How to Choose the Best Inventory Management Tool for Your Ecommerce Business

Every day, I talk to frustrated ecommerce sellers who are struggling with inventory management and the impact it has on their bottom line. Things like keeping track of their costs, understanding where their inventory is currently located, keeping track of correct quantities and keeping a handle on everything that's coming and going is so frustrating and complicated.

0:54

So I often see sellers turn to spreadsheets to track all of this, and that works for a little bit at the beginning. But as your business grows, you quickly come to realize that it takes a lot of man hours to keep those spreadsheets up to date. There's a lot of human error that comes into play and the workflow is so inefficient that it feels virtually impossible to keep track of everything and to know what's coming and going. In short, you end up with this inventory nightmare that you can't wake yourself up from.

But never fear! The industry has undergone a massive transformation in the last few years. And there are many inventory management tools out there that can help you solve for these problems. In fact, there's so many that I feel like they multiply like bunnies, but if you can sift through all those bunnies and find the one that meets the needs of your business, it will definitely alleviate a lot of the struggles that you're having right now and help you wake up from that nightmare and quit feeling like you want to pull your hair out.

1:51 What a tool does and three we recommend

So maybe you're asking yourself, what is an inventory management tool? Well, inventory management software or inventory tools manage inventory in one or more locations to ensure that it's in the right place at the right time and in the right quantities.

As the inventory sells, it keeps track of costs associated in order to give you an accurate cost of goods sold number. It will track the value of your inventory on hand, as well as the value of inventory on order. It can also help you keep track of key metrics like inventory turnover, reorder points, and some even help you with forecasting. Some inventory tools will help you establish and track manufacturing, if that's something that's important to your business.

One of my favorite things that an inventory tool can do is it will integrate directly with your sales channels like Amazon, Shopify and others in order to give you real time data, allowing you to make real time decisions.

2:46

So if there are a million inventory tools out there and you have to sift through all those bunnies, how do you know which one to choose? Three that we've seen a lot of success with with our ecommerce clients are Finale, Dear, and Cin7. We love these tools for their price point, for their ease of use, for their features, and the fact that they're cloud based.

If I was an ecommerce seller, I wouldn't consider any inventory tool that wasn't online. Your business is online. So it's a no brainer that your inventory tool should be as well.

3:18 Consideration one, manufacturing

Allow me to give you five things to consider when choosing an inventory management tool.

Number one, are you doing your own manufacturing or purchasing a finished product? Manufacturing is a major feature of some of these inventory tools. Those tools will cost a little bit more money. They're a little more complex to use, and they definitely have a steeper learning curve. If you are purchasing a finished product and not manufacturing, then these are features you don't need to worry about. But if you do manufacture, this is something that should be your very first consideration to ensure that your workflow can easily be captured and you can get good data from the tool.

3:56 Consideration two, integrations

Number two, what integrations does the tool offer? One of the biggest advantages of an inventory tool is the immediate information that you can get when items sell or during other steps along the way. But this information is only available to you if the tool integrates with your sales channel, your accounting system, your shipping tool, your 3PL, and other critical pieces involved in your workflow.

4:20 Considerations three and four, fulfillment and price

Number three, are you doing your own fulfillment or using a 3PL? Like manufacturing, warehouse management is a major feature of many of these inventory tools. If you do your own fulfillment, this is a feature you definitely want to consider. If all of your fulfillment is handled through a 3PL, this is something that you wouldn't need.

4:36

Number four, what is your price point? Inventory tools range in price from affordable to astonishingly expensive. The cheapest price point we have seen is free, with limited orders and functionality before they charge, or they can cost many thousands of dollars each month. Also consider whether the tool is priced on volume, connections, and number of users. Be sure to choose a tool that won't price you out as you grow.

5:03 Consideration five, features and workflow

Number five: features and workflow. One of the biggest reasons to adopt an inventory tool is to improve your processes, workflow, and accuracy of data. This can either be a huge win or a huge failure, depending on whether the tool you choose can actually accommodate your workflows.

Before you begin an implementation, it is crucial that you ensure that the tool can support any critical workflows that cannot be changed in your organization. We have had clients come to us so frustrated, having to abandon an expensive implementation that they spent grundles of money on, only to find out that the tool couldn't support a portion of their workflow that was critical to their business.

So make sure that you consider things like, can this tool accommodate my use of multiple warehouses? How much sales volume can this tool handle? How many users do I need? I promise you don't want to find out your tool isn't going to work once you've begun the implementation process.

6:02 Getting help choosing a tool

Inventory is a beast. And I know that if you are interested in learning more about our inventory services, or if you would like some help from someone on our team to choose an inventory tool that's right for your business, please contact us through our website. The link is in the description below.

Also, if you liked this video, please hit that like button. Comment. Be sure to subscribe and share with a friend. I'll catch you on the next video.