How to Efficiently Manage the Inventory of your Shopify Business?

Managing inventory of Shopify business

Last updated - April 13, 2023

Shopify business owners can testify to the fact of just how difficult it is to efficiently manage their inventory. Now, just because it is difficult one cannot neglect this all-too-important aspect of running a Shopify business. It is for this reason, you need to know and learn how to manage your inventory without breaking a sweat.

This blog will help you get the right insight for you to efficiently manage the inventory of your Shopify business. So, read along, and if need be bookmark the blog for quick access.

What is Inventory Management?

Inventory management

The system you use for ordering, storing, organizing, and moving goods through the supply chain is known as inventory management. It guarantees that you have the appropriate quantity of the product at the appropriate location and time.

Inventory management aims to reduce the cost of maintaining inventory by letting you know when it’s necessary to restock products or purchase additional raw materials for their production. This enables you to keep costs to a minimum and maintain ideal inventory levels. The key to a successful retail operation is effective inventory management.

Various Types of Inventory Management

Retail Inventory Management

When a retailer talks about inventory management, they’re talking about the merchandise they want to sell to their customers. As a retailer, your primary concern is making sure you have enough inventory to meet orders and consumer demand. You also want to be careful not to overstock your storage facility because it is expensive to store inventory.

Multi-location Inventory Management

Multi-location inventory system adds much more sophistication as you’ll need to efficiently manage across various stores, warehouses, or distribution channels. This kind of inventory management requires management at the location level as well, in addition to a comprehensive view of all your inventory, to guarantee you have enough stock wherever you sell.

Pros of Inventory Management

Pros of inventory management

Mitigate Spoilage

If you’re selling an item with an expiration date, like tea or coffee, there’s an extremely real danger it will go stale if you fail to sell it in time. Effective inventory management can reduce wasteful spoilage and enhance inventory control.

Eliminate Dead Stock

Dead stock is merchandise that is no longer available for purchase, not because it has expired, but rather because it may have fallen out of favor due to a change in fashion, a change in season, or another reason. You can correct this costly inventory error by using a meticulous technique.

Cut Down on Storage Cost

The cost of warehousing is frequently variable, meaning that it changes according to the volume of goods you’re holding. Your storage expenses will rise if you store too much inventory at once or produce a product that is hard to sell. You’ll save money if you stay away from this.

Enhance Cash Flow

Inventory has a direct impact on expenses (by limiting how much you can sell) and sales (by dictating what you have to buy). How much money you have on hand is greatly influenced by each of these factors. Improved cash flow management results from better inventory control.

Optimize Order Fulfillment

In a few positive ways, effective inventory management can aid in better order fulfillment. To make sure your products are close to your clients, you can employ strategies like inventory distribution, which entails keeping inventory in a number of fulfillment centers. This shortens the delivery period and lowers transportation expenses, both of which contribute to satisfied customers.

Challenges of Inventory Management

As beneficial as inventory management may be, it is quite challenging to efficiently manage your inventory. Here is a list of challenges in efficiently managing inventory; however, you will learn how to mitigate them in the below sections.

Phantom Inventory

Managing phantom inventory is one of the biggest issues in inventory management. Phantom inventory is when your point of sale system reports available inventory when none of it is actually present in your store. This issue could be expensive because it will result in erroneous stock levels, which may affect your choices for your product offering and restocking.

Supply Chain Problem

Parallel to demand, the global supply chain is another external issue that can have a significant impact on your inventory management. If you don’t keep enough safety stock on hand, supply chain restrictions will result in stockouts at your store.

A Change in Demand

Demand fluctuations can also make inventory management difficult. For instance, the epidemic very immediately caused significant shifts in consumer demand, resulting in several product shortages in many businesses.

How to Manage Inventory of your Shopify Business?

Track and Manage Inventory

Setting up inventory monitoring for either all of your products or just a select handful will allow you to make changes to the inventory of your Shopify business. You’ll have access to a 90-day inventory history if you turn on this feature.

Please use your Shopify Admin to go to Products > All products to accomplish this. Choose the item’s name and the variant you wish to keep track of next.

Track and manage inventory

Choose Track Quantity under the “Inventory” section after that. When a product is out of stock, your consumers can’t place an order until the quantity is updated to be larger than one. You can check the “Continue selling when out of stock” box, nevertheless, if you can pre-order the item or if more stock is on its way to you.

To complete the setup, enter the quantity in the Quantity area and click Save.

Modify Quantities of Inventory

Simply input the amount you wish to change in the Modify quantity available bar to change the number of accessible quantities for a single variant.

You must first choose the variant you wish to alter if you want to set a certain quantity for more than one variant. Then click Update quantity after expanding the Additional action option.

Modify Inventory

Download the Inventory from CSV Files

You can freely import and export CSV files with the quantity of your inventory for a single location or for all locations (if any). You can get an overview of product information, including identities, variants, and quantities, after downloading the CSV files.

Go to Products > Inventory to export inventory. Then, pick the rows you wish to export by clicking Export. Following that, select Export inventory to finish.

CSV File of inventory

After visiting the Inventory section, choose Import rather than Export to import your current files into Shopify. After making sure the data you wish to import is correct, click Import Inventory and then press the Start import button.

CSV file

Managing Transfers from Suppliers

Step 1

Shopify will update the product amounts for you right away whenever you fill in your inventory from supplier deliveries. But, in order to automate this procedure, you must enable Shopify’s inventory tracking as described in the section above.

Step 1

Step 2

You must send a purchase order to a certain supplier and then wait for a confirmation before you can establish a transfer.

Start by using your Shopify admin to go to Products > Transfers. Then, click Add transfer > if you currently have a few suppliers, you can add one by selecting Create new supplier and entering their name and other details, or you can add a new provider by selecting Choose origin from the Origin section.

Step 2


Operating an online store on Shopify could be challenging and hectic. But, your daily sale will no longer take much time thanks to Shopify inventory management. You can use this function to track products and orders, manage transfers from other suppliers, update inventory if there are changes, and more. Moreover, Shopify inventory management offers an inventory analysis report to assist you in choosing a marketing plan for each category of goods.

Further Reading


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