Poor inventory management is a silent profit killer. Stockouts lose you sales and customers. Overstock ties up capital and leads to markdowns. Getting the balance right is one of the most important operational challenges in e-commerce.
ABC Analysis
Classify your products into three tiers:
- A items (20% of products, 80% of revenue): Monitor daily, maintain generous safety stock, reorder frequently
- B items (30% of products, 15% of revenue): Weekly monitoring, moderate safety stock
- C items (50% of products, 5% of revenue): Monthly review, minimal stock, consider dropshipping
Safety Stock Formula
Safety stock protects against demand variability and supplier delays. A simple formula: Safety Stock = (Maximum Daily Sales x Maximum Lead Time) - (Average Daily Sales x Average Lead Time). For A-items, add a 20% buffer on top.
Demand Forecasting
Use historical sales data to predict future demand. Account for seasonality (Black Friday, Christmas, summer), marketing campaigns, and growth trends. Even simple forecasting dramatically reduces stockouts.
Automated Reorder Points
Set reorder points for each product in Axnify. When stock drops below the threshold, you receive an automatic notification. For high-volume items, consider automated purchase orders.
Regular Stock Audits
Physical counts should match your digital inventory. Schedule monthly audits for A-items and quarterly for B and C items. Discrepancies indicate theft, damage, or process issues that need addressing.
Supplier Relationships
Maintain relationships with at least two suppliers for your critical products. If one supplier has delays, you have a backup. Negotiate volume discounts but avoid over-committing to single sources.