How big data can improve inventory management E-COMMERCE

With online retail sales no signs of slowing downThe opportunity for business growth is huge.

The challenge, however, is that as E-commerce The industry is evolving, as are your customers’ expectations regarding a variety of things – not least the availability of products.

Consumer demand for instant gratification has fewer buyers willing to tolerate inventory. Instead, they prefer convenience over loyalty.

31% of online shoppers switches to a competitor when a product is not available for the first time on their preferred website. This increases to 50% in the second occurrence and up to 70% in the third.

The bottom line is that buyers want to be able to buy the products they want on the channels they prefer when they want them.

If you don’t have inventory to meet this demand, at best there is a risk that you will miss opportunities. In the worst case, this can lead to a damaged reputation and the loss of future customers.

But how exactly do you go about meeting customer demand without holding excess inventory? In short, by using the large amount of data in your inventory management system.

The current status of inventory management

Driven by the increasing demand for competitive efficiency Inventory management The functions go beyond ensuring an accurate inventory and automating important business processes – once viewed as a revolutionary development to achieve speed and accuracy in e-commerce.

Today’s inventory control systems are also the key to business insights that can help you make data-driven decisions to increase productivity and profitability.

These systems use historical data and apply data analysis to predict future needs. In particular, effective inventory management software can process large amounts of your past sales data and anticipate future demand for your inventory by taking lead times and seasonality into account.

While balancing product availability against expected market demand has been a difficult task in the past, advanced inventory management systems enable demand forecasting.

And even more: In times of big data, an inventory system also offers you unprecedented insights into customer behavior, product performance and channel performance, which are possible even for large retailers with large amounts of data.

These records contain information about:

Big data is defined as extremely large data sets that can be quickly analyzed to reveal patterns and trends, including for example:

  • How much inventory is required to meet demand while keeping inventory to a minimum?
  • How to optimize inventory management.
  • How to reduce the impact of product recalls.
  • How to enable cross-selling to improve the performance of slow moving stocks.

Ultimately, inventory management solutions are now equipped to apply a level of data science to Power Insights like the ones listed above. As big data continues to evolve across the SaaS space, it is likely that these findings will be even more advanced.

5 ways big data improves inventory management

In this section, we’ll go over some of the ways big data not only improves inventory management functions, but also provides insight into patterns and trends that can be used to improve business operations.

After all, big data is only as good as the retailers who use it.

1. Improve operational efficiency.

To survive in the competitive e-commerce environment, you need to offer your customers the best possible experience while keeping your costs to a minimum without sacrificing quality.

In other words, you need to improve your operational efficiency.

This is difficult enough even for small businesses with limited inventory and order volumes. However, as your business scales, maintaining – let alone maximizing – efficiency can become an even greater challenge.

A Inventory management system can help.

The inventory is the focus of your retail store. By fully monitoring your inventory with inventory tracking software, you can reduce friction in the supply chain. Inventory management is only one component of supply chain management. However, here are some of the points of friction that can be helpful to resolve:

  • Products that are not available lead to stocks and missed sales opportunities.
  • Incorrect stocks lead to oversold.
  • Slow order fulfillment leads to disappointed customers and a damaged reputation.

Use big data to avoid inventory

Stock levels are a big problem for online retailers. If a product is out of stock, there is a high possibility that your buyer will look for that product at an alternative retailer. This means that you not only miss this sale to a competitor, but you may also lose future customers.

While inventory is inevitable to a certain extent, using big data can help minimize its impact.

First, Calculate your lead times. You need to know how many days it takes for the product to reach your warehouse after you place your order with the supplier.

A good inventory management system can take these lead times into account along with existing sales data to calculate your safety stock and recommend reorder points for each item. Reorder points tell you when to replenish your stock so you have enough to meet your needs.

Use big data to prevent overselling

Sales through multiple sales channels is one of the best ways to accelerate your business growth. However, if you don’t synchronize your inventory across every channel, you risk selling products that are no longer available.

By acting as the central repository for your inventory, Inventory management Software significantly reduces the occurrence of oversales by reflecting the available inventory in real time.

It is even better if you can use inventory count data to determine how much inventory should be available on each of your sales channels.

Use big data to accelerate order fulfillment

Your E-commerce business Data can improve your order fulfillment speed. Many systems enable automated shipping rules. As soon as an order has been received, for example, it can be automatically assigned to the warehouse closest to the destination. This speeds up delivery and reduces shipping costs.

But that’s not all. Because inventory is filled from your warehouse, inventory management software with warehouse management functions can have a major impact on maximizing operational efficiency.

The warehouse management software determines where the inventory should be stored as soon as it has been booked in the warehouse. However, it can also inform the employees about the exact locations of the items in order to optimize their picking routes.

By applying information to big data, these systems can ultimately recommend warehouse movements within the warehouse so that the flow of goods is constantly optimized to minimize the time it takes employees to pick and pack goods.

2. Maximize sales and profit margins.

As a business owner, it is in your best interest to maximize sales and increase your profit margins. One of the biggest advantages of a wealth of e-commerce data is the ability to gain insights that enable smarter and more profitable decision making.

These insights can include customer buying trends, best and worst performing sales channels, and best and worst performing product lines. Let’s take the latter as an example.

By running reports on the performance of individual inventory items, you can keep track of the inventory and get better information Merchandising and buying decisions. For example, does an article work poorly because it is not being sufficiently advertised? Or is it because there is no demand for it?

If you still have hard-to-sell goods in stock, you can return yours Inventory costs and eat in your profit margins.

When certain items fly off the shelves, it could be a sign that demand is increasing. In these cases, more inventory could mean more sales opportunities.

Data can also maximize sales by enabling successful sales across multiple channels and multiple markets. We’ve talked a lot about product demand, but the reality is that demand can vary across channels.

With an overview of your inventory and channel performance, you can define advertising and pricing strategies based on demand, which can therefore maximize sales.

3. Increase customer satisfaction.

The insights from inventory management software can also provide a better shopping experience by helping you understand the main reasons for product return and make later business decisions.

Some examples of these decisions can be:

Switch to a more reliable carrier service

The performance of the carrier services you choose can affect your business – good or bad. This is why it is so important to keep an eye on the reasons why customers return products.

The ability to log item-level return reasons in your system is critical to understanding whether certain products will be returned due to the carrier.

In particular, you can see poor performance from this data Shipping provider or even items that are more prone to damage, so you can prevent customers from repeatedly becoming dissatisfied.

Improve product descriptions

Product not as described?

Since this is a common reason for the return, you can use the understanding of the stock item in question to assess whether your product descriptions or pictures accurately reflect the product.

Make sure you send the right items

One of the main causes of product returns is that the customer receives the wrong item. One of the best ways to do this is to avoid picking errors in the warehouse by barcode scanning.

More specifically, if a Department store If the employee accidentally selects the wrong item, a barcode scanner notifies them immediately so that they can correct the error before sending it to the customer.

Make smarter buying decisions

Let’s say you sell clothing and you get a high return because of the poor quality of certain clothing. You may want to consider alternative products – or maybe even new suppliers.

Knowing the reasons for product returns can help you improve your business processes to minimize future problems and improve customer satisfaction.

However, the speed of the return process can improve the satisfaction of customers who have already had a problem. For this reason, it is important to use a system that enables the efficient processing of returns and exchanges.

4. Reduce costs.

While there are many areas within an e-commerce store that can be optimized for cost savings, one area that is often overlooked is inventory. Many business owners don’t fully understand the financial impact of moving excess inventory.

It is vital to find a balance between stocks that are sufficient to meet demand, but not so much that you waste valuable storage space and charge high fees. To do this, you need to understand the actual cost of keeping your inventory – often referred to as your inventory cost.

Inventory costs include in particular:

  • Storage and logistics costs, including but not limited to rent, labor, ancillary costs, warehouse management fees, and the cost of shipping goods to customers.
  • Material transport costs from the purchase or leasing of equipment such as forklifts, pallet trucks and vehicles – not to mention the work involved in operating these machines.
  • Cost of capital or the total cost of buying inventory. This may include actual inventory costs, financing fees, loan maintenance fees, and interest.
  • Storage costs.
  • Risk costs such as inventory depreciation, obsolete inventory, shrinkage and the impact of inventory.
  • Insurance costs.

These reasons make it clear why it is so important to store as little inventory as possible.

You can use Lean initiatives to manage your inventoryIdentification and disposal of waste in the form of the costs associated with warehousing. However, this requires that the inventory data is visible in real time so that you can forecast the demand specifically and determine the safety stocks and reorder points.

Only then can you determine exactly which products are responsible for unnecessary costs and identify them Reduction strategies for excess inventory.

5. Reduction of inventory reduction.

Shrinkage is the loss of inventory caused by theft, damaged inventory, or obsolescence and miscount. Fortunately, inventory management processes and software can help prevent these losses.

One of the main causes of inventory reduction is warehouse theft.

Being able to track inventory movement and the person responsible for moving this item will make warehouse staff more accountable, reducing the risk of theft.

In addition, performing regular cycle counts – the practice of counting smaller subsections of inventory as opposed to rare inventories – helps to quickly identify and correct inventory differences.


This complete overview shows how big data is changing inventory management functions, lowering costs, improving operational efficiency, maximizing sales, increasing customer satisfaction and reducing inventory reduction.

If any of these issues arise for your business, it may be time to examine a more data-driven inventory management system to take your business to the next level.

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