Multichannel Inventory Management: Problems & Solutions

Multichannel inventory management is one of the top challenges in ecommerce.

Carrying costs, reverse logistics, and a negative customer experience imperil future repeat sales.

Fulfilling orders efficiently, regardless of the channel through which orders are placed, requires knowing how much stock you have and where it’s located, and having the ability to ship inventory from the warehouse closest to the customer automatically.

In a post–COVID-19 world, supply chain diversification and resilience are vital strategic objectives. Executing in a new world requires mastering multichannel inventory management.

Table of contents

• What is multichannel inventory management?
• Common challenges of multichannel inventory management
• Benefits of multichannel inventory management
• What to look for in a multichannel inventory software
• Top multichannel inventory management software
• Multichannel inventory management cases study

What is multichannel inventory management?

A multichannel inventory management system tracks, manages, and fulfills orders from multiple channels and stores using a single, centralized system. With this system, businesses can access inventory data in real time, coordinate promotions, and streamline order fulfillment.

Common challenges of multichannel inventory management

The costs associated with mismanaging inventory consists of the mostly hidden cost associated with overstocks, out-of-stocks, and preventable returns.

Manual inventory management processes

Many brands rely on inventory management workarounds, like using multiple stores to track inventory by location. But this increases your workload when you have to recreate, sync, or update inventory for each store.

Manually tracking inventory with spreadsheets relies on fragmented data, making it impossible to operate across channels, and prevents the inventory visibility needed in peak seasons or for special events like flash sales.

Poor warehouse management

For most retailers, it’s hard enough keeping track of inventory and orders when selling on a single platform. But when you’re selling on a Shopify store, as well as Amazon, eBay, and Etsy, and in physical locations, inventory management can be a nightmare.

Research indicates, however, that inventory opacity, inaccurate or nonexistent demand forecasts, and a lack of automation thwart multichannel fulfillment in the following ways:

• 28% of companies lack inventory visibility across stores, warehouses, and vendors
• 34% of companies lack necessary software integrations
• 38% of companies lack order management, inventory management, point-of-sale (POS), and third-party logistics (3PL) software

Upset customers

Without proper inventory management, you risk angering your customers with out-of-stock messages, delays, and cancellations due to inefficient fulfillment processes.

Successful multichannel ecommerce involves more than simply creating product listings on a variety of platforms: It requires a multichannel inventory management solution too.

Benefits of multichannel inventory management

Multichannel inventory management solutions allow you to focus on growing your business rather than inventory management.

Today’s cloud-based solutions are powered by artificial intelligence (AI) and leverage automation to streamline workflows. They let businesses easily track, manage, and organize inventory sales, purchases, and production across channels.

Here then are some of the benefits of implementing a multichannel inventory management solution:

1. Real-time visibility and synchronization

You need a view of your inventory quantities and locations to fulfill orders across channels. It’s a no brainer.

It’s next to impossible to manually update and synchronize inventory counts between locations and across platforms. Without real-time visibility, costly out-of-stocks, deadstock, and preventable returns are more likely.

Fast-growing, high-volume brands rely instead on multichannel inventory management tools that sync inventory across channels and provide real-time visibility from a centralized hub on which they can rely as a single source of truth.

These solutions allow businesses to improve sales and reduce the time spent in managing inventory.

2. Optimize inventory forecasting

Improved inventory visibility also helps brands better track their inventory turnover ratio, a key metric in assessing the health of the business. This type of insight informs product pricing adjustments and future restocking decisions, improving profitability.

If you limit the inventory you hold but market it effectively across multiple channels, you run the risk of overselling—selling items you don’t have in stock.

Inventory management systems can help you accurately forecast demand and better position you to manage and replenish inventory appropriately, based on marketing spend as well as the historical impact of seasonality.

For instance, if you’re an omnichannel sports retailer, it would be useful to know exactly how many basketballs were sold on each channel during December for the past five years. This would let you make informed purchase and marketing decisions for the coming Christmas season.

An efficient multichannel inventory management software also allows you to scale up during a rush or holiday season and scale down during the off-season. As a result, you’ll be able to reduce costs by not purchasing inventory until it’s needed.

3. Locate inventory closer to customers

To ship faster and cheaper, you must have the right inventory in the right locations. Having multiple strategically located fulfillment centers or retail locations positions brands to intelligently route orders to the fulfillment center nearest the customer.

While local fulfillment is vitally important for international customers, it can also help reduce delivery times across wide geographical areas such as the United States, and fragmented geographical areas such as Japan or Indonesia.

Multiple fulfillment centers also help reduce transportation and delivery costs. Savings can be passed to the customer, or allow for incentives such as free shipping.

What to look for in a multichannel inventory software

Inventory control

Robust inventory management systems can help you identify out-of-stock (OOS) patterns. For example, retailers can identify OOS trends by regularly auditing inventory and noting the days and times of week stockouts are most likely to occur.

Likewise, OOS can be also be prevented by implementing inventory management solutions that position brands to set specific rules that automatically reorder inventory when certain thresholds are met.

Bar coding and scanning

Bar coding and scanning tools help you:

• Track products easily, accurately, and efficiently
• Monitor inventory movement
• Simplify reconciliation
• Reduce transaction errors
• Generate shipping labels

You can input SKU information into your systems quickly and accurately with bar codes and scanners, removing human error. It also speeds up inventory management tasks, like stocktaking, by scanning bar codes instead of manually counting and sorting items.

Analytics

Analytics helps you get a comprehensive picture of where and how inventory is used across different channels. It tracks inventory levels, pricing, sales data, and historical data to analyze trends. Accessing this data from a single platform and quickly viewing inventory snapchats can help inform inventory control and supply chain strategies.

Integration

Part of a multiple fulfillment center strategy is integrating an order management system (OMS). An OMS allows you to check stock levels across multiple locations, pick a fulfillment center closest to your customer, send order details straight to that location, and have stock levels automatically update across all your channels.

The importance of systems integrations such as these for inventory management and order fulfillment can’t be understated. In fact, integration is the top challenge in fulfilling multichannel orders worldwide.

In addition to seamless integration, automating fulfillment processes are crucial in streamlining inventory management and order fulfillment.

Automation frees up your team to focus its time on growth opportunities instead of repetitive stock reordering tasks. With automation, you’ll never run out of inventory, as you receive automated backorder notifications and replenishment reports in real time.

For instance, if the quantity of an item in stock drops below the reorder value, automation can instantly alert you that the item needs reordering. With the right integrations, replenishment may be automated, too, or the automated restock alert may be checked against predictive demand forecasts and reordered.

Top multichannel inventory management software

Many of the top multichannel inventory management platforms offer simple one-click integration with Shopify Plus.

When evaluating the right inventory management software for your ecommerce business, understand that there likely will be overlap with other systems you already have.

Your OMS, for example, may overlap with features in the inventory management solutions (IMS) you’re evaluating.

It’s also important to understand the product roadmap for the solutions you’re evaluating. Specifically, some IMS ultimately aim to become a full enterprise resource planning–like system (ERP), SSOT, or commerce operating system. Be sure you evaluate IMSs in the context of the features already offered natively in your ecommerce platform.

Below are IMSs to evaluate:

Shopify Fulfillment Network

Shopify Fulfillment Network (SFN) is a 3PL that, when combined with your Shopify Plus commerce platform, offers an end-to-end multichannel inventory management solution that gets orders to your customers easily and quickly.

With a vast network of strategically located fulfillment centers nationwide, full-service 3PLs like ours ensure you have the right merchandise at the right location, so orders ship faster and cheaper.

SFN provides businesses with AI-powered inventory intelligence that recommends where inventory should be stored. Not only does it easily integrate with your existing systems, but it also enables a branded experience and same-day fulfillment optimization.

QuickBooks Commerce (Formerly TradeGecko)

QuickBooks Commerce is a powerful cloud-based IMS that combines all your sales channels, locations, and currencies for easy management of products, orders, and customers across multiple Shopify stores.

It integrates with popular bookkeeping software such as ShipStation, allowing you to send quotes and invoices with built-in credit card payments directly to your customers. The QuickBooks Commerce’s mobile app allows you to create and manage orders, view detailed reports, and track sales trends while on the go.

Orderbot

Orderbot is an order and inventory management system that lets you consolidate orders that flow from multiple channels with clear inventory and fulfillment visibility. It contains all the key functionality you need, such as multicurrency, integrated payment gateways, a fully published API, and import/export capabilities.

Whether you have one or more warehouses, multiple Shopify stores, B2B channels, or even marketplace integration with Amazon FBA, Orderbot’s focus on visibility helps you keep up to date with both current and future orders.

Sellbrite

Sellbrite is a comprehensive multichannel management for Shopify Plus merchants. It allows you to publish your inventory across other channels like Walmart and Amazon quickly and easily. You can manage products with variations, automate purchase orders, generate smart reports, and invite your team to manage your multichannel business on Sellbrite.

Multichannel inventory management cases study

Rohr Remedy, an Australian company that sells skin care products based on traditional bush medicines, was having trouble managing inventory across its retail, wholesale, and online channels.

It was looking for an inventory management system that could easily integrate with its current systems, such as Xero and Shopify, and eventually decided to work with TradeGecko.

According to Emily Rohr, the founder of Rohr Remedy, the benefits of switching to a multichannel inventory management system were startling.

“In using TradeGecko, we’ve definitely reduced the amount of time we spend on inventory,” she says, “and that’s made a massive difference in us being able to supply our customers. We’re getting more orders because we’re more streamlined.”

The Multiple Warehousing feature has been particularly beneficial for reducing delivery times and keeping customers happy, as it allows the company to allocate every order based on shipping location.

Upgrade your inventory management capabilities

Whether you’re running an ecommerce store that is currently selling products across multiple channels, or you’re thinking about reshaping your business to incorporate multiple channels, it’s essential to recognize that manual inventory management is no longer sufficient for proper inventory management.

Cloud-based multichannel inventory solutions can help you organize your business, keep your customers happy, and give you the best chance for future growth.