eCommerce Inventory Management: What You Need to Know

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eCommerce Inventory Management: What You Need to Know


eCommerce Inventory Management: What You Need to Know

Congratulations! You’re here because you’ve already established your own eCommerce business or decided to. And with all the profits to be made online without the added overhead costs that come with a traditional brick-and-mortar shop, who can blame you? But one crucial factor can make or break your budding eCommerce enterprise, and that’s eCommerce inventory management.

What is eCommerce inventory management, what are the problems faced in inventory management, and more importantly, what are the solutions?

Strap in because you’ve come to the right place to learn everything related to eCommerce inventory management and how to choose from the best eCommerce inventory management software!

Understanding Inventory Management

You may be asking yourself, at this point, what are the functions of an inventory management system? Simply put, proper inventory management can be the difference between your enterprise being extremely profitable vs. extremely costly. To start, your inventory is your products or goods that you are ready to sell to potential buyers. These products are sitting around in your inventory until they are sold.

Sometimes items expire or have a limited shelf life, so having too much of an item in stock may lead to unexpected costs. And while you can’t necessarily predict the future to know how much of which item you’ll be able to sell ahead of time, you can make a few rough guesses (especially if you have data from the last few months of sales to help you make those predictions).

With the right eCommerce inventory management tools, you’ll be able to analyze those patterns and see where your business stands in real time. You’ll be able to calculate everything from your current growth rate and your previous year’s sales to much more.

Similarly important to having an efficient order management system, having the right eCommerce inventory management software is valuable in your eCommerce arsenal. It will ensure that you won’t produce or order too many products or too few. In one case, you risk having too many unsold items collecting dust in a warehouse at your expense. In the other case, a lack of supply means you miss out on orders that could have made you a sweet profit. A proper eCommerce inventory management system will help you forecast with pristine accuracy over time.

eCommerce Inventory Management Challenges And Solutions

So let’s delve deeper into some of the more common eCommerce inventory management challenges and their solutions.


Here are a few examples of challenges that eCommerce business owners face.

Having Multiple Channels And Warehouses

One of the most common challenges facing inventory management in eCommerce is a lack of coordination when dealing with multiple channels and warehouses. We’re sure you can imagine (if you haven’t experienced it already) the stress of selling your products across multiple channels such as Amazon, eBay, Etsy, and more. Keeping track of the sales and orders from each channel and keeping your inventory up to date can be a nightmare.

The same can be said about the multiple warehouses you may partner with as your business expands in line with the growth of the demand for your products. Soon you may find yourself overwhelmed keeping track of orders, inventory, and relationships across all the manufacturers, partners, and warehouses spanning different locations you work with!

Overselling And Overstocking

One of the biggest problems in inventory management is not properly forecasting how many products to have in your inventory.

Fall short, and you won’t be able to supply your demand. Overestimate how much product you need, and you might risk accumulating deadstock (a.k.a. too much inventory and not enough demand).

By overselling and letting customers buy products that aren’t in stock, you risk building a bad reputation among your clients, which is no easy thing to repair. Overstock and your goods may take up valuable space in your warehouse, or worse still, expire before they ever get sold, making them cost you a pretty penny instead of making you one.

In either scenario, you’ll be facing some major inventory management issues.

Manual Sales Management (and Its Pitfalls)

Another popular inventory management problem is when you try to manage things manually. This might be fine in the beginning stages of your eCommerce business when things are relatively easy to keep track of, but if business starts booming (which, of course, is every business owner’s dream come true), scaling will become a big issue as you struggle to meet the growing demands of your customers!

Manual sales management tools such as offline spreadsheets, or tools that are not synchronized to each other or even worse, good old pencil and paper, are simply not going to cut it when you start selling products on multiple channels and working with multiple vendors or manufacturers or storing your goods at multiple warehouses around the country/globe.

With solid online eCommerce inventory management software, you’ll be able to track and manage inventory across multiple channels in real-time, but we’ll get into more of that later!

Understanding The Inventory Data Insights

So let’s say you’re gathering interesting data… Well, one of the other challenges of inventory management systems is actually being able to understand the data that you collect over time.

A key factor in eCommerce inventory management is gathering and analyzing data insights so you can make key decisions regarding your demand to boost your profits and minimize costs. Forecasting is an inventory management challenge that many eCommerce business owners struggle with, especially when they cannot access those insights ASAP.

Without the right data insights, you’ll have difficulty accurately knowing when to reorder products, scale back, and where inconsistencies exist. These are the kinds of crucial decisions that will affect the future of your business!


Have no fear; there are inventory management problems and solutions!

Product Information Management

The more control you have over information, your inventory management process will be painless. And if you find a tool for keeping product information management synced and seamless across the business, your decision-making process will become much less difficult. Online inventory management helps businesses to scale, make more informed decisions and, as a result, keep customer satisfaction high!

The benefits of having inventory management software are clear, but we’ll get into some of the best eCommerce inventory management software a bit later.

Adjust With Seasons (Keeping Inventory Smaller During Slow Seasons)

Sometimes, it’s not too difficult to understand when the high and low seasons are for your products. You can start using the online tools available to your benefit like Google Trends, for example. This simple and easy tool will help you to understand how search demands and interests have changed over time.

Let’s say you were in the business of selling hot chocolate. If you were to search “hot chocolate,” you would find that there is a peak in searches over the winter months, particularly in December. Now, if hot cocoa is one of many products you offer, you’ll be able to predict a high season in the winter months and a dip in demand in the summer. This will help you to prepare for big orders in the winter months while being ready for fewer sales in the summer (making sure you don’t make the mistake of ordering or producing hot cocoa products for no reason).

Of course, if your products aren’t seasonal, this solution might not make the most sense for you, but it’s certainly a great starting point! After some thorough tracking over time (whether manual or automated with the help of inventory software), you’ll be able to pick up on the sales trends of your own products in a similar fashion.

First-In-First-Out: Sell Older Items In The Inventory First

FIFO, or the First-In, First-Out rule, is a key pillar in eCommerce inventory management that can help prevent the issue of spoiled products or of them losing relevance. The rule is simple enough to follow, but let’s use an example to picture it better.

Coming back to the hot cocoa example. Let’s assume that hot cocoa only has a shelf life of 6 months, and we’ve already established that sales start to go down in late Spring. Assuming you are still ordering items to fill your inventory, the last thing you want is for your existing items (or older inventory) to get pushed to the back of the warehouse to either expire or miss their peak.

With that logic in mind, the FIFO rule states that inventory that has been ordered first should be sold before the new inventory is. And while some warehouses already follow this rule, it would be wise to double-check with your suppliers to ensure this is the case.

Automate Warehouse Operations

Many eCommerce inventory management systems have a warehouse automation feature, basically a process of automating inventory in and out of warehouses with minimum human involvement. Thanks to intelligent automated systems, you can cut out any repetitive manual data entry and analysis and let the automation deal with the details.

eCommerce Inventory Management Software

So much hassle and guesswork can be eliminated with the help of well-executed eCommerce inventory management. Let’s dig a little deeper into the benefits of having inventory management software and how to choose a warehouse management system for your business!

Why Implement Inventory Management Software

If you’re still confused about inventory management systems’ functions, look no further. Some systems include features like inventory tracking and optimization capabilities, customer relationship management, warehouse management, orders and invoicing, barcoding, batch tracking, demand forecasting integrations with other business software, and so much more.

With features like these and more at your disposal, you’ll be able to track your inventory and orders more accurately, improve customer experience, improve operational efficiency and have greater transparency across teams. All of this is great for when you’re scaling for growth.

Implementing inventory management software can really up your eCommerce inventory management game.

How to Choose the Right Inventory Management Software

At this point, it’s safe to say that we’ve covered some of the advantages of inventory management systems, but how do you know which eCommerce inventory management system is the right fit for you?

Here are some questions to ask yourself: What are your must-have features? Are you a small, medium, or enterprise-level business? How much are you willing to pay? What channels do you sell on? Do you need specific integrations? How much support will you need?

From costs to features, capacity for growth to ease of use, there are many factors you can consider when deciding on the eCommerce inventory management software for you.

eCommerce Inventory Management Software Platforms

Many eCommerce inventory management software platforms are out on the market, so choosing can be a bit daunting. Here are our top picks!

Dear Systems

Dear Systems is a great tool for selling and managing your products over multiple sales channels. It is a system with small businesses in mind and handles everything from manufacturing, purchasing, sales, accounting, and inventory management in one tidily integrated bundle.

This tool is also great for multi-warehouse eCommerce inventory management and can automate the entire process! As an added plus, it has a diverse set of integrations, including Shopify, eBay, and more. With its convenient layout, the platform is easy to use, but be aware that Dear Systems isn’t the most affordable option.


If dropshipping is your route, Ordoro might be your perfect match. Regarding eCommerce inventory management, Ordoro offers tools like batch-print shipping labels, assigning barcodes to SKUs, and issuing unique purchase orders when your product levels start to deplete. It will automatically sync and track your inventory updates and even find you the best bargain shipping rates with the help of USPS discounts!

Ordoro supports the routing of dropshipping requests for vendors and lets drop shippers fulfill eCommerce orders using a unique vendor portal, making it an extra useful tool for businesses that deal with drop shipping.

This software is ideal for beginners, as it is a very affordable option. There have been some complaints of a few glitches in the system, and they don’t boast of the best customer support, but as far as many clients are concerned, Ordoro gets the job done.


If you want to dip your toes in before committing, you may want to take advantage of Veeqo’s free trial to start off! This eCommerce inventory management software delivers some pretty impressive inventory control, shipping for online brands, and support for up to 21 shipping order integrations.

Veeqo supports multiple warehouses, returns, and wholesale orders and can offer in-depth reports. It also has special features for picking and packing, including barcode scanner picking.

If you are looking for an affordable multi-channel inventory management platform with a friendly, user-friendly back end and stellar customer support team, the Veeqo might be your choice.


If you’re looking for another eCommerce inventory management software that will give you the best bang for your buck, QuickBooks might be the one for you, with its offers of multiple price tiers and premium options for those who have more advanced needs.

QuickBooks is great for those who want to automate their order workflows, manage multiple sales channels, speed up payments, create private B2B eCommerce experiences for their wholesale customers and automate the connection between systems across multiple channels (like Amazon, Shopify, and Wayfair) without a cinch.

With operations in mind, QuickBooks helps professionals automate their business so effectively that they can relinquish low-level and repetitive tasks often prone to human error.
Time To Scale, Thrive and Shine
If you want to grow your eCommerce business, then tackling your eCommerce inventory management is a great place to start! Armed with the right tools, you’ll be set to expand your eCommerce business with improved operation efficiency, accurate inventory management, precise order tracking, and so much more.


Of course, when your business is operating smoothly in the background, and there is less time between a customer ordering a product and their order being fulfilled, it’s no wonder you’ll see an improvement in customer experience too.

Plus, armed with data insights, reporting, and forecasting tools, you’ll be able to make smarter, data-driven decisions. With automated workflows, you can focus more on what makes your business great and on building stronger relationships with your customer base, leaving the inventory management to software systems instead.

Angela Hassassian

Hailing from Massachusetts, Angela is a hyperactive content writer, avid reader, lifelong student, curious tech enthusiast, and an adventure-loving social butterfly who firmly believes that knowledge from all realms should be sought out and shared.


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