Poor merchandise is not the cause of the death of the e-commerce retailer. Mistakes on Tuesday or special sales generating overstocks are why they go broke. Stockouts are expensive and uncommon. Only one stock-out can cost a company four percent of its annual profits. Ecommerce Operations Services are tailored for these types of services.
Why Do Inventory Mistakes Cost More Than You Think
The consequences of a single count being wrong in your warehouse inventory could be overwhelming. Something a customer needs (an order). No, you can't. Their review is negative. Customers won't want to shop with you.
Both overstocking and stockouts are examples of inventory distortion, which costs retailers some $1.77 trillion a year, according to IHL Group. The biggest cause is incorrect inventory information. The figure grows exponentially if your inventories are not real-time up-to-date across all devices.
What Does Inventory Management Actually Look Like in Practice
There are real-life examples of this. A medium sized clothing company sold on Amazon, Shopify and at retail stores and was keeping track of stock levels in spreadsheets. They over-sold 340 units in a sales event over the weekend. The costs incurred to handle customer service and return requests were greater than the revenue earned on the deal.
They used a centralised inventory system which automatically synchronises when they partnered with a Hire Ecommerce Operations Services company. They saw a reduction of 18% in the return rate and an increased order accuracy of 99.3% in 60 days.
Adding more people would not have helped. The procedure was improved .
How Does Real-Time Inventory Sync Prevent Revenue Loss
In real-time sync, all channels update instantaneously when a unit is sold on Amazon. Zero latency. Without any human intervention. This will not be resold.
This is especially important when you get a high volume of orders with lots of errors, such as on Black Friday and during the holiday season. At peak traffic times, inventory sync can help cut down on failed orders by 30% for some brands.
This is one of the first things ecommerce operations service providers set up when you contract with them.
What Happens When You Scale Without Fixing Inventory First
An annual revenue of a direct-to-consumer supplement firm grew from $500,000 to $2 million in 14 months. Excellent issue. Their issue was that they were not able to scale up the inventory process.
They hadn't been able to have three of their top-selling products in stock at the same time and had $80,000 in obsolete stock sitting in a warehouse. The right money was put in the wrong stock.
They did not have a re-order point system in place in an audit of their operations. They were buying stock on intuition. One-quarter of stock was cleared of dead stock and out-of-stock rates were reduced by 62% when forecasting was introduced through their Ecommerce Operations Services provider.
Which Inventory Metrics Actually Matter
Most groups will track the total value of merchandise. That's simply useless on its own.The ability to make better decisions is enhanced by these metrics: sell-through, shrinkage, reorder point accuracy, and days of inventory on hand.
They can be proactively addressed by teams when THey are obvious and checked weekly. Dashboards created by a quality Hire Ecommerce Operations Services agency will automatically display these metrics.
