10 Inventory Management Strategies And Techniques For Your E-Commerce Business

Inventory Management Strategies

Last updated - June 20, 2022

A lot of us think that Inventory Management is just limited to maneuvering the merchandise, product prices, and the whereabouts of the company’s products. But, it is more complicated than that. One needs to be fully aware of the inflow and outflow of his products. In simple words, the owner needs to know when new products arrive in the inventory and when or where the products leave the stock. Moreover, how many products are currently sitting in the warehouse? Are there enough products in the inventory to meet the demand of the online orders?

These are the most critical questions that need to be answered and accounted for. As the business grows and eventually extends to an eCommerce Development, these questions become much more difficult to answer because you continuously need to update the details on various platforms. Many businesses still use the traditional spreadsheet method to track and record their inventory. It only slows down the organization’s efficiency, which leads to lower sales. So, it is very vital that you shift to an inventory management system as it will help the e-commerce business to grow faster. This article will talk about the ten inventory management strategies you can use in your e-commerce business.

First In, First Out (FIFO)

FIFO is an abbreviation of First in First out. As the name suggests, the products which are bought first or arrive first at the warehouse are the ones that are shipped out first from the warehouse and delivered to the customers. This inventory management method is used predominantly by those businesses that deal with limited timeline products, such as the food industry. But the FIFO method can be used by everyone and is not restricted to a particular sector. Businesses that don’t want to store items in the inventory for a longer duration can use this method. FIFO would not be an ideal strategy for those products whose prices are not stable and keep changing as it will lead to differences in the price of the products received and the cost of the products sold.

Odoo’s Point of Sale is one of the best tools for inventory management. It is available offline and online. One of the standout features is that businesses can send customized emails to customers through the app.

Inventory Management Strategies
1. Odoo Shopping Cart

Just In Time Inventory (JIT)

As the name indicates, JIT is a technique in which businesses get the products when they need them. For instance, if a business receives an order for sunglasses, it will receive the product as the order is received rather than storing the product in its warehouse. In short, you only buy the product when you require it. Even though this technique may take time, it is excellent for cutting down your storage cost and is considered an efficient method that does not require you to stock products. 

Third-Party Logistics (3PL)

Third-party logistics is a strategy in which another business takes the responsibility of taking care of your e-commerce business logistics which consists of warehousing, distribution, and fulfillment of services by charging a fee. 3PL is an outsource of your operational logistics and allows you to pay more attention and invest time in your business.

ABC Analysis Inventory 

It is really common for any business owner, especially if you are an e-commerce business that certain products in your inventory sell more and are high in demand. Conversely, some products in the inventory are low in demand and don’t sell that much.  It does not mean that you should pile up the products which are high in demand as they will increase the storage costs. ABC analysis is a technique in which the products in your inventory are categorised into three groups based on their performance.

  • Category A: Top valued items in low amounts.
  • Category B: Regular Items in a medium amount.
  • Category C: Low valued items in excess amount.


Dropshipping is a process in which the eCommerce business owner does not keep the products in stock and purchases the product directly from the manufacturer, who then dispatches it directly to the customer upon receiving the order. Using this technique, the e-commerce business owner does not need to buy any storage space to keep the products; instead, he pays some fees to the manufacturer. Ordoro is one of the best software for dropshipping. We recommend that you try their free trial to get an idea of what the tool offers.

Inventory Management Strategies
2. Ordoro

Minimum Inventory Quantity

The minimum inventory quantity is a technique that helps e-commerce businesses to keep track of their inventory level. It is a must for every owner of an e-commerce business to have a minimum level of inventory.  Some inventory management systems will automatically alert the owner of the inventory of a certain product that falls below par quantity. Two variables are responsible for setting a minimum or par level of inventory quantity 

  1. Demand for the product.
  2. Time required to make the product.

Inventory Scanning System

An inventory scanning system uses a barcode placed on a product to record the items when they arrive at the warehouse or ship to another address or make changes to it. Barcodes are not that expensive and are beneficial because there will always be an error caused by a human from mistyped stock-keeping units to wrongly labelled prices.  The need for this system becomes increasingly high when your e-commerce business starts to grow.

Erp System 

ERP is an abbreviation for Enterprise Resource Planning. It is a software that enables you to manage your items much more efficiently. This software enables you to track orders easily and many other important operations concerned with e-commerce. It enhances the efficiency of the business by keeping you up to date with the information on products and costing. There are several ERPs that are worth your money. The most notable is Oracle’s NetSuite.

Inventory Management Strategies
3. NetSuite Dashboard

Inventory Audit  

One of the most critical things for an e-commerce business owner is to get his hands dirty by manually doing an inventory audit which consists of counting the inventory. As humans are not machines, there is every chance that your inventory count can show a different number due to human error. Therefore, it is essential to regularly conduct an inventory audit and ensure that the inventory count matches your ERP system.

Forecasting Inventory Demand

In the e-commerce business, the demand for a product can suddenly increase or decrease.  Therefore, it is vital that you are flexible enough to respond to these market fluctuations. You should be able to anticipate and market change. Merely using historical demand data is not sufficient. It would be best if you also used statistical demand forecasting. It is much more efficient because it allocates an appropriate algorithm to evaluate the demand by studying its demand pattern.


It concludes our article on the top 10 inventory management techniques for an eCommerce business. After reading this article, we are confident that you have an idea about inventory management techniques and which one you can use for your eCommerce business. If you still have any questions, let us know. Lastly, before purchasing a tool or hiring an inventory management company, check the reviews to avoid issues. Thank You.

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