive tools to maintain inventory and manage orders on multichannel portalsThe platform is tailored for small enterprises looking to make an impact on the global market through a progressive workflow.The program provides unlimited user access and multiple warehouses at no extra charge.The software is compatible with any desktop, is mobile-friendly and requires no ongoing maintenance.Product management, vendor management, cycle counting, innovative par level, kitting, multi-warehouse readiness and low-stock alerts are just a few of the dynamic capabilities included in this cloud-based platform.It allows users to track product movement by connecting any device, tablet or mobile app.It makes it easier to track down goods in multiple places and increases picking efficiency.This multi-channel ready software is very flexible and aids in the proper integration with other platforms.It comes with comprehensive support and a free trial period. SkuVault Source SkuVault's eCommerce Inventory Management Software makes managing sellers’ online stores a breeze. It includes simple workflows in a platform that anyone on the seller’s team can utilize, regardless of their technical knowledge. The solution is designed to streamline sellers’ order fulfillment procedures, from inventory management to warehouse organization. Here is the list of features that they provide:  Efficient pick-to-ship cycle, ensuring that orders are completed on time.The ability to integrate with multiple sales channels streamlines business operations even further.It prevents shipping problems and wrong shipments, as well as the normal errors produced by manual entries, thanks to the automation provided.Its buffer inventory also assists sellers in maintaining the desired quantity levels. Included smart analytics and reporting capabilities allows sellers to establish precise inventory estimates in order to maximize sales. Increases the quality of a company’s decisions with its data-driven insights.Integrates effectively with other corporate systems, such as ERP, accounting and CRM, for a truly seamless experience. eChannelHub Source eChannelHub strives to alleviate the agony of multi-channel sales by allowing sellers to concentrate on the seller's main business rather than worrying about stock management, product data updates, order fulfillment and other related duties. It is a multi-channel eCommerce platform fully linked with all major channels, allows retailers to spend less time updating, upgrading and formatting product data, allowing them to focus more on selling.Supported by a professional, young workforce, to assist everyone planning to take advantage of the inventory management software.Uses a single, centralized interface for multi-channel eCommerce platforms.Simplifies and manages the online listing and syncing of products, inventory, orders, processing and shipping across all marketplaces, shopping carts, shipping solutions and ERPs.Covers everything for a seller, from marketplace listing tools to real-time inventory sync tools, order management systems, etc. TradeGecko Source TradeGecko is one of the top inventory management software solutions because of its simple user interface and remarkable functionality. This versatile inventory management software is designed to help high-growth eCommerce and multichannel businesses succeed. TradeGecko is a cloud-based inventory management software system which mainly: Caters to small and medium-sized businesses with limited resources but a desire to succeed.Strives to help sellers work smarter, expand faster and improve sales.Provides best-in-class inventory management software that optimizes and ensures the efficient functioning of the seller’s organization.Keeps track of stock levels and maintains inventory across several warehouses by automatically updating inventory. Allows the moving of inventory between warehouses, manage several currencies, receives and fulfills orders, synchronizes orders with inventory and generates sales reports.Serves as a single point for inventory management and maintaining a balance between B2B and B2C marketplaces.Generates sales orders, creates sales emails, sets shipping rates and does various other things to make the business run more efficiently. Deskera Books Source For managing inventory and auto-bookkeeping, Deskera Books is all a seller needs. Deskera Books is a cloud-based, user-friendly inventory management and accounting software that automates inventory management. Unlike other inventory management softwares on the market, this one:  Combines inventory management and inventory accounting, so the COGS are updated in real-time once sellers have fulfilled orders.Provides built-in compliance that allows sellers to safely and easily prepare accounting and tax reports.Covers a business whether it's a small dropshipping business or a large wholesaler with many warehouses in operation.Immediately updates stock levels and stock valuation when it receives stock or fulfills orders from vendors and customers.Offer services such as pick, pack & ship, dropship, backorder, warehouse management, stock transfer, stock adjustment and inventory reports are among the advanced inventory functions available.Allows a seller to keep track of their business and access real-time inventory from anywhere with the Deskera Mobile App. Finale Inventory Source Finale Inventory is a multichannel inventory management software that is cloud-based for developing organizations. Finale Inventory is used by the majority of the world's smaller and medium-sized firms because of its essential features. The program was created with the goal of meeting inventory requirements while also emphasizing the necessity of centralization, multipurpose integration and warehouse management. Some of the additional services it provides are listed below: Avoids costly stock-outs by calculating reordering points based on product sales velocity. Helps you make better purchasing decisions and handles restock forecasting using comprehensive order management features.Has a comprehensive out-of-the-box barcode inventory control solution.Uses multi-operational mobile barcode scanners, which aim to boost warehouse capacity.It expressly coordinates between warehouses and online sales channels, as well as assists with stock updates on a regular basis.It includes a robust reporting engine that generates configurable reports to aid in the making of swift business decisions. Conclusion: Implementing WareIQ’s Inventory Management Software for Enhancing Fulfillment Capabilities. We at WareIQ have created a cutting-edge inventory management software solution that will assist you in streamlining your processes and increasing the efficiency of your everyday operations. We provide sophisticated, user-friendly inventory management software that is tailored to small and medium-sized businesses. Our inventory management solution is cost-effective and tackles a variety of challenges that previously required expensive enterprise-level solutions. WareIQ’s inventory management software offers a 360-degree analytics engine to online brands for business growth. With WareIQ, top brands have clocked 10 times annual growth in the volume of monthly orders. Through WareIQ’s fulfillment platform & in-built inventory management software, eCommerce & D2C companies benefit in the following ways: Monitoring Business Health  Closely track gross orders, revenue & inventory amount and growth to assess business success and health. Data at Your Fingertips Get visibility of your inventory in historical, zone-wise and channel-wise segments and access NDR data easily. Ensure Business Continuity Analyze orders across categories such as unprocessed, ready-to-ship, RTO etc. to take quick and appropriate action. [signup] Inventory Management Software - FAQs What is inventory management software?Inventory management software helps organizations streamline their inventory creation and order fulfillment processes. Inventory management software, as well as inventory auditing, inventory control and purchase order management, are used by businesses to optimize their inventory management operations. What are the 4 types of inventory?There are four main types of inventory are: Raw materials/componentsWork in ProgressFinished goodsMRO supplies Does WareIQ have inventory management software?Yes, WareIQ has an inventory management software that provides insights on appropriate network design & inventory placement to improve inventory returns & increase regional fulfillment share. What are the 3 major inventory management techniques?The three most prevalent inventory management tactics used by most manufacturers are:Pull approachPush strategyJust-in-Time (JIT) strategy What is EOQ analysis?Economic order quantity (EOQ) is a calculation that businesses use to determine their ideal order size, which allows them to meet demand without going over budget. EOQ is calculated by inventory managers to reduce holding costs and surplus inventory.

June 09, 2022

How to Sell on eBay? 9 Simple Steps to Become an eBay Seller in 2022

How to Sell on eBay? 9 Simple Steps to Become an eBay Seller in 2022

eBay was one of the companies that were born from the internet boom in the 1990s. Since its inception in 1995, it has become a household name in the eCommerce business and currently operates in 32 countries, worldwide. The company was founded in 1995 and is headquartered in San Jose, California.  eBay predated the entry of its closest rival, Amazon, into the Indian eCommerce market by almost a decade, commencing operations in the country in 2005. It has arguably pioneered the rapid growth of the eCommerce industry in the country, with other major players such as Amazon and Flipkart, wanting a share of the action. In this blog, we will take you through how you can sell on eBay, the benefits of using eBay for sale, the challenges associated with it and how WareIQ can help.  Why Should You Choose eBay for Sale? Immediate Recognition While Amazon has garnered more trust from customers in recent years, eBay is no slouch when it comes to trustability and customers’ ability to recognise the brand as an eCommerce giant. If a retailer uses eBay for sale, customers will automatically associate them and their products and services with eBay and all the positives that come with it. This instantly increases the chances of customers buying your products compared to if you were an independent seller because they have faith in eBay’s verification processes and trust that their purchase and order fulfillment experience will be up to the mark. Auction Services One of eBay’s unique features that continues to set it apart from other competitors is the ability for retailers who sell on eBay to conduct auctions. Products that get sold at auctions always end up getting sold for a much higher price than the retail equivalent, simply because the product will always get sold at the highest possible price that people are willing to pay. eBay also gives users the option to set a reserve price, which acts as a safety net to prevent products from getting sold at a severely discounted price compared to what it is actually worth. Promising SEO Capabilities This is another metric where eBay is slightly behind Amazon but still offers prime SEO results, pun not intended. Regardless of what types of products customers are searching for, eBay results are bound to pop up in the top 5 to 10 results, at least. Retailers who only sell on eBay and other eCommerce platforms and who do not operate their own websites can take advantage of the heightened SEO results. Reduced Prices This is one metric where eBay has a clear advantage compared to Amazon. Amazon charges around 15% plus additional fees per sale compared to eBays 10%. This means that retailers who sell on eBay can retain higher profit margins while selling at the same or discounted prices compared to who sell on amazon , flipkart or other eCommerce websites, which can be a huge boon, especially for small to mid-sized businesses. Gigantic Customer Market eBay, while still second to Amazon, has an astounding 183 million active users. This means that retailers who sell on eBay instantly get access to this huge market of potential customers which can instantly result in more demand and sales. However, sellers will have to fend off other competitors who are also seeking to make use of this newfound demand. Retailers will need to adjust their business strategy accordingly but new customers are always a good thing. [contactus_gynoveda] 9 Simple Steps to Start to Sell on eBay Creating an Account Open the “My eBay” drop-down menu that is present on all eBay pages and click on “selling”. Type of Account You can either opt for a business account or a personal account. Once that is done, enter the information in the registration form and click on “create account”. You can also sign up with an Apple, Google or Facebook account. Then fill out your contact details and click “Continue”. Registering as an eBay Seller After filling out the contact details, you will be redirected back to “My eBay”. You will have to register as an eBay seller. Click on the “My eBay” menu and click on “selling” as done previously. Listing an Item You will be directed to the Selling Overview page where you need to click on “List an Item” which will redirect you to fill out the “Sell Your Item” form. Naming Your Product Once you enter the name of your product, click on “Get Started”. Adding Product Information Once you enter all the details in the “Sell Your Item” form, click on “Submit”. The listing will then be saved as a draft from where you will be directed back to the Seller Account Registration page where you have to click on “Get Started”. Verify Your Phone Number You will have to fill out your phone number and have it verified by entering an OTP. Changing Account Type You can now change your account type if you want to. It will mostly not be needed. Users can opt between 2 types of accounts to sell on eBay: Personal Account: Choose this if you want to sell on eBay as an individual or if you are connected to a registered business.Business Account: Choose this if you want to sell on eBay as a company (Single-member LLC, Corporation/Multi-member LLC, Partnership) or a sole proprietor. You Can Now Sell on eBay Now that your account has been verified, you can commence selling on eBay. Challenges Faced by Retailers Who Sell on eBay Presence of Additional and Hidden Fees eBay, like other eCommerce selling platforms, cannot abstain from imposing additional and hidden fees on retailers. Retailers are often bombarded with new and varying prices that they have to pay if they want to continue to sell on eBay. Examples include getting charged an insertion fee if you add one listing in 2 different categories and you are also using a free account. These expenses can often have dire consequences for retailers who already have slim profit margins. Restrictions on New Sellers eBay seeks to make the most amount of money it can. Retailers have to remember that it is not a charity service and eBay's bottom line probably matters even more than their own. To ensure that firms are pulling their weight, restrictions such as selling thresholds or minimum income requirements for a specified period of time are often imposed on sellers, with penalties being imposed on sellers who cannot meet them. This will rub salt in the wound for new businesses that are already struggling to get by. Creation of Product Listings Creating listings on eBay can often be a lot harder than it needs to be. For example, if retailers want to upload in bulk, they can upload a CSV file but will have to filter through more than 60 pages of instructions, which can make it unnecessarily complicated for people who are not well-versed with technology. This process can take time and effort, especially if your catalogue is diverse and you have different products with multiple variations. Restrictions on Type of Images eBay imposes restrictions on the type of images that can be used. Images can only be between 500 pixels wide and 1600 pixels wide. Images that are either above or below this threshold will not cut it. Additionally, eBay is very strict when it comes to images used from existing sources and requires crediting the original source, which can then direct the interest of customers away from your page.  Lack of Automation and Integration When retailers opt to sell on eBay and utilise eBay’s 1st-party services, they often limit themselves because there are no options to integrate with other platforms or software solutions. This makes life much harder for businesses that want to sell their products on multiple platforms because they will have to juggle manually updating multiple different pages that have different passwords which can be a cumbersome process. Additionally, there are limited options for automation for basic tasks such as packaging. eBay for Sale: 8 Strategies to Get the Most Out of it Run Promoted Listing Campaigns Promoted listings are a tried and tested way of improving product visibility and eventually, sales. Research shows that promoted listings are viewed 36% more than regular ones. The pricing scheme for these campaigns also limits the amount of risk incurred by a retailer because instead of paying upfront, eBay receives an additional percentage of each sale made. Use Intelligent Keywords Keywords are the words that customers type into search engines when they are looking for a product. Keywords constantly evolve depending on the season, type of products, the platform used, etc. Retailers need to constantly be ahead of the curve and use the appropriate keywords in their product descriptions, page titles and image descriptions so that they can give themselves the best chance of matching with what customers are looking for. Offer Fast and Free Shipping In the current landscape we live in, same-day and next-day shipping have become the norm. Your business needs to offer it to avoid being left behind. Another way to spark interest from customers is to offer free shipping wherever possible. There are many methods to offer free shipping while still retaining a high-profit margin such as including the shipping cost in the price of the product and having minimum cart requirements, among others, so retailers need to analyse their capabilities and offer shipping services accordingly. Try Hiding Negative Reviews  If your listing page is constantly flooded with negative reviews, it could be indicative of a much larger issue. However, if you are a growing business, there are bound to be trials and errors along the way. Retailers who sell on eBay, need to make sure that they address and correct every negative review that they receive so that can be gotten out of the way because they have been solved. They also need to put an honest effort into turning negative reviews into positive ones so that when another customer checks the reviews, the ratio of positive to negative reviews will be higher.  Try to Achieve eBay Top Seller Status If you sell on eBay, you should definitely consider becoming a top-rated seller. This will give you an achievable long term goal and will enable you to optimize all the metrics that will help get you there such as providing an excellent customer experience and selling products that are popular. By becoming a top-rated seller, you would be eligible for various perks such as boosted visibility, a specified amount that gets credited towards promoted listings, discounts on shipping and much more. Have a Fair Return Policy Retailers who use eBay for sale need to frame an appropriate return policy. Since returns expenditures are generally incurred by sellers, they need to have a policy in place that doesn’t put undue pressure on them. Conversely, they also need to keep in mind that a strict, rigid return policy can be a turn off for customers. Retailers need to strike a balance between offering a fair return policy for themselves and their customers. eBay offer a cash-back guarantee relating to orders that are not fulfilled, damaged products and orders that don’t match the description. Excluding these circumstances, retailers are free to choose if they want to offer returns or not. Promote Your Listings on Social Media Social media and eCommerce go hand in hand. The same people that are browsing pages on Facebook and Instagram are also checking for products that they want to buy and spend hours looking for the best deals possible. The logical conclusion is to utilise social media to promote products that you sell on eBay since those users are already well-informed about the internet, how to buy products online and would appreciate extra knowledge about a sale or a product that they may want to buy.  Run Email Marketing Campaigns For retailers who sell on eBay, running email marketing campaigns is a good way of keeping people informed and reminded about your products, promotional offers you are running and information about your brand in general. It is also a good way of gathering data about the tastes and preferences of customers so that it can be used for future marketing campaigns and can yield better results. Conclusion It is a dream for many retailers to sell on eBay due to the vast array of benefits that comes with it. While it is definitely a good idea to register to sell on eBay, we also do not recommend putting all your eggs in just one basket. Due to the adverse growth of the eCommerce industry in the country, it pays dividends to generate as much exposure as possible in order for a retailer to capture the maximum amount of market share that they possibly can. It also depends on factors such as the nature of your business and products, the financial capabilities of your business and the potential customers you are trying to target. If you do decide that selling on eBay is the right decision for your business, you would need to think about the best way to fulfill all those orders. This is where WareIQ can be of assistance. WareIQ is emerging as one of India’s most rapidly expanding 3PL fulfillment companies. We provide every aspect of order fulfillment such as fulfillment centers to store products, picking and packing services, distribution and delivery services and reverse logistics. This, coupled with our superior and advanced tech platform that provides a state of the art Warehouse Management Software, NDR support and an RTO shield that gives you protection from liabilities and return orders, is sure to make your order fulfillment experience world-class. [signup] Sell on eBay: FAQs What are some things retailers shouldn’t do while selling on eBay?There are few things that retailers should abstain from while selling on eBay and some of them are listed below:- Using unoriginal photos- Not being honest about the product and its features- Ignoring messages and enquiries from customers- Miscalculating shipping charges- Not fulfilling orders to certain locations- Setting the wrong start price at an auction How long does it take for you to get paid when you sell on eBay?Payment usually occurs 1 day after confirming the payment from the buyer, unless there is some issue with the transaction. It takes about 2 days for the amount to reflect in the sellers account. Is there a listing fee while listing products to sell on eBay?No, there are no fees associated with listing your products on eBay. Fees will only be charged if a product is sold and if you opt for any of the featured listing options. Can you integrate an eBay account with WareIQ’s WMS?Yes, an eBay seller account can be integrated with WareIQ’s WMS and users can avail of all the benefits that come with that. How can 3PL companies like WareIQ solve the challenges faced by eBay sellers?3PL companies such as WareIQ provide flexibility to users by providing services such as order fulfillment, packaging and shipping at much cheaper rates. Additionally, WareIQ’s WMS can integrate with most eCommerce selling platforms and can consolidate data relating to orders and inventory from all of them in one centralised location.

June 08, 2022

What is Inventory Management System? Types, Benefits, and 10 Techniques Used in Inventory Management Systems

What is Inventory Management System? Types, Benefits, and 10 Techniques Used in Inventory Management Systems

Inventory is constantly changing. Sales, refunds, new receipts, and even damage and theft influence your inventory levels throughout the day. Therefore, the inventory management system is the most crucial part of successful retail or wholesale organization, notwithstanding their difficulty. As your business grows and the amount of inventory you handle grows, it becomes challenging to manage inventory effectively. Using technology will make things easier for you and your employees. That is the reason any retail firm needs an inventory management system. A lot of people associate inventory management with retail applications. However, inventory management systems are used in various industries, including manufacturing, utilities, healthcare, education, government, and more. Inventory management systems simplify and consolidate the process of regulating inventory movement and maintenance so that the proper quantity of inventory is accessible at the right time and in the appropriate condition. What is Inventory Management System? An inventory management system or IMS is a system that combines technology, i.e., hardware and software, with processes and procedures to oversee the monitoring and maintenance of stocked products, whether they're company assets, raw materials and supplies, or finished goods ready to be sent to vendors or end customers. A complete inventory management system includes the following components: A method for identifying each inventory item and its information, such as barcode labels or asset tags. Inventory control systemHandheld barcode scanners or cell phones with barcode scanning applications are examples of hardware equipment for reading barcode labels. Inventory management software that includes the capacity to analyze data, produce reports, estimate future demand, and more.Labelling, documenting, and reporting procedures and policies. This should incorporate a proven inventory management strategy like Just in Time, ABC Analysis, First-In-First-Out (FIFO), Stock Review, etc. 4 Basic Functions of Inventory Management System Modern-day inventory management systems aid in the profitability of your company. You might be squandering money on inventory without even realizing it if you don't have a system. You may be buying too much or not enough. You can be wasting money counting and valuing your goods. You might also be wasting money by not knowing where your inventory is. Primary Functions Of Inventory Management System include- Tracking An inventory management system's primary function is to keep track of your items and supplies. When you buy inventory, you need to track when you bought it, when you sold it, and how much you have on hand. It also tells you where your inventory is. This is especially critical if your list is used in many departments. A supply of rubber, for example, may move through manufacture, shipment, and storage before ending up in a warehouse in a distant location. You can track how inventory travels through your firm with the help of a sound system. Avoiding Redundancy Duplicate orders can quickly lead to an overabundance of inventory. When an item isn't where it should be on your storage shelf, and you presume you're out of stock, you make a new order. An inventory management system prevents duplication by alerting you that you already have the item in stock somewhere else. Inventory Valuation An inventory control system can inform you how much you pay for inventory at different times of the year. For example, even if you purchased the same item several times at various prices, an inventory control system can track those values and calculate your average cost. This might assist you in determining selling prices and profit margins. Counting You won't have to pay staff to count products if you physically use an inventory control system. Based on the data in your system, you'll always know how much you have. This can help you save a lot of money on the payroll for inventory workers.  How Do Inventory Management Systems Work? Inventory control systems, such as inventory management applications, include several features that assist businesses in managing various sorts of inventory. For example, inventory management applications are often used in conjunction with barcode tagging to identify inventory assets, and information about each item is recorded in a central database. Barcode labels act as inventory trackers, allowing users to get information about an item from a computer system, such as the item's price, the number of units in stock, the position of an object within a warehouse, and so on. The best inventory control applications are mobile-friendly, with companion apps that let users track and manage inventory while moving about a facility or from one location to another. There are a variety of inventory monitoring apps for smartphones, some of which are only available for mobile devices. In contrast, others feature desktop software that allows users to track inventory from any platform. There are also several inventory management apps created exclusively for warehouse managers. Look for features like trigger warnings when inventory levels hit pre-defined criteria, re-ordering capabilities, and analysis and reporting to support functions like forecasting when looking for inventory management software. [contactus_gynoveda] 8 Benefits Of Inventory Management System Any effective business's inventory management system is what goes on behind the scenes. It's the art and science of balancing supply and demand in a company - managing the supply chain always to have enough stuff to earn a profit. For small enterprises or big retail or warehousing operations, using an inventory management system offers several advantages, including: Automation Automation is one of the most significant advantages of an inventory management system. Automation eliminates the possibility of human error, saves you countless hours, and assures you that you do not make errors. Once a set of rules has been established, this system can do repetitive tasks with little manual assistance. This gives you real-time access to your inventory levels and instantly changes your stock count when a sale is made. This functionality is essential for accurate forecasting and a positive client experience by preventing overselling. Automated inventory management also provides real-time visibility into where your goods are located, which is critical to keeping stock in several places, such as a warehouse or multiple retail locations. Making Informed Decisions Having enough inventory on hand affects every aspect of a company's capacity to create profit. Through a variety of built-in reports, the Inventory Management System allows users to make educated decisions based on real-time data from the program. In addition, the Inventory Control System will provide you with the resources to effectively estimate future sales by providing you with a picture of previous sales performance. Demand Forecasting Because of precise demand forecasting, when order fulfilment volumes grow significantly due to holidays or events throughout the year, such as a significant marketing push from an influencer, the quantity of inventory you have will stay up with demand. Historical and seasonal data may also determine if any sales patterns necessitate stock level modifications at different periods of the year. Boost Productivity and Efficiency By reducing the amount of time spent on routine and complex tasks, the Inventory Management System will help increase efficiency and productivity. Users may easily report, search, and input data and manage inventory using the Inventory Management System's user-friendly interface. Boost Sales and Purchase Order Accuracy Using a sophisticated Order Management System, you can improve the accuracy of sales and buy orders. In addition, users may reserve available goods across various locations with Dynamic Inventory to guarantee that client expectations are satisfied. Management Inventory of Multiple Locations When a firm develops into many locations, the owner must be able to keep track of inventory levels at each site. Using Dynamic Inventory's robust multi-channel sales fulfilment business model, users may monitor inventory levels across various locations. Attempt to Avoid Running Out of Stock. Use our Low-Stock Alerts to get alerted when items fall below a certain threshold, ensuring that you don't run out of stock. In addition, users will now get access to our Low Stock report, which displays all goods that require replenishment, allowing them to prevent running out of stock. Reduce Risk by Managing Product Recalls Accurately Users may trace the exact location of items using Lot Numbers, Batch Numbers, and Serial Numbers in the Inventory Management System. If you need to enable a product recall for a batch of things, this capability comes in handy. Types of Inventory Management System Inventory management systems integrate all parts of an organization's inventory operations, including shipping, purchasing, receiving, warehouse storage, and turnover, tracking, and reordering, into a single technological solution. The fact is that an efficient management system takes a holistic approach to inventory and empowers organizations to use lean practices to optimize quality and performance along the supply chain while ensuring the appropriate quantity of stock at the suitable locations to deliver the promised services. The two types of inventory control systems available and most frequently utilized these days are. Perpetual Inventory Management System is one of the most common types of management systems.The second one is called as Periodic Inventory System Two technological types of inventory management systems utilized to assist the entire inventory management process are-  Barcode Systems Radio Frequency Identification (RFID) Systems. You must invest in a vertical inventory management system to meet your company's unique requirements. Finally, we can also divide inventory management systems into industrial sectors. These are further classified into- Manufacturing Inventory Management Warehouse Inventory ManagementRetail Inventory Management Organizations must have correct inventory knowledge to be competitive. In addition, making judgments regarding future purchase and distribution duties might be difficult, if not impossible, without knowing what is in storage. Therefore, a comprehensive approach is required to decide how, where, and when to arrange merchandise. Now that we've covered the foundations of inventory control systems and how inventory control systems function in general let's talk about the types of inventory control systems. Perpetual Inventory Management System When inventory goods are acquired, sold from stock, relocated from one location to another, chosen from inventory, and destroyed, a perpetual inventory management system automatically updates inventory records and accounts for additions. Sub certain businesses prefer endless inventory management systems because they provide up-to-date inventory information and manage minimal physical inventory counts. Permanent inventory systems are also favoured for inventory tracking since, when correctly maintained, they provide reliable data regularly. This inventory management system is most effective when combined with a database of inventory amounts and bin locations updated in real-time by warehouse employees using barcode scanners. Perpetual inventory management systems come with several drawbacks. To begin with, these systems cannot be maintained manually and need specialist equipment and software, resulting in a higher installation cost, particularly for firms with many sites or a variety of warehouses. In addition, maintenance and improvements are required regularly for perpetual inventory management systems, which can be costly. Another disadvantage of utilizing a perpetual inventory management system is that recorded inventory may not represent actual inventory as time passes since frequent physical inventory counts, which are required even when inventory trackers are utilized, are not performed. As a result, mistakes, stolen products, and wrongly scanned things influence inventory records, causing them to differ from absolute inventory counts. Periodic Inventory System Periodic inventory systems do not maintain inventory daily; instead, they allow businesses to know the beginning and ending inventory levels over a certain period. Physical inventory counts are used to tracking inventory in these inventory control systems. When physical inventory is finished, the amount in the purchasing account is transferred to the inventory account, and the cost of the ending stock is modified. Organizations can use LIFO or FIFO inventory accounting methods to calculate the cost of ending inventory or another way; keep in mind that beginning inventory is the previous period's ending inventory. The use of a periodic inventory method has a few drawbacks. To begin with, when physical inventory counts are done, routine company operations are almost halted. As a result of the time restrictions, personnel may rush through their physical counts. In addition, because periodic inventory systems do not often employ inventory trackers, mistakes and fraud may be more common due to the lack of continuous inventory control. When adopting a regular inventory management system, it's also more challenging to pinpoint where inconsistencies in inventory counts arise because so much time passes between counts. Finally, periodic inventory control systems are better suited to smaller enterprises because of the required quantity of labour. Barcodes Inventory System InIn a barcode inventory system, things are given unique barcodes. A barcode is scanned when a product is purchased, and data is sent to a central database. When choosing a product, the warehouse worker scans the barcode. The scanner then informs the employee if they have chosen the correct item. It also logs the activity in your inventory management system, allowing you to keep track of stock levels more precisely. Assisting you in keeping real-time inventory track and enhancing picking speed and accuracy Barcodes may hold a lot of information that your inventory management system can utilize. A barcode, for example, can carry information such as a product's name, weight, measurements, and warehouse location. However, for efficient choosing, you would often not use a barcode to retain such detailed information but rather a unique string of numbers merely to ensure the correct item is selected. Barcodes connect the data obtained while picking and packaging to your inventory management system. So, when the barcode is read, it informs the picker that they have selected the correct item and your inventory management system. Then, in your live inventory tracking, reflect the revised value. On the one hand, it makes life easier for your pickers and reduces mis-picks. But on the other hand, it provides a precise real-time live inventory count. Radio Frequency Identification (RFID) Inventory Systems Inventory management systems that employ radio frequency identification (RFID) use active and passive technologies to track inventory movements. Fixed tag readers are used throughout the warehouse using dynamic RFID technology; RFID tags pass through the reader and record the action in the inventory management software. As a result, active solutions are best suited for businesses that require real-time inventory management or where inventory security is a concern. In contrast, passive RFID technology necessitates portable readers to track inventory movement. The inventory management software records the data from a tag when it is read. Passive RFID technology has around 40 feet, while active RFID technology has a reading range of about 300 feet. RFID-enabled businesses had a 95 per cent inventory accuracy rate. RFID inventory management solutions come with several drawbacks. For starters, RFID tags are far more expensive than barcode labels. Hence they are often utilized for higher-value items. RFID tags have also been reported to cause interference, mainly when used in many metals or liquids situations. Transitioning to RFID equipment is extremely expensive, and your suppliers, customers, and transportation providers must all have the necessary equipment. Furthermore, RFID tags contain more data than barcode labels, causing your system and servers to become overburdened with data. Manufacturing Inventory Management System This is the method you'll need if your inventory is focused on linking bills of materials and work orders together. To run a manufacturing firm, you'll need to keep track of your job and the supplies you'll need to supply or make it, which necessitates a sound inventory management system. These are the characteristics you'll require: Tracking of materials Levels of inventory (parts and finish products)ERP/maintenance software connection for automated reordering Warehouse Inventory Management System  The goal of warehouses is to find out where an item is located. Although maintaining an accurate inventory count of on-hand products is critical, it is also crucial to guarantee that you can find an item quickly in a warehouse scenario. Software-based warehouse inventory management solutions are frequently employed to optimize fulfilment center processes. You'll require the following features: Support in several locationsSystem for advanced barcodes (with QR, among other standards)Order picking assistance Shelf and bin tracking system Retail Inventory Management System It's critical to have adequate stock in a retail firm to keep things running smoothly and financially. Supplies must be reordered before they run out to maximize sales opportunities while avoiding buying too many things that will not be sold. As a result, a sound inventory management system is necessary to maintain your inventory balanced and in line with your business objectives. These elements are a must-have for ensuring proper inventory levels. Order choosing assistanceReordering is done automatically.Support for barcodingForecasting inventory Choosing Inventory Management System Knowing what you have on hand is the first step in correctly managing your inventory. Depending on the type of your business and the number of things you're dealing with, you may go as straightforward or as elaborate as you like. A simple logging system may be sufficient for specific firms, while a computerized arrangement is superior for others. Consumers should consider a few things before deciding on a periodic and perpetual inventory management system technique, as well as a barcode or RFID tagging strategy. What is the size of my company?I work with what sort of inventory?Is there enough money in the budget for a new management system?What type of deployment approach should I go with? After you answer these questions, going further from here will let you dive deeper into concepts to focus on Inventory Management System. Manual Inventory Record Keeping A stock book where you track transactions could suffice if you don't carry many different things or don't move many each day. List the types of items in one column, and write down the sales in another. This shows you how many of each item has been sold at a glance. You may accomplish this in a physical notebook or on a computer with a rudimentary spreadsheet. This is the most basic method of inventory management, and it works best when just one or two-person input data and only a few specific things need to be tracked. There are a few manual logging ways to consider. For example, each sort of merchandise may be tracked using tags, cards, or tickets, which you can record into your log when they sell. You may also determine how much was sold by comparing sales receipts from your cash register with delivery receipts. Computerized Inventory Management System It makes sense to bring the speed and usefulness of computers, tablets, and smartphones to inventory management today when most of us are so accustomed to using them. In addition, small business owners will typically profit from a more automated inventory monitoring system. You may spend significantly less time inputting data and obtain far more meaningful information than if you did it manually, with little to no learning curve. There are several sorts of computerized systems, ranging from tracking inventory through the warehouse and production process to those better suited to retail applications. Some even integrate with your accounting software, automatically updating cash flow figures and income estimates. You can read more in detail about retail warehouse here. Point of Sales Systems Your cash register is part of a system that maintains track of your inventory and ringing up sales and calculates the appropriate change using this sort of system. POS systems are particularly useful in controlling inventory and supplies in retail establishments, taverns, and restaurants. With each sale, you'll get an updated, real-time picture of where things stand, and you'll be able to see at a glance which goods are selling and should be reordered and which aren't and should be lowered to move. In addition, other information, such as consumers' email addresses or mobile phone numbers, can be entered during a transaction and can be very useful to your marketing efforts. If you're thinking about utilizing a POS system, find out what kinds of reports it can generate and how simple it is to use to keep track of your inventory. You want to be able to quickly add new products to your list and create alerts for items that are about to run out. The software, cash register, receipt printer, bar code scanner, and credit card reader are all included in most POS systems. Start simple and add on as you need it if you can't afford a full-fledged plan. There are also POS programs for your smartphone that are both free and affordable. 10 Techniques Utilized In Inventory Management Systems Small businesses frequently have cash flow issues, influencing stock levels, resulting in stock outs and dissatisfied consumers. If too much of this, the company may go out of business. Inventory management system solutions come in handy in this situation. Business managers may retain ideal inventory counts, eliminate human error, save money for physical inventory stock, and more with the correct inventory control procedures. Let's take a look at the most popular inventory methods. These are highly effective methods for improving inventory control in firms. Minimum Order Quantity (MOQ) The smallest amount of stock that suppliers are prepared to sell is the minimum order quantity (MOQ). If you can't meet the minimum order quantity for a product, you won't be able to buy it from that source. Suppliers use minimum order numbers to improve earnings while simultaneously eliminating inventory and "bargain shoppers." The minimum order quantity is determined by the entire cost of your inventory and any additional charges you must pay before making a profit. As a result, MOQs help wholesalers stay profitable and maintain steady cash flow. Economic Order Quantity The economic order quantity (EOQ) formula helps you balance the expense of keeping goods on hand with a supply chain that satisfies consumer demand. Start with the following information to determine the economic order quantity: The pace of demand or the number of goods moved in the previous year (or quarter or month, etc.)The cost of the things you'll need to order during the sales period to fulfil demand.The expense of storing merchandise at a warehouse (also called the holding cost) Understanding a product's EOQ is critical for determining inventory optimization and reorder quantity. Just In Time Inventory Management Just-in-time Inventory management comprises producing what's wanted when required, and in the amounts demanded. Many organizations employ a "just-in-case" inventory management approach, which involves keeping a modest amount of inventory on hand in case of demand increases unexpectedly. Just-in-time inventory (JIT) management aims to establish a zero-inventory system by manufacturing Goods to Order. It operates on a pull mechanism, which means that when an order is received, it initiates a chain reaction across the supply chain. As a result, employees are notified that inventory must be ordered or that manufacture of the required items must begin. A just-in-time inventory management system has several advantages, including: Visibility of Inventory that is less old-fashioned, outdated, or spoiltEliminating storage and stacking while optimizing inventory turnover reduces logistics costs and waste production and increases efficiency.Lowering your inventory, you may save money on insurance and rent.Since manufacturing takes place on a smaller, more concentrated scale, identifying and correcting production problems is faster.Keeping a healthy cash flow by only ordering products when it's essential FIFO and LIFO The accounting systems of FIFO and LIFO are used to value inventories and report profitability. First in, first out is the acronym for first in, first out. It's an inventory accounting system that states that the first items in your inventory leave instead. Thus it would help if you always got rid of your oldest stock first. Last in, first out is the acronym meaning last in, first out. It is a way of inventory accounting that states that the final goods in your inventory are the first to leave, implying that you get rid of the most recent stock first. You almost always have to utilize the FIFO rule if you're running a food business or dealing with perishable goods. You'll wind up with outmoded inventory, which you'll have to write off as a loss if you don't. When it comes to non-perishable homogenous commodities like brick or stone, LIFO is a fantastic strategy since you won't have to rearrange your warehouse or rotate batches because they'll be the first ones out anyhow. Reorder Point Formula The reorder point algorithm tells you when it's time to replenish your inventory. When you reach the lowest quantity of inventory you can maintain before needing more, you'll be notified. By employing this strategy to regularly order the right amount of stock every month, you may stop becoming a victim of market ups and downs. ABC Analysis ABC inventory analysis divides your inventory into three groups based on how much it costs to store and how well it sells. A-Items: The most popular items that don't take up a lot of room in your warehouse or cost a lot of money. B-Items: Items in the middle of the price range that sell often but cost more to store than A-Items. C-Items: The rest of your inventory, which accounts for the majority of your inventory expenditures yet has the smallest impact on your bottom line. By determining which goods you should refill more regularly and which items you don't need to keep as frequently, ABC analysis helps you save money on working capital. ABC analysis improves inventory turnover and lowers outdated inventory. Batch Tracking Lot tracking is another term for bat tracking. It is a method for effectively tracing items along the distribution chain using batch numbers. Batch tracking allows you to identify where your items originated from, where they went, how much was sent, and if they have an expiration date when they expire, whether they are raw materials or completed things. This inventory management system has several advantages, including: Supplier partnerships have improved.Simple and quick recallExpiration tracking has been simplified.Less accounting mistakes due to manual tracking Lean Manufacturing System The lean manufacturing system is also known as lean manufacturing or lean production. This technique is well-known for boosting customer value and eliminating waste without losing efficiency. It attempts to prevent anything in your production process that generates waste or limits your capacity to make a valuable product, it contributes to inefficient and inconsistent processes. The following concepts are shared by all lean manufacturing systems: The highest valuable product is delivered to the consumer through lean production.It outlines the actions and processes necessary to create useful products.It goes through a procedure to ensure that all of your value-adding stages run well, with no bottlenecks, delays, or disruptions.Products are created on a just-in-time basis, which means that resources are not stored and consumers can get their purchases in weeks rather than months.Lean thinking and process improvement are key to the company's culture. 6 Sigma Six Sigma practitioners use statistical models to gradually develop and optimize a company's production process until it reaches the Six Sigma level. Most commonly, this is accomplished through the use of a five-step method known as DMAIC, which stands for define, measure, analyze, improve, and control. The DMAIC processes user data and quantifiable objectives to generate a cycle of continuous improvement in manufacturing operations. DMAIC is important for improving existing processes, but Six Sigma also employs DMADV to build new processes, products, or services. DMADV is an acronym that stands for define, measure, analyze, design, and verify. It serves as data and extensive analysis to assist you in developing efficient procedures or a high-quality product or service. It uses extensive training and specialized projects, as well as realistic statistical analysis, to help your organization save a lot of money. Lean Six Sigma Lean Six Sigma is the combination of Six Sigma and lean manufacturing to build a comprehensive system for eliminating waste and reducing process variation to simplify production and improve product output. Lean Six Sigma largely uses Six Sigma processes as the system's backbone to generate targeted improvements in production. It also combines several lean tools and approaches to decrease wasted processes and procedures. Consignment Inventory Consignment inventory is a commercial arrangement in which a seller or wholesaler known as a consigner agrees to provide their products to a consignee, most commonly a retailer, without the retailer paying for the items in advance. The co-signer retains ownership of the products and pays for them only when they are sold. As long as suppliers and retailers are ready to share the risks and profits, this is a win-win situation. Low inventory carrying costs, direct to retailer delivery, and access to new markets benefit vendors. Retailers benefit from reduced risk, greater cash flow, and a cheaper total cost of ownership. Partner with WareIQ for the Best Inventory Management System You can plan your stock levels and know when to place a purchase order for extra products using a proactive inventory management system. You may better manage your cash flow by projecting your inventory demands into the future. Prevent sales from being lost due to stockouts and backorders. eCommerce fulfillment businesses have never needed to plan more. Inventory management and forecasting aid in the development of a robust supply chain that can withstand interruptions. You don't have to deal with the difficulties of inventory management systems across numerous sales channels on your own. Request assistance from your third-party logistics provider. WareIQ offers certified commercial solutions, professional services, and barcode scanning and printing gear to help businesses better understand and control their assets, inventory, supply chain, and industrial processes. These solutions are implemented quickly and operate cost-effectively, saving organizations time, money, and effort. WareIQ's extensive knowledge and capabilities in requirements and needs analysis, product selection, system installation, implementation, and integration offerings, as well as full training capabilities, enable us to solve the majority of inventory control and asset management problems for our clients. [signup] FAQs What factors influence inventory costs?Rent, insurance, security fees, power bills, refrigeration, and any other maintenance or storage-related charges may be included, depending on the type of business. Essentially, the higher the carrying costs, the more products a corporation must store. What are the important factors for inventory management systems?Raw Materials, Work-In-Process (WIP), Finished Goods, and Maintenance, Repair, and Overhaul (MRO) are the four categories of inventory most typically employed (MRO). When you know what kind of inventory you have, you can deploy best practices for inventory management systems What are the characteristics of an effective inventory management system?An easy-to-use interface that doesn't require significant training, support, or documentation are among the system's criteria. Automation for inventory management business operations to eliminate manual procedures. A secure database that gives accurate, real-time information. What is the definition of inventory turnover?The inventory turnover ratio is a measurement of how rapidly your company's inventory gets sold. It's a good way to gauge the strength of your company's sales volume and performance by comparing it to industry norms. Knowing your inventory turnover rate may provide you with a lot of information about how your business handles inventory, sales, and expenditures. How do I know when it's time to restock stock?Calculate reorder points manually or using the software that is included with your inventory management system. When the stock falls below the set reorder point, certain  

June 08, 2022

What is Free Shipping In eCommerce? How To Offer Free Deliveries For Your Online Store in 10 Ways?

What is Free Shipping In eCommerce? How To Offer Free Deliveries For Your Online Store in 10 Ways?

eCommerce Shipping stores are a common sight in online shopping. Instead of wandering around in physical stores and fighting amongst crowds, fulfillment sellers can sell whatever their products at great convenience from the comfort of their offices or homes. For many merchants, free shipping (also known as free distribution, or free delivery) is an added draw that helps them build customer loyalty and lower shipping costs. However, it's not just enough to give away the goods; there needs to be a strategy behind putting this offer together. Free deliveries are a marketing strategy for eCommerce fulfillment companies. In today's competitive online world, many small businesses plan to offer free shipping or at least find ways to lower shipping costs - but it can be hard to understand how to apply this successfully in a real-world scenario. Warehousing and Fulfillment can be tricky for eCommerce logistics, especially those that rely on warehousing and D2C fulfillment companies. However, there are many benefits on offering free shipping - from increasing customer retention rates to receiving appreciation from your customers. This article will outline how you can provide free shipping and lower shipping costs to your online customers. What is Free Shipping in eCommerce?  Free shipping is a fantastic feature for online shoppers. It allows customers to get their items without paying any extra fees. It can be a great way to attract new customers and make them feel appreciated. Ensure you have accurate shipping information on your website and offer free shipping on qualifying purchases.  Use promotional codes and discounts to incentivise buyers to make purchases that qualify for free shipping. It will help you reach your MOV requirement faster and increase the number of customers who receive free shipping when they make a purchase, which will enable a higher rate of customer retention and acquisition. [contactus_gynoveda] Why Should Online Stores Offer Free Shipping? Online stores can evaluate both flat rate or standard shipping offered by the 3PL players & then decide which kind of shipping will help them offer free shipping to their online shoppers. Read the blog on flat rate vs standard shipping to understand the differences. Free Deliveries are a great way to attract customers and keep them returning to your online store. Offering free delivery on all orders can help you gain loyal customers and make more sales. There are many reasons online stores should offer free delivery, but four of the most important ones are listed below: Free Shipping Helps Increase Your Customer Base  When you offer free deliveries, you tell customers that you value their business and are willing to go the extra mile to ensure that they're satisfied with their purchase. It makes customers more likely to return and recommend your store to their friends. Free Shipping Boosts Your Sales Figures  If an online retailer has many shipping options, they can better cater to the sizes and needs of their consumers. The availability of these different shipping methods equates to a higher sales rate. In 2017, eCommerce warehousing giant Amazon reported that offering free shipping increased sales by 27%. That's a massive boost for any online store and it demonstrates just how important free shipping is for attracting customers. Free Shipping Can Increase Profit Margins  The shipping charge should be available both on the product page and at checkout to maintain an ongoing cost from product page to checkout. If an extra shipping charge deters a customer, they may abandon their shopping cart. Offering free delivery or at least providing lower shipping costs makes it even cheaper for customers since they don't have to pay any additional fees associated with shipping. Plus, if you have a lot of regular customers who order large items, free shipping can save them money. Free shipping Shows Your Customers That You Care  Many online stores offer free distribution on orders on a specific retail value to show their customers that they're valued and appreciated. Offering free delivery is one way to show your customers that you understand the importance of their business. 10 Different Ways to Provide Free Shipping to eCommerce Customers There are a few different ways to offer free deliveries by eCommerce fulfillment to customers. Here are some examples: Use Voucher Codes If you have voucher codes that you offer your customers, you can include them with orders or offer them as a separate product. This way, customers can get access to free shipping without spending extra money on more purchases. Offer Free Returns If you offer free returns, you can make it so that customers who return items receive free shipping. This way, customers won't have to worry about paying for shipping twice – once for the original purchase and again for the return. However, use this policy sparingly if your business incurs the logistics cost. Provide Free In-Store Pickup If you have a brick-and-mortar store, you can also offer free in-store pickup for online orders that are above a certain amount. This way, eCommerce customers can take their purchases home without having to pay for shipping. Offer Exclusive Deals on Free Shipping Sometimes, it's beneficial only to offer free delivery on specific items or particular year periods. This way, you can promote your products and keep your customer base loyal by offering exclusive deals with the benefit of free shipping. Use Social Media to Promote Free Shipping You can use social media platforms like Facebook and Twitter to promote special deals on free shipping. This way, you can attract new customers and keep your existing ones happy by offering free shipping on their favourite items. Offer Minimum Requirements You can always specify minimum requirements that customers need to meet in order to take advantage of free shipping. This could result in more sales as customers try to reach these minimum requirements which will result in more revenue for the company. Offer Free Shipping to Certain Locations You can offer free shipping to certain locations that meet your expectations for the amount of demand and confirmed orders that they yield. Offering free shipping to these areas will help to increase demand even further, while mitigating increases in shipping prices as orders can be shipped in bulk and you can take advantage of large scale discounts offered by shipping companies. Provide Free Shipping During Specific Seasons Certain seasons result in more demand and more products sold than others. In order to make your customers happy and not risk your bottom line by being too generous, you can offer free shipping only during seasons that result in a large number of sales for your business. Include the Shipping Fee in the Price of Products By doing this, you are able to maintain your profit margins and also make customers feel like they are getting a better deal than what they actually are since they assume that they are getting something for free. Use Memberships or Subscriptions as a Way to Entice Customers You can entice customers into signing up for memberships or subscriptions by offering perks such as free shipping and ultra-fast delivery. This will help to promote your products as well generate new sales. How Do eCommerce Brands Recover the Zero or Lower Shipping Costs? Brands that are not profitable enough to provide shipping free on all products can choose to offer bonuses with purchases so that customers will spend more and qualify for free delivery. Find Out How to Increase the Price of Your Product. When you are pricing expensive items, shipping may be more than the cost of the item itself and make the product seem overpriced. However, adding a little to the price of already expensive products might not dissuade customers from buying as it will still be cheaper than paying for shipping. Add markup to your products to cover the average shipping and logistics costs. It is hard to predict additional orders, so covering shipping might make it plausible for the other charges. Find Out How to Get Customers to Spend More Gradually Increase LTV, offer subscriptions and loyalty programs and consider effective email marketing strategies. Customers often need to make a second purchase to cover the cost of acquisition. For example, six will subscribe for a second transaction out of ten customers. If the customer's next purchase covers their initial expense, then anything after that is a bonus. Add Bundling or Lower the Spending Threshold to Increase Your AOV Bundle products together to be able to charge lower shipping costs. Include other benefits, such as buying a membership to the website to get more value and money from the customer's purchase. Increasing your AOV (average order value) will help you reach new customers and keep old ones coming back for more. To increase the average order value (AOV), you should bundle products together or pre-kit them, so it's a single pick and pack process to fulfill an order. For example, Bathorium, a manufacturer of bath frames, allows customers to purchase six for the price of five – this saves shoppers money and increases AOV. To avoid losing customers, consider raising prices if the cost of free shipping is too high. If you offer low-cost items or no subscription model with a product, you might require customers to have a minimum order quantity(MOQ) to receive free delivery. How Do I Know if Free Shipping is Right for My Online Business? Some stores have the flexibility to offer customers free shipping on all products. However, other stores need to offer free distribution as an incentive for customers for specific products. For instance, if your product is expensive, you should test free shipping out for that product by running a limited-time promotion. To promote or boost sales, experiment with the minimum spending requirements and time limitations. It will help you customise the campaign to your customer's needs. Remember, experimentation is critical when it comes to marketing, and you should always keep track of what is working by doubling down on it and stop or remove things that aren't working well. Free delivery likely indicates that retail fulfillment is profitable. If you keep purchasing and making returns, there's always demand for the product and shipping aggregation. Avoid excessive returns by examining the potential impacts and ramifications of your purchase. If you want to offer free shipping, lower shipping costs or make your entire shipping process more efficient. WareIQ can help. We offer the choice of more than 20 of the largest shipping courier providers in the nation at the most competitive prices to enable you to retain higher profit margins and provide a high quality delivery experience to your customers. WareIQ is one of India’s leading and fastest-growing full-stack eCommerce fulfillment companies that offer a variety of services from same-day and next-day delivery, shipping badges and RTO Shield, to state of the art technological solutions such as our custom WMS and our intuitive, well-designed app store. We can take care of your brand’s entire fulfillment service requirements and ensure that you and your customers get the best order fulfillment in the country and have a hassle-free experience and raise satisfaction levels to new heights. [signup] Free Shipping in eCommerce FAQs Is it worthwhile to provide free shipping?Free delivery is an increasingly common online shopping option in which customers do not have to pay an additional shipping fee. Customers who value clear pricing structures may welcome free delivery, making it a possible competitive edge for online enterprises. How significant is free delivery to customers?Free delivery makes up to 75% of consumers more inclined to purchase. This is because the incentive enhances the online experience and eliminates the barrier that shipping prices generate. Most importantly, customers consider free delivery to be easy and convenience influences their purchasing decisions. Does offering free delivery increase sales?Free delivery is a great method to increase your sales since customers adore it. They see it as an extra benefit that will allow them to save money when the time comes to buy. How does free delivery make money?Free shipping is used as a lever by smart merchants of all sizes to enhance conversions and average purchase values while minimizing the negative impact on revenue generation. Furthermore, free delivery might save customer care expenses for returns. When returning an item, customers frequently request that delivery costs be paid. How do I offer free shipping for my online store with WareIQ?There are a few methods that online retailers such as WareIQ use to offer free shipping. One approach is to require a minimum purchase amount before providing free shipping. Other methods include charging additional fees for free shipping or offering different discounts for customers who choose to order products with free shipping. Since we offer users a choice of shipping companies, you can always ship your products at the most competitive rates.

June 07, 2022