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Managing inventory across multiple sales channels comes with significant challenges, especially as your business grows. With each new platform, the complexity increases, making efficient and accurate inventory tracking crucial.
Having a strong multichannel inventory management system in place can help you navigate these challenges, streamline your operations, and help your business grow.
What is multichannel inventory management?
Multichannel inventory management is the standard business practice of cataloguing and tracking products as they are put up for sale and then sold across multiple sales channels (e.g. website, app, social media, in-store, etc.).
Without inventory tracking, business owners and managers would not be able to keep stock levels accurate, would risk overselling, and would lack the data needed to make informed decisions about the day-to-day running of their businesses. It’s a necessary component of running a multichannel retail company of any size.
In the digital era, multichannel inventory management has become synonymous with inventory management software. However, a surprising number of businesses still rely on manual methods to manage stock levels and track sales.
From paper log sheets to static Excel docs, these old-fashioned inventory management methods eat up precious time and resources, are much more prone to human error, and fail to identify opportunities for business growth.
Benefits of multichannel inventory management
When done right, with the support of a robust software program, multichannel inventory management plays a significant role in running a successful retail business. There are countless advantages to using integrated, multichannel software over piecemeal manual processes.
The key benefits are as follows
1. Improved shopper experience
There’s little worse that a retailer can do than overpromise and underdeliver for its customers. When you accidentally sell items that you don’t have in stock, requiring you to cancel a sale or back-order items, you weaken customers’ trust in your brand and risk losing their business entirely.
Inventory management software helps prevent these scenarios and ensures a smooth sales process across all of your sales channels. By automatically calculating inventory as and when sales are made, you and your customers can rest assured knowing that the items you advertise are truly available for purchase.
2. Resource and cost efficiency
Since the advent of reliable inventory management software, every minute spent manually updating stock levels is a minute wasted.
Manual processes—updating spreadsheets, pencilling in item counts on handwritten logs, and calling different store locations for stock updates—aren’t only a misuse of time and resources, but they often lead to costly mistakes due to inevitable human error.
When integrated with your payments platform, inventory management software updates stock levels in real-time so that your team can focus on what really matters: delivering excellent customer service.
3. Accurate, cross-channel visibility
The growth of mobile apps and social media commerce has added even greater complexity to the already gargantuan challenge of inventory management. It’s no longer as simple as managing and cross-referencing online and in-store sales.
Most major retailers, and many smaller ones too, are now selling across multiple digital and physical locations, via both direct and indirect channels.
From direct-to-consumer (DTC) platforms, like the business website and mobile app, to wholesale partnerships with other retailers and digital marketplaces, the growing list of sales channels has made manual inventory tracking methods nearly impossible
Inventory management software is a game-changer for retailers, particularly those with a strong growth agenda. Giving employees a complete, real-time picture of inventory across all sales channels allows them to respond to fluctuating stock levels swiftly, run promotions to shift slow-to-sell items, and troubleshoot any inventory discrepancies before they become a larger issue.
Adding new store locations or an additional sales channel is quick and straightforward.
4. Analytics and reporting
A highly valuable, yet often overlooked, aspect of inventory management software, is how it sheds light on current business practices and helps retailers identify ways to boost revenue.
Many inventory software programs have built-in, visual analytics tools that highlight sales patterns with easy-to-understand graphs and charts. These tools can even auto-forecast demand for different market segments, factoring in geography, seasonality, customer demographics, shoppers’ purchase history, and other key metrics.
When researching the software, look for a program that includes analytics and reports as standard. Even if the initial cost is higher than competitors, the software will more than pay for itself when you factor in the revenue-boosting insights its analytics tools provide.
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Common challenges of multichannel inventory management
1. Overselling
The number one challenge of inventory management is the one that has the potential to do the most damage: overselling.
Overselling occurs when inaccurate inventory tracking leads to the sale of out-of-stock items. The knock-on effect of this is order delays and cancellations, unhappy customers, negative reviews, and, ultimately, damage to your brand reputation.
The likelihood of overselling increases with each new sales channel added to your business’s portfolio.
As you expand and grow, it gets harder and harder to keep stock levels accurate across every warehouse location, storefront, and digital sales platform using manual processes.
Automated inventory management, linked with payment processing, helps you maintain accurate inventory levels across all channels, avoid overselling, and deliver a positive shopping experience to your customers.
2. Underselling
Another chief concern of inventory management is underselling. This challenge is often overlooked because it has less to do with immediate issues and more to do with missed opportunities.
Underselling occurs when retailers lack a clear, broad picture of their inventory levels. It happens when sales opportunities are passed over due to poor logistics, inaccurate forecasting, and the failure to align marketing strategies with inventory levels.
A common example of underselling occurs when an item is marked as “out of stock” in the warehouse, and therefore on the retailer’s website, despite being available at a store location or directly from the supplier.
One, more macro-level example of underselling is simply the failure to shift inventory due to a lack of marketing and promotion.
Inventory management software helps give retailers a better understanding of which products are slow to sell so that they can strategically promote them and update their inventory orders for those products in future.
3. Navigating returns and exchanges
Managing inventory may seem relatively straightforward when dealing with forward logistics, as items make their way through the fulfilment process, from your business to the customer.
It’s often when items need to travel backwards through this cycle that complications arise. This scenario, known as reverse logistics or reverse distribution, occurs when a customer returns an item, requests an exchange, or sends a product in for repairs.
The challenge for retailers is to ensure that, as items go through this backward flow, inventory is tracked just as accurately and efficiently as during the forward fulfilment cycle. This is one area where inventory management software really demonstrates its value.
4. Limited visibility of the inventory cycle
It used to be that inventory management systems only accounted for two broad stages of the inventory life cycle: 1) in stock and available for sale or 2) sold.
Although technically accurate, this limited view makes it difficult to analyse and streamline operations for greater efficiency, and nearly impossible to identify the cause of fulfilment issues when they arise.
Fortunately, overcoming this challenge in the modern era is much easier. Sophisticated software programs allow retailers to trace each product, get real-time snapshots of its status at various distribution stages, and smooth out any potential bottlenecks.
5. Lack of integration with sales platforms
Ensuring that stock levels are accurate across the many sales channels today’s retailers use is a challenge.
Too many businesses still manually update inventory figures on each individual sales channel, a process that’s both time-consuming and prone to errors. Even businesses that do use inventory management software struggle to integrate it across all channels due to a lack of standardised APIs, an outdated IT infrastructure, and general incompatibility.
Although it’s a challenge, seamlessly managing inventory across all sales channels is certainly doable. It all comes down to choosing a cloud-based software program that’s robust and flexible enough to sync with all of your sales platforms.
The best multichannel inventory management software for your business
The best software is one that can be customised based on your unique needs. Flexibility and scalability are essential. However, there are also crucial features that every retailer should look for when researching inventory management systems.
Among the key features you should look for are:
- Automated updates and tracking - Look for a software program that will automatically update stock levels as products are sold across all channels. Make sure it’s possible to trace orders through the inventory cycle so that you can promptly identify any fulfilment issues should they arise.
- Alerts, notifications, and order automation - Any high-quality inventory management software will notify you when stock is running low and allow you to set up automated ordering from your supplier so that you never have to worry about running out of inventory.
- Cloud-based infrastructure - Modern inventory management must be hosted on the cloud so that it’s secure and accessible across all business locations, from warehouses to corporate offices to individual store locations. Cloud-based software ensures the system can not be brought down by power outages or local hardware failures.
- Robust analytics and forecasting tools - In addition to facilitating your day-to-day operations, your inventory management software should also help support the future success of your business. Built-in sophisticated analytics and demand forecasting tools will allow you to cut overheads and optimise your sales strategies.
- Simple API integrations - Your inventory management software should be flexible enough to integrate with other key business applications, such as e-commerce platforms, accounting software, and payment processing.
- Multi-currency and multi-language support - If your business operates internationally, look for inventory management software that you can customise according to the currency and language of each business location. Without this feature, it’s easy for critical data and insights to get lost in translation.
- Detailed reverse logistics management - Choose a software program that accounts for returns, exchanges, repairs, and any other reverse-distribution scenario. Without this, it’s impossible to have accurate inventory figures when once-sold products go back into the system.
- User-friendly interface - It’s the job of inventory management software to distil a highly complex process into a unified platform that’s easy to understand and update as needed. Before purchasing any software, ask to demo the program to make sure it’s intuitive and easy to use.
- Support and training - Many inventory software companies provide onboarding support and training so that your team can fully understand the system before it gets up and running. This is a crucial but often overlooked feature that’s definitely worth considering before you sign on with a software provider.
- Strong security measures - Don’t let your company’s sensitive data fall into the wrong hands. Look for inventory management software that comes with strict user access controls and data protection tools as standard.
How Planet can help your business?
In the fast-paced world of retail, managing inventory across multiple sales channels can quickly become overwhelming. Planet's Order Management System (OMS) simplifies this complexity by offering a unified, real-time solution that tracks inventory seamlessly across all your platforms.
Whether you're selling in-store, online, or through social media, Planet’s OMS ensures accurate stock levels, prevents overselling, and enhances your overall customer experience. With robust analytics and automation, you can focus on growing your business without the headaches of manual inventory management.
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