SOLVED: What Is Inventory Management?

SOLVED What Is Inventory Management Multiorders

Starting an ecommerce business, it’s important to ask what is inventory management. On the most basic level, it’s a set of ideas revolving around inventory, that allow you to maximize profit and minimize risk. Let’s take a moment to clarify what is inventory, first.

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What is inventory?

Inventory is the total of goods available to your customers. Economically speaking, it’s something you invest capital in to sell for a profit. The most crucial part of a healthy business is to keep the right amount of products.

You always want enough stock on hand so that customers can buy whatever they want, whenever they want. If you’re sold out, then you’re turning away people who are primed to buy–and that’s worse than having no customers at all. – Mike Sowinski

Having too much stock leaves you with less capital to move around or use on a short notice. This can lead to business stagnation. Also, more inventory means higher storage costs.

Having less stock than necessary means profit loss, as well as poor reputation as a seller. All sales channels (Amazon, eBay, etc.) factor in reputation when displaying search results to customers. Meaning, being out of stock will hurt your sales unproportionally.

To put briefly, you should have just enough inventory to sell to every buying customer. It’s infinitely better to restock from suppliers frequently than to keep stock yourself.

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What is inventory management?

We’ve introduced the main goal of managing inventory – keeping the right amount of stock. However, this is easier said than done. It involves demand forecasting, negotiating with suppliers, shipping times, keeping safety stock and many other ideas.

A good portion of such ideas are part of inventory management software, like Multiorders. Let’s take a look at how software can help you control your stock.

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How does software help manage inventory?

In its essence, every feature of such software does that. That’s why it’s there in the first place. However, let’s take a look at the most notable ones.

inventory performace reports


Reports show how your business is doing. Analysing performance reports is essential to keeping the right amount of inventory. Reports help you forecast upcoming demand, as well as compare previous forecasts to actual results. The point of comparing previous forecasts to results will improve your future demand prediction accuracy.

Find your supplier

Restock points

Instead of always keeping an eye on stock, software reminds you when you’re low on a product. Of course, you’ll have to determine the threshold for “low”, but it’s always modifiable, never permanent. This is where you’ll apply accrued economic knowledge, trend and other research.

regular vs automated inventory management


Hope we helped you answer what is inventory and how to approach it. While you certainly don’t need to be an economics graduate to start an ecommerce business, having a solid grip on the core principle ideas will certainly help you avoid some mistakes along the road.

However, nothing will be as handy as using software to aid you in inventory management. You’re welcome to try Multiorder’s services for free. All it takes to start is creating an account and tinkering for a few minutes!

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