Brands choose Shopify for its user-friendly UI, features, and ability to support growing brands. However, inventory management is one challenge brands often face with their Shopify store. The good news? Most of these challenges stem from the same inventory culprits. So, if you can avoid the common mistakes in Shopify inventory management, you’ll reign supreme over your Shopify inventory management.
To help, we have compiled tips and tricks to help you avoid the common Shopify inventory mistakes – so you can stop worrying about inventory management and start doing more important things, like running your business.
Inventory can be overwhelming. So, let's take a look at common inventory management miscalculations that we have seen businesses make.
The first step in effective inventory management is keeping track of your products. Luckily, Shopify has a built-in SKU (Stock Keeping Unit) system that can help you manage your inventory. However, if the system is not used properly, confusion and errors can arise.
When it comes to overstocking, you really can have too much of a good thing. Overstocking is when you have too much inventory that isn’t selling. Overstocking can also negatively impact your business because it ties up your money in inventory that isn’t generating revenue. Another negative of overstocking inventory? For perishable products, overstocking can also lead to unsold stock expiring.
On the other hand, understocking occurs when there is insufficient inventory to meet customer demand. This situation can lead to lost sales and frustrated customers, who may turn to a competitor or face a long wait for the product to be restocked.
Another frequent error is poor organization and tracking. Managing inventory can be daunting, especially when dealing with a large number of products. Therefore, keeping tabs on inventory levels can be challenging (which can result in stockouts and overselling). Also, when inventory is disorganized, errors are more likely to occur, affecting shipping and fulfillment times … because, after all, you can’t sell what you can’t find.
Now that we've covered some common inventory management mistakes, let's explore some tips and tricks to help you streamline your inventory and avoid these pitfalls.
It’s important to create a consistent and organized SKU system when it comes to proper SKU management. You can start by creating a naming convention for your products that is easy to understand and remember. For example, you can use a combination of letters and numbers to identify the product type, color, size, and material.
Using the product’s name as your SKU can be tempting, but this should be avoided because a product’s name is too long. SKUs are supposed to be concise so they can be read quickly by the warehouse team.
Also, make sure that each SKU is unique and does not overlap with other products because it will create confusion and inaccurate data.
We live in the technology age, so we might as well use said technology to help us work smarter – not harder. Automatic inventory tracking is a great place to start, and it is one of the easiest ways to keep track of your inventory. Even better? Shopify offers a feature that allows you to set up low-stock alerts and automatically update your inventory levels when a sale is made. This makes sure that you always have accurate inventory levels and can help you avoid overselling or stockouts.
Another tool in your inventory management toolbox to combat common inventory management mistakes is using your sales data to make informed inventory decisions. By analyzing your sales data, you can identify which products are the top sellers and which aren’t. This information can help you decide which products to stock more and which to phase out.
Don't let your stock gather dust on the shelves. When you implement a first-in, first-out (FIFO) system, you can be sure that your inventory is always fresh and up-to-date. How? FIFO ensures that you sell the oldest products first, which can help prevent spoilage or dead stock.
Shopify has its own inventory management tools, but some businesses need more functionality and capabilities than Shopify can offer. Inventory management software can provide additional features like multi-channel selling, lot tracking, and multi-warehouse support. By using a Shopify software partner, you can be sure that the integration will be seamless, while also providing additional features like powerful automation rules to save you even more time and resources.
“You can’t sell what you don’t have”
- Abraham Lincoln (not a direct quote)
If your inventory management is not on point, you could be leaving money on the table. That’s why accurate inventory management isn’t just about counting boxes and every doodad you sell. It’s the backbone of a thriving business because you can only sell the stock you have – and know about.
Here are some common challenges that accurate inventory management can vanquish.
How does accurate inventory management help prevent overselling and stockouts on Shopify?
Accurate inventory management allows you to know exactly how much inventory you have on hand so you can prevent customers from placing orders for products that are out of stock.
How does accurate inventory help you make informed decisions?
When you have easy access to real-time data about your inventory levels, you can adjust your purchasing and stocking decisions accordingly.
Better decisions = better processes. Informed decisions help you optimize your inventory management process, which, in turn, improves your bottom line.
Now that we know the importance of effective and accurate inventory management on Shopify, let’s put together a game plan.
Here’s a quick checklist of things to do to help gain control of your Shopify inventory:
✅ Set up automatic inventory tracking
✅ Review past sales data to make informed decisions (winners vs. losers)
✅ Implement a first-in, first-out (FIFO) system
✅ Integrate Shopify with inventory management software (like Zenventory)
✅. Regularly review and update your inventory levels
✅. Conduct regular audits to ensure accuracy
✅. Train your staff on proper inventory management procedures
By following this checklist and implementing the tips and tricks we have discussed, you can avoid common mistakes in Shopify inventory management. Huzzah!
Effective inventory management is needed for any Shopify store to succeed. Therefore, you can improve your overall business performance by avoiding common mistakes like not using SKUs correctly, overstocking or understocking, and poor organization.
Remember to utilize the tools and strategies available to you, like taking advantage of Shopify’s built-in features, implementing inventory management software, and tapping into data-driven insights.
Also, by taking a proactive approach to inventory management, you make sure that you will have the right products in stock at the right time.