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    How To Manage Inventory For Your Online Store

    Stores Meta Descriptions

    In today’s digital era, online stores are gradually replacing the traditional brick and mortar stores. Online stores are convenient for both business owners and customers.

    However, one aspect of stores hasn’t changed, and that’s inventory management. 

    Irrespective of your store being online or offline, you’ll need to constantly manage the physical products in one way or another. Depending on the scale of your store, management of stocking activities can be easy or tricky.

    This is because you’ll need to keep track of your goods, know which items are in high demand and need to be continually replenished.

    The secret to keeping your store up and running rests on how effectively you manage your stocking. In this blog,

    we’ll show you the six ways you can manage your ecommerce store’s product quickly, conveniently, and easily.

    Why Inventory Management Is Important

    Maintaining a clear record of every new or returned product as it enters or leaves a warehouse or point of sale, is termed inventory management.

    Other than ensuring that your store has enough products to meet the customer’s demand, this form of management is also important for the following reasons:

    • Improved Cash Flow - Effective inventory management drives cash flow. If the products are sitting idle in your warehouse, it blocks the inflow of cash. When you have a robust system in place, you’ll have a clearer idea of how much stock you have. It’ll also help you to forecast when you’ll need to replenish the stock. Both these factors work in sync to ensure that you don’t lose out on sales, while allowing you to plan ahead. This guarantees that you’ll have a steady flow of cash coming  in and out of your business
    • Prevents Dead Stock - A stock that can no longer be sold due to numerous reasons, is categorized as dead stock. When you diligently manage your inventory, it can help you avoid dead stock piling up and save you from unexpected losses
    • Saving On The Storage Costs - If you end up storing too much product, your storage costs will increase. However, if you manage the inventory well, you’ll be able to avoid unnecessary expenses

    Top Methods

    There are different ways to manage your store’s inventory. From Excel sheets to automated software, the choice relates to your business’ size. Listed below are some tried and tested ways to better manage your inventory.

    Setting Par Levels 

    The easiest way to get a better hold on your inventory, is by setting par levels for all of your products. A par level is defined as the minimum, on-hand quantity that should be available at all times. Once the product drops below the par level, it’s time to restock it.

    Par levels vary by product type and overall demand. For instance, fast-moving items will have a higher par value than slow-moving items. You’ll need to gather your store’s sales data and analyze it to set the correct par levels for each product. Once done, it’ll help organize your decision making and management process.


    First-in-first-out (FIFO) is one of the core fundamentals of effective inventory management. It simply means that your oldest stock of items (first-in) gets sold first (first-out). This is extremely important if your store deals in perishable items. Applying the FIFO technique helps avoid unwanted losses due to spoilage.


    The last-in-first-out (LIFO) method assumes that the most recently purchased stock will sell out first. It’s the direct opposite of the FIFO method. It works on the premise that prices of commodities are gradually increasing, and the most recently purchased products will be the highest priced. This means that higher costs would result in lower earnings, and, thus, lower taxable income.

    LIFO is considered to be a difficult way of managing product tstocks. For instance, if you push the older products to the back of the shelf, the chances of them becoming unsellable or totally obsolete are extremely high.

    Regular Reconciliation

    Even if you rely on software and reports, it’s important to manually reconcile the stock in your warehouse. You can either take a physical count of all the items in your store and compare them against the reports for discrepancies, or you can rely on spot checking random items. It’s a good idea to run spot checks for fast-moving items.

    The ABC Prioritization Method

    The ABC Prioritization Method is an effective goal setting technique that can be used every single day. It can help you efficiently manage your store’s products by breaking down your stock into three categories, where each category represents the following:

    • A - Items that contribute to 80% of sales, i.e. fast-moving products
    • B - Items that contribute to 15% of sales
    • C - Items that contribute to 5% of sales, i.e. slow-moving or dead stock

    By using this method, you’ll be able to better understand which items need to be restocked quickly and which items need to be sold at lower rates to free up cash.


    Just-in-time (JIT) is the process where you keep the lowest possible stock to meet demands, and restock them before they go out of stock. It helps improve efficiency and lower spoilage by acquiring products as needed. If you rely on the JIT method, you’ll be able to lower the overall holding costs, improve cash flow, and avoid dead stock. However, this process requires careful analysis, forecasting, and planning. 

    Bottom Line

    Inventory management is an important aspect of business that helps you better manage the demand and supply of items. It helps you control the cash flow and avoid losses due to spoilage and dead stock. Choose the right technique that suits your business needs, so you can manage your inventory more efficiently.