Managing Inventory Doesn’t Have to Be a Holiday Hell

This is a guest post by Shipwire’s Nate Filmore.

For all those non-believers out there, here’s a news flash: Hell exists — at least, inventory Hell does. Just ask any growing online seller preparing for the holiday onslaught, and you’ll likely hear stories of long nights spent poring over an Excel spreadsheet tracking sales and shipments.

If the seller has inventory in multiple locations the spreadsheets get more complex, in many cases routing orders and tracking inventory in a variety of locations — be it their garage, a brick-and-mortar storefront or an overseas warehouse. Often, these merchants are trying to balance inventory management with their other sales, marketing and administrative responsibilities as well.

But weary merchants, take heart: There are better ways to manage geographically dispersed product this holiday season.

Keeping Up With Booming Holiday Sales

In general, e-commerce business growth is hardly anything to complain about, especially as the world emerges from a recession. By all accounts, the darkest days are behind us.

ComScore reports that U.S. online retail spending reached $32.9 billion in the second quarter of 2010, which is up 9 percent as compared with a year ago. Google’s latest research shows that consumers are feeling good about the 2010 holiday season too: Sixty-four percent of shoppers plan to spend the same or more this year, as compared with the 2009 holiday season. Finally, eMarketer recently published that e-commerce spending is expected to grow 13.7 percent to $51.4 billion in the fourth quarter of 2010, topping last year’s fourth-quarter sales of $45.2 billion, according to a new forecast published by eMarketer.

While all this holiday action presents great opportunity for buyer conversion, it also presents pitfalls for online merchants who don’t have airtight control over their geographically dispersed shipping and inventory. Consider this: PayPal and comScore report that 46 percent of buyers abandon their carts because of shipping rate inaccuracies. Another 23 percent do so because of inventory inaccuracies. Given these statistics, the pressure’s on: Online merchants can hardly afford to stumble in the shipping and inventory management game.

Weigh Your Options

So when holiday orders come flying in and inventory expands in a merchant’s various warehouses, the once-adequate Excel spreadsheets no longer cut the mustard. Since inventory management is critical to running a profitable business, a more robust way to route and track orders across warehouses and the supply chain is required.

To that end, online merchants have a couple of options when it comes to inventory order management solutions to alleviate the headache of inventory management, and to subsequently improve efficiency and customer service.

Outsourcing your inventory and shipping to a product fulfillment company (also called a 3PL or third-party logistics company) is one way to eliminate inventory and shipping hassles. Here are a few professional tips as you approach outsourcing.

* “Try before you buy.” Get a free trial and do an “end-to-end test” by sending the vendor sample inventory and routing it back to yourself.

* Seek transparent pricing. Avoid long-term agreements and hidden costs like volume commitments.

* Invest in growth markets. Look for a global warehouse network with warehouses in your growth markets.

* Connect via software. Online sellers should require a software platform that you can easily plug into your Web store, and, of course, eBay.

* Fit your business. Some sellers will outsource all fulfillment, some will not. The solution should fit your business as it grows and changes.

* Help yourself. Require great customer support because you are paying your outsourced fulfillment partner to handle problems as they arise.

If you keep some or all of your shipping in-house, you can serve your business by looking for an order management solution. An inventory order management solution takes over where your Web site ends, and helps you manage orders through a process that includes routing the order to the inventory location, processing the order, facilitating pick, pack and ship operations, and tracking the shipment until the buyer is happy. Here are some thoughts for considering an order management solution.

* Hosted software. If you don’t want to buy, maintain and upgrade software you want to get Web-delivered tools — the order management equivalent of Hotmail or Gmail.

* Try before you buy. Get a free trial and make sure the solution matches your needs.

* Ensure interoperability with your shopping cart. Your shopping cart and order management software should work hand-in-hand.

* Automated validation and order screening. Shipping addresses should be validated and orders should be automatically scrubbed for validity.

* Multi-carrier support. As your business grows your shipping complexity will increase. Your order management software should help you select shipping options and simplify your growth.

* Multi-location support. Make sure your order management software can intelligently route orders among multiple ship-from locations. Examples include warehouses, outsourced warehouses, retail stores, drop-ship suppliers or maybe even your garage.

Make a list of all your business requirements and then price shop providers to find the best match for your business.

Tips for Taking Advantage of the Holiday Surge

Whether you want to shell out big bucks for inventory management software or would rather rely on an outsourced SaaS-based inventory management service, the basic requirements for attracting and keeping customers this holiday season — and every season — remain the same:

* Shipping price accuracy. Errors in shipping rates will lead to shopping cart abandonment. Make sure your shipping rates are accurately quoted and reasonably priced.

* Fast and free shipping closes deals. Find a way to offer fast and or free shipping to increase conversions. Here are six free shipping tips.

* Shipping transparency. Your buyers should be notified at every step of the order process. This is a great place to cross-promote while you inform your buyer.

* Correct shipment. There’s nothing worse than receiving the wrong shipment. Take time to ensure the accuracy of each order at fulfillment.

* Timeliness of shipment. Receiving a late shipment ranks high on the list of annoyances, especially during the stressful holidays. Again, optimized shipping methods can help here, offering ideal delivery times.

All that’s really needed to achieve these particular requirements is a bulletproof shipping and business inventory order management system. With that in place, the once-overwhelming holiday shopping surge and accompanying inventory Hell will be a thing of the past. Keep in mind that the issue is not necessarily where you’re keeping your inventory. Rather, it’s how you access it, how well you keep tabs on what’s available, and how inexpensively you can get it to a customer. Conquering these hurdles practically guarantees your success.

Official bio: Nate Gilmore is the Vice President of Business Development and Marketing at Shipwire product fulfillment, a provider of inventory order management software and outsourced order fulfillment with warehouses in the United States, Canada and Europe.