Ecommerce Inventory Management: A Step-by-Step Guide for 2023

    To keep yourself updated with latest Amazon and eCommerce related news, subscribe to our newsletter today - Click Here

    Ecommerce inventory management is the process of overseeing and controlling the inventory of an ecommerce business. It involves keeping track of the products available in the store, the products sold, and the products that need to be restocked. Effective ecommerce inventory management is crucial for the success of an online store, as it can impact a business’s profitability, customer satisfaction, and reputation.

    This article will provide a step-by-step guide on effectively managing your ecommerce inventory. We will cover everything from setting up an inventory system, tracking inventory levels, and creating a restocking strategy. Additionally, we will discuss the some good inventory management software for ecommerce businesses to help streamline the inventory management process.

    By the end of this article, you will have a comprehensive understanding of how to manage your ecommerce inventory efficiently and effectively and be equipped with the tools to make informed decisions regarding your inventory management strategy.

    Step for an effective ecommerce inventory management

    Step 1: Analyze Your Sales Data

    analyze Sales Data
    Analyze Your Sales Data

    The first step in effective ecommerce inventory management is to analyze your sales data. This involves looking at the sales history of your ecommerce store to identify which products are your best sellers and which are slow-moving. By analyzing your sales data, you can make informed decisions about inventory levels and purchasing decisions.

    Pull your sales data from your ecommerce platform or inventory management software. Look at your sales history over time (such as the last month or quarter) to get a clear picture of which products are selling well and which are not. Pay attention to the following metrics:

    • Units sold: How many units of each product have been sold during the period?
    • Sales revenue: How much revenue has each product generated during the period?
    • Average order value: How much are customers spending on average per order?
    • Gross margin: What is the profit margin on each product?

    Once you have this data, identify your best-selling products and slow-moving items. Best-selling products are the ones that have sold the most units and generated the most revenue. Slow-moving items are the products that have low sales volume and may be tying up valuable inventory space.

    Step 2: Optimize Your Inventory Levels

    Once you have analyzed your sales data, the next step is to optimize your inventory levels. This involves setting up reorder points, using safety stock, and implementing just-in-time inventory management.

    1. Set up reorder points: Reorder points are the minimum inventory levels at which you must order more products to avoid stockouts. Setting up reorder points ensures you don’t run out of stock and lose potential sales. You can calculate you’re reorder points using historical sales data, lead times, and safety stock.
    2. Use safety stock: Safety stock is the extra inventory you keep on hand to prepare for unexpected increases in demand. By keeping safety stock, you can avoid stockouts during peak periods and ensure you can fulfill orders on time. The amount of safety stock you need will depend on lead times, demand variability, and service level goals.
    3. Implement just-in-time inventory management: Just-in-time inventory management is a strategy that involves keeping inventory levels as low as possible while still meeting customer demand. This can help reduce carrying costs and increase efficiency in your supply chain. You’ll need to have accurate demand forecasting, reliable suppliers, and efficient logistics to implement just-in-time inventory management.

    Step 3: Improve Your Inventory Accuracy

    Accurate inventory counts are essential to successful ecommerce inventory management. By regularly conducting inventory counts, you can identify discrepancies and prevent stockouts, which can lead to lost sales and dissatisfied customers. Here are some steps you can take to improve your inventory accuracy:

    1. Conduct regular inventory counts: Regularly counting your inventory is the best way to identify discrepancies between your actual inventory levels and what your system says you have. You can conduct these counts manually or use an automated system, depending on your inventory size and budget.
    2. Use barcode scanning and other automated tools: Using barcode scanning and other automated tools can improve the accuracy and efficiency of your inventory counts. These tools can help you quickly identify items that are out of stock or need replenishment.
    3. Train your staff: Properly trained staff can help ensure accurate inventory counts. Train your staff on proper inventory management techniques, including using barcode scanners and other tools, conducting inventory counts, and reporting discrepancies.

    Step 4: Streamline Your Fulfillment Process

    Efficient fulfillment is critical to the success of an ecommerce business. Customers expect fast and reliable delivery, and delays or errors can damage your reputation and result in lost sales. Here are some steps you can take to streamline your fulfillment process:

    1. Use a dedicated fulfillment center or third-party logistics provider: If you’re struggling with order volume, consider outsourcing your fulfillment to a dedicated center or a third-party logistics (3PL) provider. These services can help you manage your inventory, process orders, and handle shipping and returns, allowing you to focus on other aspects of your business.
    2. Use software to automate shipping and tracking information: Shipping software can automate the process of printing labels, generating tracking numbers, and updating customers on the status of their orders. This can save you time and reduce the risk of errors while providing a better customer experience.
    3. Offer multiple shipping options: Giving customers a range of shipping options can help improve their satisfaction with your business. Consider offering free or discounted shipping for orders over a certain amount or allowing customers to choose between standard and expedited shipping.

    Best Inventory Management Software for Ecommerce Businesses

    Effective ecommerce inventory management requires powerful software to help streamline the process. Here are some of the best inventory management software options for ecommerce businesses:


    ecommerce inventory management
    Inventory Management Software

    TradeGecko is an all-in-one inventory management platform for small to medium-sized ecommerce businesses. It provides order and purchase management, inventory control, and fulfillment features. TradeGecko integrates with popular ecommerce platforms like Shopify, WooCommerce, and Magento.

    Zoho Inventory

    Zoho Inventory is an inventory management software that offers robust features like multichannel selling, order fulfillment, and order management. It also integrates with popular shipping carriers like USPS, FedEx, and UPS. Zoho Inventory has a user-friendly interface and is ideal for small to medium-sized businesses.


    Skubana is an inventory and order management software designed for ecommerce businesses. It integrates with multiple sales channels such as Amazon, eBay, Shopify, and Walmart to provide a centralized platform for managing inventory levels, orders, and shipping.

    Skubana offers features such as real-time inventory tracking, automated reorder points, advanced analytics, and customizable reporting. It also includes integrations with various shipping carriers and fulfillment centers to streamline the shipping process.


    SkuVault is an inventory management software that provides real-time inventory management, order management, and pick-and-pack functionality. It integrates with ecommerce platforms like Shopify, BigCommerce, and Amazon. SkuVault is ideal for small to medium-sized businesses.


    ecommerce inventory management

    Cin7 is a cloud-based inventory management software that offers features like order management, stock control, and multichannel sales. Cin7 also provides real-time reporting and analytics, which helps businesses make informed decisions. Cin7 integrates with popular ecommerce platforms like Shopify, WooCommerce, and Amazon.

    When choosing inventory management software, it is essential to consider the needs of your business. Factors such as the size of your business, the complexity of your inventory, and your budget should be considered. Ultimately, the goal is to find the software that meets your needs and helps you achieve your inventory management goals.

    Frequently Asked Question (FAQs)

    What is inventory management in ecommerce?

    Inventory management in ecommerce refers to tracking and controlling the stock levels of products sold online to ensure enough inventory to meet customer demand without overstocking and tying up too much capital.

    What are the 4 types of inventory management?

    The four types of inventory management are: perpetual inventory management, periodic inventory management, just-in-time (JIT) inventory management, and materials requirement planning (MRP) inventory management.

    What is the best inventory method for ecommerce?

    The best inventory method for ecommerce businesses depends on various factors, such as the size, the type of products being sold, and the available resources. However, just-in-time (JIT) inventory management is a popular method used by ecommerce businesses.

    What are the 5 stages of the inventory management process?

    The five stages of the inventory management process are: analysis of sales data, optimization of inventory levels, improvement of inventory accuracy, streamlining of the fulfillment process, and ongoing monitoring and analysis.

    What are the 3 major inventory management techniques?

    The three major inventory management techniques are: economic order quantity (EOQ), reorder point (ROP), and safety stock.

    What is Amazon’s inventory method?

    Amazon uses a combination of inventory management techniques to manage its inventory, including just-in-time (JIT) inventory management, safety stock, and economic order quantity (EOQ).

    What is the FIFO method?

    FIFO stands for “first in, first out,” a method of inventory management that assumes that the first items received into inventory are the first sold. This method is commonly used in industries with limited shelf life or perishable products.


    In today’s competitive ecommerce landscape, effective inventory management is crucial for business success. Following the steps outlined in this guide, you can optimize your inventory levels, improve accuracy, streamline your fulfillment process, and ultimately boost customer satisfaction and revenue.

    To take your inventory management to the next level, we recommend exploring the best software options for ecommerce businesses. Based on our research and analysis, we recommend [insert your top software recommendation as the most suitable option for your needs.

    Don’t wait until you experience stockouts, overstocks, or dissatisfied customers to take action. Start implementing these strategies and investing in the right tools today to achieve a more efficient, profitable, and scalable ecommerce business.

    Get Unlimited Graphic and Video Design Services on RemotePik, book your Free Trial

    To keep yourself updated with the latest eCommerce and Amazon news, subscribe to our newsletter at

    Get more stories like this in your inbox every week!

    Recent Articles

    Related Stories

    Leave A Reply

    Please enter your comment!
    Please enter your name here