Multi-Channel Inventory Management: What It Is and How to Do It

The management of inventory across different channels of sales is a major issue for businesses today. With expectations for customers higher than ever before and the retail industry becoming more complicated, ensuring that stock levels remain precise across platforms, online, marketplaces, and physical stores is essential for sustaining the growth. If you are reading this, you’re probably having issues scaling your ecommerce business. If you’re growing quickly into a medium-sized business that has multiple channel inventory management processing thousands of orders each month, spreading stock across various platforms could become a hassle.

We get it. But when you have the right solution you can solve these issues easily. Through this post, you’ll learn ways to streamline your inventory, eliminate mistakes, automate tracking, and increase the size of your company.

What is multi-channel inventory management?

Multi-channel inventory management could be a collection of processes or a program that tracks inventory across different platforms and locations.

It’s fairly simple to track inventory when selling from one place. But, as your business expands into multiple options–such as a physical shop and an online storefront and platforms such as Amazon or Etsy, the complexity grows. This is the point where inventory management systems are required. They consolidate your inventory information and ensure that you’re aware of your sales channels, regardless of which one you’re managing your inventory from.

You could start selling soap made from your own hands at local farmer’s markets and later expand into a tiny storefront.

If you have a physical store, customers can see exactly what they will see. The process gets more complex when you have online stores. You must be clear regarding the availability of each page that lists the product’s availability. If the product is not in stock (and not listed in advance), it is your responsibility to contact the customer following payment and explain the issue.

Multi-channel inventory management keeps your list of products current across different platforms, while single-channel management makes it easier to track inventory.

Also read: Warehouse Management: Enhancing Operational Efficiency and Cost Optimisation

Best practices for multi-channel inventory management

Use these guidelines to be successful in the multichannel selling market.

• A regular reconciliation of the inventory information: To prevent any discrepancies, ensure to regularly reconcile inventory data. This will help catch mistakes early and helps ensure that stock levels are in line with what’s available
• Using integrated software: Make sure you invest in integrated software that can connect your marketplaces, online stores, and accounting systems.
• Training staff:  A proper training program is essential to ensure smooth operation. Make sure your staff understands the system and is aware of how to handle updates to inventory or refunds, and order fulfillment across all channels.
• Utilizing analytics to improve strategies: Make use of data analytics to monitor the performance of your business, spot trends, and then optimize your inventory management strategy. This method helps improve forecasting of demand and more accurate inventory management.
• Utilizing safety stock levels:  Maintain an inventory buffer (safety inventory) to avoid stock shortages during peak times or sudden demand surges.
• Optimizing for scalability: When your company expands, be sure that your inventory management system can handle the growth in channels and orders. Select a software solution that supports ease of scaling when your business grows
• Conducting regular audits: Schedule regular inventory audits to verify accuracy. Regular checks can help you identify problems and provide you with an overview of the condition of your inventory, which reduces the risk of costly errors.

Challenges of multi-channel inventory management

1. Managing inventory with spreadsheets

Spreadsheets may appear to be a straightforward solution but they’re not necessarily the most effective when you manage your business through many sales channels. While spreadsheets can appear like a simple solution, they usually cause a lack of visibility and a lack of central control.

Without a single dashboard, it can be difficult to have a clear view of the stock levels across different platforms. Lack of visibility could cause an overstocking or a shortage on specific platforms, which makes it difficult to effectively plan inventory levels. In the end, companies could end up with excess inventory in one place but being unable to purchase stock in another, leading to financial problems.

As an example, let’s say you’re selling electronic products. Amazon might have 200 of its “Kindle remote,” while eBay only has 30 if you don’t have a central overview on your stock. Research suggests that nearly 28% of businesses do not have visibility into their inventory across all retailers, which could lead to a loss of sales or tied-up resources. In the absence of a single system, the inconsistencies and gaps in visibility can lead to massive loss and inefficiencies.

Overselling and how it can lead to dissatisfaction from customers

Overselling occurs when you think that you have enough inventory to fill orders, but you do not. This results in the loss of sales and unhappy customers.

Indeed, research indicates that the loss of stock will cost retail companies throughout both the US and Canada about $349 billion by 2022. Additionally, it reduces the retention of customers and reduces loyalty among your frequent customers.

To combat this, you must monitor and replenish the top-selling items. A lot of businesses utilize this method to manage their inventory. ABC Analysis Model to prioritize the most impactful products.

Also read: Best Inventory Management Software for Small Business

Importance of multi-channel inventory management to eCommerce growth

Let’s see what we can do.

1. Boost sales opportunities by tapping into diverse marketplaces

Selling across multiple channels can help you connect with a wide audience. You could make it possible to go international when you can, opening up new possibilities.

Skinny Mixes experienced this firsthand. They were handling orders by hand and soon became a burden. Utilizing sales tools, Skinny Mixes integrated Amazon, Shopify, and QuickBooks to streamline the inventory management and bookkeeping.

By synchronizing in real-time sales journals, orders and inventory, Skinny Mixes recovered the time that would otherwise be spent on tasks such as manual inventory update and order management. This has resulted in them having increased the volume of orders by 75% and added an annual revenue of $3 million.

Increased customer satisfaction by ensuring accurate stock availability

It’s not a good idea to experience the pain of a buyer looking to purchase a product, only to discover it’s not in stock at the point of purchase. However, it’s not all about avoiding disappointment. It’s equally about how the management of inventory directly affects cash flow and the trust of customers.

If inventory levels are synchronized across platforms, companies can keep their cash flow in check by avoiding under or overstocking. This means better purchasing decisions, fewer write-offs and more money to invest into the company. When you pass these advantages on to your customers – such as faster replenishments, greater availability, and more efficient transactions, you’ll ensure they are satisfied and loyal.

With a well-designed system that is constantly changed in real-time. This means that customers can check live inventory levels on every platform. There’s no surprise at checkout and no interruptions in cash flow. Your business will operate more efficiently, and your customers will have a smooth shopping experience each time.

Tools and technologies for Multi-channel inventory management

Inventory management across multiple sales channels can be complicated and time-consuming, but the proper tools can make an enormous difference. Multi-channel inventory management software that is advanced includes features such as real-time inventory syncing, automatic price adjustments, stock updates, and central dashboards that make it easier to manage processes. These tools do not just help save time, but they also minimize the mistakes that are often associated with manual procedures.

Here’s what to look for:

1. Automated software to sync inventory in real time

There are numerous automation software to assist in adding new products, adjusting prices, and updating inventory whenever they are sold. This ensures that the inventory levels are up to date across every channel. You can anticipate stockouts, prepare purchase orders ahead of time using this.

For instance,  you can utilize QuickBooks Inventory or your online store to serve as an inventory hub. Integration with QuickBooks will sync inventory and orders and prices across all of your sales channels in real-time. Once you make a change at one location, it is updated everywhere. This reduces time and avoids making mistakes.

Additionally, you can also create various comprehensive reports, including:

• Sales performance: Review how the specific channels, products or promotions are doing to enhance the sales strategy you employ.
• Cash flow: Monitor trends in cash flow to make sure you have funds to invest or pay for operational expenses.
• Profitability: Learn about your profit margins on a level of the product or channel to help you concentrate on the factors that drive revenue. Automated syncs fee and revenue information from sales channels, and also item costs, along with the cost of sales (COGS) of your system for accounting.
• Amazon Settlement reports: Webgility gives summaries of Amazon settlements and the associated fees, and links these to orders. This feature lets you look up fees and expenses about categories like shipping charges and item fees paid by Amazon.
• Shopify Payout reports: For Shopify customers, automation software offers summaries of fees and payments, tying them with specific transactions. This report assists in tracking costs and understanding the financial implications associated with your Shopify transactions.

2. Warehouse management system for organized storage and retrieval

If you have QuickBooks installed and want to map, match, or create listings for your products. It will automatically update inventory whenever the orders are canceled or returned.

The system also assists in forecasting demand, which allows you to make better purchasing choices. This decreases the possibility of overstocking and guarantees that your inventory remains precise. There is no more problem of overselling and you can confidently guarantee satisfaction for your customers.

Also read: How to Improve Warehouse Sustainability

3. AI assistant to retrieve details regarding inventory

Nearly 40% of online marketers already use AI to analyze data and it’s obvious that AI has transformed the way that inventory management is handled. Why should you think about taking it on? Simply stated, AI doesn’t just identify issues, it solves them through instantaneous insights and practical recommendations.

AI Assistant eliminates the need for handling inventory management by automating routine tasks, and then delivering useful information directly to you. This is how it works:

• Gaining detailed insights: AI gathers and organizes information from your purchase fees, refunds, and product catalogs, then presents the data in a simple-to-read structure
• Error reduction: Through analysing trends and identifying the inconsistencies between sales channels, AI lowers the risk of costly errors, for example, overselling or a mismatch in pricing
• Time-saving automation: Routine procedures such as stock adjustments, price updates, and bookkeeping are all automated, which allows you to concentrate on growth strategies instead of administration tasks.

4. Automate product listing and pricing sync across multiple channels

Listing products across multiple platforms can be difficult. However, you can easily list products in QuickBooks Inventory to Amazon or your store online. Prices, descriptions, and the conditions of products are updated across all platforms with just one click.

The system also allows bulk listing, which makes it simpler to add new products using pre-set values. Whatever the product listing is, they’ll always be up-to-date.

5. Automate POS

The ability to stock shelves with the best-selling items is made easier by automating purchase orders. Automating POs makes the process easier and helps you replenish your shelves effectively while avoiding unnecessary accumulation of inventory. This integration allows for seamless data transfer between your store’s online and QuickBooks, making it easier to manage accounting processes.