As an online retailer, you know that managing inventory and products has a significant impact on your operational efficiency and sales. But how exactly do you overcome the challenges of inventory management in Shopify and take your ecommerce business to the next level?
In this blog post, we'll take a closer look at inventory management with Shopify. In doing so, we'll not only talk about the built-in features, but we'll also address the potential limitations you might encounter. To help you get the most out of your Shopify inventory management, we'll also show you how extensions and best practices can help you with your inventory management.
This will give you a clear overview of the options and solutions available to you to optimize your inventory management and increase your e-commerce success.
Table of contents
Do you need support with your store management? As Shopify Plus experts, we'll be happy to assist you and help you customize your store to meet your needs. Contact us.
What is Shopify inventory management?
Your inventory is the amount of a certain product that is available for sale. With inventory tracking, you can avoid offering products that are out of stock. When you need to order or replenish products, you'll be notified easily.
In the Inventory section of the Shopify backend, you can set up inventory tracking, view your inventory, and adjust your inventory level. Inventory adjustment history for products and variants can also be viewed as their inventory is tracked by Shopify. It is also possible to analyze changes to inventory levels in the Inventory Reports section of Shopify.
Shopify inventory management is the heart of your e-commerce business. It includes all the processes associated with managing your product inventory and stock levels in your Shopify environment. These features are crucial to ensure that you can always keep track of your products, process orders efficiently, and provide a smooth shopping experience for your customers.
In Shopify Inventory Management, you can not only add, edit, and categorize products, but also monitor the current inventory. This allows you to know how many units of a product are available at any time and replenish stocks in time to avoid shortages.
Inventory management in Shopify provides a solid foundation for your e-commerce business, but there are many more features and extensions that can help you optimize your inventory management. Let's take a closer look at where the limitations lie and how you can take full advantage of Shopify's capabilities.
Reading tip: Learn about the benefits of Shopify Plus here.
Limitations of Shopify Inventory Management
There are some specific challenges Shopify merchants may face with internal inventory management.
Many products are restricted or even banned from Shopify, limiting the ability to track them through the ecommerce platform. These restrictions often require manual intervention and the implementation of multichannel inventory management to track inventory separately from Shopify and other sales channels. Not only can this be time-consuming, but it also increases the risk of inventory count inconsistencies.
Auto-replenishment of inventory in Shopify is not done by default. While the platform sends notifications of low inventory, orders are not automatically triggered. Similarly, inventory records are not automatically updated when new products arrive. Implementing additional inventory management software is required to take advantage of these features.
Reading tip: Learn more about Alaiko's fulfillment solutions in this article.
Although Shopify provides reports on sales per day, week, or month, it does not provide comprehensive information on inventory turnover and the entire inventory lifecycle - from procurement to sales. This can limit the ability to make informed inventory management decisions and increase efficiency.
The above challenges highlight that despite many useful features, the Shopify platform also has its limitations when it comes to inventory management. Therefore, it is crucial to use appropriate extensions to overcome these challenges and ensure effective inventory management.
Advantages of Advanced Inventory Management
International retailers often face the complex task of managing multiple sales channels and potentially operating across multiple warehouse locations and 3PL service providers throughout the supply chain. As mentioned in the previous paragraph, there are also limitations to inventory management with Shopify that cannot fully address these requirements. This includes mapping warehouse space and shelf numbers, efficient inventory management, and paperless picking, which are critical to optimizing warehouse processes and ensuring a smooth supply chain. This is where external systems, particularly enterprise resource planning (ERP) systems, come into play.
Reading tip: Want to sell internationally with Shopify? In this article, you'll learn how to succeed.
ERP systems provide a comprehensive solution to optimize warehouse management through Advanced Inventory Management. They not only enable accurate allocation of shelf numbers and storage space, but also real-time tracking of inventory, forecasting of demand, and control of the entire supply chain. This results in lower inventory costs, reduced capital commitment, and more timely delivery of products and services. Errors in order fulfillment are minimized, which in turn increases customer satisfaction. ERP systems integrate seamlessly with existing e-commerce platforms and provide a holistic solution.
Advantages of ERP systems for online retailers
We have summarized the most important advantages of ERP systems for Advanced Inventory Management for you once again:
Automation: ERP systems automate many inventory management tasks, including inventory tracking, order processing, and goods movement. This reduces human error and increases efficiency.
Real-time information: With an ERP system, you have access to real-time information about your inventory at all times. This helps avoid inventory shortages and enables better planning.
Inventory control: an ERP system enables precise control over inventory, minimizes losses and ensures optimal inventory management.
Planning and forecasting: using historical data analysis and inventory forecasting, you can more accurately predict demand and reduce inventory costs.
Space optimization: an ERP system helps use warehouse space efficiently by suggesting optimal storage locations and minimizing space requirements.
Improved order processing: you can process orders faster and more accurately because you can monitor inventory levels in real time. This leads to higher customer satisfaction.
Cost control: by better managing inventory and ordering processes, you can reduce storage costs and increase profitability.
Compliance and reporting: an ERP system ensures regulatory compliance and enables detailed reporting on warehouse activities and costs.
Scalability: ERP systems are typically scalable and can grow as your business grows without requiring you to change your entire warehouse management system.
In summary, an ERP system can help increase the efficiency and accuracy of your warehouse management, reduce inventory costs, and increase customer satisfaction by providing better control, automation, and integration with your business processes. With an ERP system, you are optimally equipped to meet the challenges of warehouse management.
Reading tip: You can learn more about Shopify ERP in this article.
Implementation challenges and solutions
Implementing an ERP system for warehouse management can be an extremely beneficial investment for companies to optimize their warehouse processes. However, there are also some challenges that can arise during this complex project. One of the main challenges is integrating existing operational processes into the new system, as this often requires significant changes in the way of working. Data migration and consolidation of existing warehouse data into the ERP system can also be complex and requires careful planning to avoid data inconsistencies. Training employees to ensure they can use the new system effectively is another critical aspect that cannot be neglected.
Furthermore, selecting the right ERP system is crucial, as not all systems are equally well suited to a company's individual requirements. Integrating third-party software and hardware into the ERP system can also be a complex task. Finally, companies must ensure that their ERP implementation meets data security and integrity requirements, especially with regard to sensitive inventory data. Despite these challenges, well-planned and executed ERP implementations offer significant long-term benefits in terms of warehouse management efficiency, visibility and cost control.
Reading tip: What is a PIM system? Learn more about it in the article.
Provider for Advanced Inventory Management and Shopify warehouse management
In addition to the global ERP programs, Shopify has introduced its own local ERP program for Europe in cooperation with partners such as NetSuite or MS Dynamics D365. This enables European merchants to seamlessly integrate local ERP systems into their Shopify stores. This integration option is available through existing Shopify apps, which means that ERP systems no longer need to be connected via APIs or custom solutions. This provides a direct and convenient solution via the Shopify app store for merchants in Germany, Austria and Switzerland.
This ERP program includes Xentral, Pickware and Pixi. All three systems are not only Latori partners but above all providers of Advanced Inventory Management. Some of our customers also rely on these tools. You can find out more about the first tools here: Xentral and Pickware.
Enterprise companies and retailers with a large product range in particular rely on the provider Pixi. But what makes Pixi so special? It offers a sophisticated logistics strategy that aims to create the ultimate customer experience. The provider brings the following benefits to Shopify merchants:
Offers high, effortless scalability to keep pace with your expanding business
Ensures delivery promises are met to ensure customer satisfaction
Ensures 100% accurate stock levels to prevent overselling or supply shortages
Automates order fulfillment to make processes more efficient and smoother
Implementing an ERP system for advanced warehouse management can be complex, but it offers significant long-term benefits in terms of efficiency and cost control. The local ERP program for Shopify in Europe provides seamless integration of ERP systems via Shopify apps to further optimize warehouse management and e-commerce operations.
At a time when online retailers are constantly looking for ways to optimize their operations and gain competitive advantage, warehouse management is becoming a critical factor. With the right solutions, you can not only manage inventory efficiently, but also increase customer satisfaction and strengthen your market position.
Need help setting up Shopify stock management in your store? We are here to help you with advice and support. Contact us.
Frequently Asked Questions about Advanced Inventory Management with Shopify Plus
Why does it make sense to implement an ERP system for inventory management?
Implementing an ERP system for inventory management provides the opportunity to streamline warehouse processes, increase efficiency, and improve cost control. It allows for accurate inventory monitoring, automatic inventory replenishment, and better data integrity.
What are the limitations of Shopify's internal inventory management?
Shopify has some limitations, including product restrictions, lack of automatic inventory replenishment, and limited inventory turnover reporting. These limitations can lead to manual intervention and inconsistencies in inventory management.
What are the benefits of Advanced Inventory Management and local ERP integration for European retailers?
Advanced Inventory Management provides advanced inventory management capabilities, such as intelligent inventory management and automated reordering, to increase efficiency. Local ERP integration via Shopify apps enables European retailers to seamlessly optimize their inventory management without having to use complex connectivity or APIs. This increases competitiveness and efficiency in the supply chain.
Why is my Shopify inventory not being tracked?
Your Shopify inventory may not be tracked because some products may be restricted or even banned, limiting the ability to track them. This often requires manual intervention and the implementation of multichannel inventory management to track inventory from Shopify and other sales channels separately. This can be time-consuming and increases the risk of inventory count inconsistencies.