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The Quick Guide to Inventory Management for Online Shop

Doing inventory management effectively is integral to building a sustainable, profitable, & scalable online shop. E-commerce entrepreneurs face a complex challenge of poor inventory management no matter what their expertise, the size of their business, or what products or services they sell.

You likely think a great deal about inventory management as the year progresses and you work through plans for launching a new e-commerce business.

Listed below is your quick inventory management guide for the online shop.  

1. Know what drives demand for each group of products

Understanding how demand for your product category fluctuates over time is essential to improving inventory management for an online shop, especially when you’re just getting started.

In order to achieve this, you can use Google Trends to examine search interest and demand over the past twelve months or perhaps five years.

2. Analyze past sales to predict future demand

To optimize inventory management, forecast future demand, including seasonal demand, is the second step. Identify when interest and demand were highest by looking at previous sales. Throughout the year, you should look for major marketing opportunities—like holidays and events—and plan for an increase in sales.

During peak demand times, order and store inventory accordingly so that items do not run out of stock. Refer back to your Google Trends and Google Analytics analysis if you do not have a sales history.

3. Determine an initial minimum level of viable stock

You must ensure you have minimum viable stock levels set for each product that you sell in your e-commerce shop. In order to meet demands and avoid delays in fulfilment, your goal should be to determine how much inventory you can keep at a minimum. The price you should sell at will depend on the amount of inventory you have in stock and the time it takes to replace it.

Placing a new order with your manufacturer or wholesaler should be done when the quantity you designated drops below the number you designated. You can use this as a guideline. If you see the demand for your products growing or waning over time, adjust this number accordingly.

4. Analyze ABC for products and prioritize them accordingly

By utilizing the ABC analysis, you will be able to increase efficiency and save money. In the ABC analysis, three categories are used to prioritize your existing inventory:

5. Adapt to the season

Take measures to make sure your e-commerce store is ready to take advantage of the upcoming holiday shopping season or season of the year. Don’t let your stock levels swell during slow months but ramp up your supply as soon as you can.

Promoting special offers during peak seasons helps sell off inventory and avoid carrying excess dead stock. In the slow period, use the time to prepare all the elements needed for a successful sale period, including partners, tools, warehouse storage, people resources, etc.

6. Develop an inventory management system

Inventory management software is required for e-commerce businesses today if they are going to grow. The tips listed above can be completed manually, but as mentioned earlier, it will not be easy to scale your business.

With inventory management software, you can keep track of inventory, monitor inventory levels on all the channels you sell your products on, assemble real-time data within a single system, and leverage valuable insights from your data to boost sales, take advantage of opportunities, and grow your e-commerce business.


Think about the following questions when you are trying to improve inventory management for your online shop. Do you have a specific system in place to manage your inventory? How have you overcome challenges you have faced in the past? If you could share any learning with entrepreneurs and business owners, what would they benefit from? Answers to these questions will guide your inventory management strategy, business growth, and ability to support your current and future customers.

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