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Inventory Management for Ecommerce Websites

Inventory Management for Ecommerce Websites


Managing inventory is only one of many tedious tasks that must happen behind the scenes to keep online retail running smoothly. We touched on ecommerce website inventory management in our recent article about order fulfillment solutions: “Making Sales is Great! But now what?” In this article we will be focusing on inventory management software for ecommerce. Inventory management software serves two principal functions:

  1. it tracks what items your store has in stock
  2. it tells you when to order more stock or automatically places orders for you.


Keeping track of inventory can be hard enough when you’re running a single site and storing merchandise in a single location. For shops with multiple storefronts and/ or multiple warehouse locations, keeping track of inventory can be quite complicated! Luckily there are simple ecommerce inventory solutions to help you manage your online shop.


What Does Inventory Management Entail?


Inventory management is a complex activity that involves tracking items that have been sold, keeping tabs on items that are in stock, and ordering new stock to keep up adequate inventory levels. This may seem simple when boiled down to a few words, but in practice managing inventory can be stressful and mistakes can be costly. Managers – especially of small eshops – may be wondering:

  • How can I know what to order and when?
  • How can I order just what I need while still not running out of stock?
  • How can I ensure that I order correctly and on-time during the holiday rush?

The answer is inventory management software.


The following chart illustrates the complexities of inventory management, and helps us to understand what management software can do to help make businesses more efficient.

inventory chart

Deciding when it’s time to reorder can be tricky even for the best business managers. An item’s reorder point should be determined based on the expected lead time for an order – that is to say, how long it will take for the goods to arrive at your warehouse or store location – as well as the anticipated sales over that period of time (that is, over the lead time). The safety stock level refers to a minimum quantity of an item that you want to have on hand at all times for contingencies such as delayed orders or unusually large sales volumes. Adequate safety stock levels and lead times will be different for every item and will likely vary over time (for example, changing with the seasons).


To put this into a formula:

Safety Stock Level + Expected Sales during Lead Time = Stock Level at Reorder Point


The number of variables in the inventory management equation (including seasonal fluctuations)  makes it especially difficult to manage inventory by hand in an effective fashion. Software-assisted inventory management is efficient because it can take many factors into account and automatically optimize stock levels and indicate reorder points.


Software can also remember what you ordered in the past, so that seasonal trends and holiday orders can be estimated more accurately. The holidays are an especially critical time for ecommerce and the whole retail industry as stores offer competitive sales and promote fast shipping all while trying to keep items from selling out of stock.


Note: There are many theories of inventory management such as Lean Inventory Management and Just-in-Time Inventory Management. Inventory Theory is studied within the broader field of Operations Research, and generally aims to come up with ways to keep the lowest stock levels possible while still meeting customer demands. Inventory management software is crucial to a well-functioning and efficient operation no matter what particular inventory strategy your business adopts.


The Inventory Management Balance


Poor inventory control for ecommerce can have a serious impact on any online shop, costing money as well as customer trust and loyalty. Every retailer has to balance between two extremes: excess inventory and running out of stock.

Inventory Balance

  • Running out of stock is a bad practice for any eshop. Out-of-stock item pages lead to lost sales and drive shoppers to buy from competitors.

… but on the other hand

  • Every item in inventory ties up business capital. It’s better for a business to have more cash assets and fewer unnecessary products on-hand and taking up shelf space.


What Should I Look for in Inventory Management Software?


Inventory management programs should help your ecommerce site to solve at least the following business problems:

  • knowing what’s in stock across all storage and retail locations at all times;
  • determining adequate stock levels for each item in inventory;
  • determining reorder points;
  • and accounting for fluctuations in sales and ordering over time.


Naturally, not all inventory management software is created equal. Some features that you should pay attention to when looking for software for your online business include:

  • ecommerce platform integrations;
  • shopping cart integrations;
  • real-time updates across multiple sales channels;
  • and integration with POS systems at physical retail locations.


Inventory Management is Part of ‘Complete’ Ecommerce Software Solutions


Inventory management software is almost always part of “complete” ecommerce software packages. These all-in-one solutions can take care of inventory management as well as order management, shipping management, bulk product listings, accounting, and more. Linnworks (mentioned in our previous article about order fulfillment) is one such service, and is worth considering for anyone looking into inventory management software.


Four Inventory Management Systems for Ecommerce Websites


1) TradeGecko


TradeGecko offers many ecommerce business solutions including powerful tools for inventory management and inventory optimization. Partnering with Lokad (a company that offers “quantitative optimization software for commerce”), TradeGecko makes many sophisticated calculations to help you better manage your inventory. The data that they offer includes:

  • Reorder point: the number of units that should trigger a replenishment order
  • Order quantity: the number of units that should be reordered, based on the reorder point, stock on hand and stock on order
  • Lead demand: the number of units that will be sold during the lead time
  • Stock cover: the number of days left before a stockout if no reorder is made
  • Accuracy: the expected accuracy of the forecasts


TradeGecko automatically updates stock levels across multiple ecommerce channels, supports multiple warehouse and inventory locations, and integrates with the Magento, Shopify, and WooCommerce platforms.


While pricing starts off as low as $39 per month (billed annually), that price level only gives you 25 sales orders per month on 1 sales channel. For unlimited sales orders AND 2 sales channels you’ll have to jump up to the $169 per month level (billed annually, or $199 per month billed monthly).


With tips for getting started, a blog, ebooks, and guides, TradeGecko wants to make sure that you get the product support you need to quickly and easily learn their software and maximize your business potential. TradeGecko also offers a mobile app for when you’re on the road and want to keep tabs on the business.


2) Stitch Labs


Stitch Labs is all about “bringing everything together” and “making better business decisions.” To this end Stitch integrates with ecommerce platforms (see chart below), but also offers impressive integrations with payment processors, accounting software, shipping services, and even Google Drive.


Here are some of the integrations that Stitch supports:

Payment Processors Accounting Software Shipping Services
  • Square
  • Spark Pay
  • Vend POS
  • Paypal
  • Stripe
  • Quickbooks
  • Quickbooks Online
  • Xero
  • ShipStation
  • ShippingEasy
  • Rakuten (Coming)


Stitch’s integration with Google Drive allows you to “download and review data on your own terms,” something that may be of particular interest to those who want closer control over their business data. Having easy access to your own data is also promising if you ever consider switching services in the future.


Big data insights can drive your business forward. Collecting data is a great first step, but Stitch aims to process your raw data into “actionable data” and use it to show you how you can grow your business in practical, manageable ways. They’re not just offering inventory management, but rather holistic business optimization.


3) Bright Pearl


Started by the owner of an international longboard business based in California, Bright Pearl’s founders know what it’s like to actually run an ecommerce company: “Our software and services have been developed thanks to first hand experience of what it’s really like to be a growing retailer.”


Bright Pearl includes its own accounting software as part of their all-inclusive package. Having accounting software built-in may be a beneficial and time-saving feature for some businesses, though others may prefer the ability to choose a separate accounting software of their choice such as the popular QuickBooks. (This may especially be the case for businesses that have invested a lot of time and training into using their current accounting solution).


Bright Pearl stresses their real-time cash flow monitoring, cloud-based access from anywhere, comprehensive training, and regular updates. Though their pricing is high, BrightPearl may be the best inventory management software for ecommerce if you have the budget and are looking for a one-stop solution to all of your business management software needs.


4) Odoo Inventory Management


Odoo Inventory Management stands out from the crowd in several ways:

  1. it is the cheapest solution at just €30 per month;
  2. it is open source;
  3. and it doesn’t offer any ecommerce platform or shopping cart integrations, though it has an open API.


As with all other services we’ve looked at, Odoo offers much more than purely Inventory Management. They are the only service that that we’re reviewing, however, to offer applications as separate monthly subscriptions, meaning that you only pay for what you really need. Additionally, they offer app customization for €80 per app and even an implementation service as part of their “Basic Success Pack” for €1,550 if you need technical assistance to get up and running.

Odoo offers a number of apps with clear monthly pricing so you can build your own package.


With Odoo “you own your data.” Not only does this mean that you can download a backup or your cloud-based data on-demand, but it also means that you can run Odoo from the cloud OR on your own servers (on-site) with an Odoo Enterprise Plan (they’ll even help you make the switch).


And don’t let Odoo fool you with it’s open-source, a-la-carte nature – it’s powerful and trusted by huge brands like Danone, Auchan, LA Poste, and Canonical. Odoo is clearly not for everyone, but it is an exciting product that anyone with a little tech savvy should consider.


Comparison of Inventory Management Software

Software Solution Integrations Pricing Free Trial?
TradeGecko Magento, Shopify, WooCommerce, Amazon $39/ $79/ $169/ $349 per month depending on features 14-Day Free Trial
Stitch Labs Shopify, Square, Magento, Amazon, eBay, Etsy, BigCommerce, and more $29/ $79/ $199/ $449 per month depending on features 14-Day Free Trial
Bright Pearl Amazon, BigCommerce, eBay, ekmPowershop, Magento, Shopify, POS Software £199/ £299/ £499 per month depending on monthly order volume and SKUs 30-Day Free Trial
Odoo Open-source API, but no listed integrations €30 per month Yes



Track and Optimize Ecommerce Inventory with Software Solutions


All online shops should have some form of ecommerce inventory management system in place to optimize stock levels and make the most of their business capital. Inventory tracking systems for online retail enable shops to spend less time figuring out what’s in stock and updating listings and spend more time engaging their customers.


TradeGecko, Stitch Labs, and Bright Pearl are three full-featured ecommerce inventory solutions that any eshop can rely on for their critical business decisions. Odoo offers compelling open-source applications that may have a higher learning curve but are extremely capable.


Send us a message if you have any questions or comments about inventory management solutions. Our Webinerds team is here for you on Facebook, Twitter, LinkedIn, and via email.

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