Top 7 Useful Inventory Management Strategies To Use in 2022

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Are you looking for some eCommerce effective inventory management tips? If yes, then you are in the right place. Read ins and outs along with the best practices of efficient inventory management in eCommerce here.

Year 2021 remained tumultuous and unpredictable for almost all of us. Every business around the world battled with novel challenges to sustain in the difficult time and eCommerce businesses were no exception.

Effective inventory management for eCommerce businesses remained essential during the time of pandemic as the supply chain came to almost a standstill at some point. Even the eCommerce leviathans struggled with it.

Inventory management is one of the most important aspects of any eCommerce business. Poor inventory management can create hurdles in your online business and can be challenging to deal with, no matter how expert you are.

If you are just diving into the eCommerce business or running it for years, then it’s the time to rethink the inventory management that you can implement.

In this article, I have pulled out some of the amazing tips for effective inventory management for the eCommerce businesses to help you excel in your business.

What is Inventory Management in eCommerce?

Before diving deep into the effective eCommerce inventory management tips, let’s consider answering – What is Inventory Management in eCommerce?

The eCommerce inventory management is the cost-efficient sourcing, storing, tracking, and shipping of products. It is an organized approach to make sure that no shipment or order remains unfulfilled.

Efficient inventory management in eCommerce can lead to a high order fulfillment rate at a lower cost. It can also cut down the operational costs and can help the companies to leverage their businesses.

Top 7 Techniques and Best Practices for eCommerce Inventory Management

The eCommerce businesses can not overlook the importance of inventory management. It is essential for the smooth running of the business with utmost customer satisfaction. 

Managing the eCommerce inventory effectively is one of the most challenging tasks for the business owners. Based on the opinions of successful eCommerce professionals, I have curated a list of the top seven eCommerce inventory management tips.

You can implement these inventory management best practices in your eCommerce business to run your business in the most efficient manner. Enhance the customer experience of your store from lightning fast shipment to better order tracking through improved inventory management.

Conduct ABC Analysis

Ever struggled between managing the number of expensive and inexpensive items in your inventory? Ever battled with a limited inventory budget? If so, then you must consider conducting an ABC analysis of your inventory. 

ABC analysis refers to ‘Always Better Control’ analysis. It is the method of prioritizing control over the items in the inventory based on their value. In this method, you need to classify the items in the inventory into three groups: A, B, and C.

You, as a store owner, need to classify and prioritize the control on these items based on their groups, with utmost control on group A with expensive items, moderate on group B with less expensive items, and least on group C with inexpensive items. It can be better understood by the table below.

GroupNumber of itemsControl
Group-A (Expensive)LowHigh
Group-B (Less Expensive)ModerateModerate
Group-C (Inexpensive)HighLow

This method focuses on having maximum control over the items that occupy most of the investments to manage the inventory efficiently.

First In, First Out (FIFO)

Are you selling perishable items that might expire or decay after a certain period? Suffered a loss from the devaluation of products over time? If so, then this inventory management technique is most preferable for your eCommerce business.

As the name suggests, the technique refers to selling out the items that came first in the inventory. The FIFO inventory management technique is best suited for the perishable items that are subject to decay or expire after a certain period.

Because of the widespread usage of this technique, several pallet racking systems are also available to assist the FIFO management. It ensures the prioritization of the output of the oldest and obsolete products first to prevent the loss of value or devaluation of the items.

Set PAR Levels

Suppose, in your online store, someone ordered 10 quantities of a single product, and you only have 5 in your inventory. In such a case, you might need to re-order the remaining 5 quantities from the manufacturer to fulfill the order.

This can add to your order processing period and can cross the expected delivery date by the customer. Therefore, it is highly essential to set the periodic automatic replenishment levels of the items in the inventory to avoid such scenarios.

You can set the periodic automatic replenishment levels for the items in your store to replenish them once they reach the minimum set amount. You can also use the ABC analysis to determine the PAR levels of your stock with high PAR levels.

Implement Barcode Scanning

Are you running an online business with thousands of unique items? If so, keeping track of every item is prone to human errors. Even if you are using a computer program for that, the chances of mistyping the SKUs and unique codes are very high.

In such a scenario, implementing a barcode scanning system in your inventory can help. Barcodes are the 1D or 2D representation of the product information that the scanners can read.

Barcode scanning system is cheap and can even boost the efficiency of inventory management by reducing the manual efforts required to enter the product details in the system.

Inventory Audits

Inventory audits are highly important for the online store owners to evaluate the accuracy of the inventory tracking and management. Even if you are using software to keep track of your inventory, it is crucial to audit your inventory manually for a couple of reasons.

Conducting inventory audits once or twice a year can help you figure out if any stock is stolen, lost, or decayed. It prevents the over-stocking or under-stocking items by accounting the exact stock with the digital records.

However, conducting manual inventory audits can be tedious for most of the business owners. There are certain ways to accomplish it. You can audit a random product in your inventory to check the accuracy of your records instead of a thorough audit.

Tire Storage Solutions is a robust software that can help you run hassle free inventory audits for your tire garage. Download the booklet here to see how it can be helpful to those in the auto industry.

Organized Physical Storage

Finding the products in your warehouse can be tedious when you have thousands of products racked up in a messy way. Managing the physical storage of the products in the inventory in an organized way is indeed essential for better inventory management.

Organize your physical warehouse such that you can easily locate the items, and pack them in no them when customers place the order. It can reduce the time required to ship the order and can improve the customer satisfaction towards your store.

Stay Ahead with Historical Data

Data is currently fueling businesses across the world. Your customer’s data is one of your assets.

Analyzing the historical customer data of orders on your eCommerce business can help you understand the market demand and can allow you to stay ahead of the curve in inventory management.

Historical data about the past purchases of the customers can help you prioritize the stock of items based on the market demand and trends. Thus, it is highly important to study what’s selling fast in your online store for better inventory management.

Why is Inventory Management Important in eCommerce Businesses?

Effectively managing the inventory is highly important for the online businesses to prevent stock-outs and over-stocks. There are plenty of reasons to manage inventory of your online store and I have listed a few of them below.

Saves You Money

Better inventory management in eCommerce simply saves your money. It can reduce the loss caused by the decay or expiry of the items. Also, you can cut down the inventory budget by better optimizing your inventory with the most-demanded products.

Also, regular inventory and supply chain audits can help you figure out where you are losing bucks and what needs to be fixed.

Improve Business

Inventory management can help the eCommerce businesses to better manage their products in the most efficient way. It can streamline the order processing and can help the business improve. 

Order Fulfillment

Managing the inventory effectively will make sure that most of the orders are fulfilled on time. It can improve the order fulfillment rate of your store at a lower cost, leading to improved customer satisfaction and loyalty towards your brand.


Poor inventory management can cost you an arm and a leg. Implementing effective inventory management techniques in your eCommerce store can make the work a lot easier and prevent possible losses. 

It is vital for you to implement inventory management best practices for overall betterment of the store. It can lead to more profitable business with improved customer satisfaction that can provide the customers a reason to come back!

Heron Nelson

Heron is a business blogger with a focus on personal finance and wealth management. With over 7 years of experience writing about financial topics, Heron has established herself as a trusted voice in the personal finance space. She has a deep understanding of financial concepts and strategies, and is able to explain them in a relatable and actionable way for her readers.