The 5 Most Common Inventory Issues for E-Commerce – Identification and Solutions

Are You Struggling with Inventory Challenges that Impact Your E-Commerce?

Imagine a customer who’s just found the perfect item in your online store – only to discover it’s out of stock at checkout. Or consider a warehouse packed with products that are selling slower than expected, while bestsellers constantly need last-minute restocking. 

These issues not only create stress for you and your team but can also cost you sales and credibility. 

Without effective inventory management, your e-commerce business risks losing both customers and revenue – and the unique customer experience that could otherwise set your business apart.

Many online stores and retailers face exactly these challenges, which constantly impact their daily operations and financial bottom line. To provide a smooth experience and keep your inventory in check, you need solutions that can tackle these obstacles.

In this article, we’ll examine the 5 most common inventory issues that hinder e-commerce operations and provide practical solutions to help you manage your inventory and deliver the customer experience your customers expect.

1. Unpredictable Inventory Demands

Problem:

For an e-commerce business, accurately forecasting inventory needs can be incredibly challenging. Demand can fluctuate due to trends, seasonal changes, promotions, and broader economic shifts. 

This challenge is twofold: either you may have too much inventory on hand, resulting in tied-up capital and lack of space, or too little, leading to stockouts and dissatisfied customers. Your purchasing management is thus influenced by your inventory control and ability to keep up with your inventory needs.

What can you do about unpredictable inventory demands?

Solution:

Data analysis of your purchasing and sales will help you predict your inventory needs so you can meet seasonal variations and market trends. Most warehouse management systems (WMS) enable you to generate reports on your purchases, sales, and reorder levels, allowing you to respond to demand changes and adjust inventory levels continuously. 

You might also consider a Just-In-Time (JIT) strategy, where you only order items when needed. This can be an effective approach in certain situations, as it reduces the need for storage space and ensures a high turnover rate.

Tip:

Set up KPIs and dashboards to continuously monitor inventory demands, allowing you to adjust forecasts in real-time and avoid waste and stockouts.

2. Inventory Accuracy

Problem:

When inventory levels aren’t accurately recorded, meaning they aren’t updated every time you buy, sell, or lose items, even small errors can have big consequences. Without accurate, up-to-date inventory data, customers may order items that aren’t actually available, leading to delays, delivery errors, and disappointment.

These errors not only create a frustrating experience for the customer but also lead to internal issues within the supply chain. When employees spend extra time searching for products that may not be available or restocking inventory, it quickly affects productivity and increases operational costs. 

A consistent lack of accuracy in inventory records can thus lead to a vicious cycle of errors, wasted resources, and dissatisfied customers, which can harm both profits and reputation over time.

Solution:

A modern WMS can provide real-time inventory updates and help you with inventory counting, minimizing human error and providing a clear picture of your stock levels. Barcode scanners and RFID tags can further improve inventory accuracy by quickly and efficiently recording items, ensuring that the inventory is always up-to-date.

Tip:

Regular cycle counts can help maintain accurate inventory data and quickly catch any errors. This allows you to optimize inventory without the need for large, resource-intensive inventory counts.

3. Inefficient Order Fulfillment

Problem:

When an e-commerce business has inefficient order management and slow order fulfillment, it can cause significant issues as customers today expect fast and accurate delivery times. Problems with order management can lead to delays and picking errors, resulting in disappointed customers and potentially negative reviews. This not only affects customer loyalty but can also lead to financial losses for the company, as poor order fulfillment may ultimately deter potential customers and create unnecessary costs.

Solution:

Most WMS solutions are equipped with order management functions that assist you through the entire order fulfillment process, from picking to shipping. 

Additionally, implementing batch or zone picking can help minimize the time employees spend moving around the warehouse, especially when multiple orders are processed simultaneously. This optimization of order management ensures that orders are picked and packed quickly and accurately, improving customer satisfaction and minimizing errors.

Tip:

Investing in employee training on best practices for order fulfillment and order management can be just as important as advanced technology. When employees understand how to perform tasks efficiently and accurately, both the speed and precision of order fulfillment improve, creating a more satisfying customer experience and a stronger reputation for your business.

4. Lack of Warehouse Capacity

Problem:

If you’re working with limited warehouse space, it can quickly lead to bottlenecks, especially when demand spikes during peak seasons or when certain products suddenly become popular. Lack of warehouse capacity can create congestion in the warehouse, with items stored in random or inappropriate areas, making it difficult for employees to locate and pick items efficiently. 

This inadequate storage system can lead to delays in order fulfillment, which not only affects employee productivity but also results in longer delivery times for customers – a factor that can cost both sales and loyalty.

Solution:

Optimizing warehouse layout is key to better capacity utilization. By using vertical storage, you can make full use of the space’s height and maximize storage without physical expansion. With storage solutions like racks and shelves, the warehouse can become more organized, making it easier for employees to quickly and efficiently locate items.

Tip:

For online stores experiencing seasonal fluctuations or unpredictable growth, outsourcing warehouse management to a third-party logistics provider (3PL) can be a flexible solution. A 3PL provider can offer additional storage capacity as needed, so your business can handle peak loads without committing to a fixed physical expansion. In this way, you can maintain efficient inventory management and ensure quick order fulfillment year-round without compromising customer satisfaction.

5. Coordination Between Warehouse and E-Commerce Platform

Problem:

For many e-commerce business owners, keeping inventory levels accurately updated on the website is a major challenge, especially when operating across multiple sales platforms like retail stores with POS, external marketplaces, or social media purchases. Without seamless coordination, discrepancies can arise between actual stock levels and those listed on the website, leading to items appearing as available online when they’re out of stock in the warehouse.

This can result in dissatisfied customers who expect to receive an item they’ve already ordered and paid for. And when customers lose trust in inventory information, they may be more inclined to choose a competitor’s online store, where they feel more secure about availability. 

This lack of synchronization affects not only customers but also the company’s operations. Employees must spend time processing refunds or finding alternative solutions for customers, and you risk losing customer loyalty and incurring additional costs associated with order handling errors.

Solution:

To ensure effective coordination, online stores should implement a WMS that automatically synchronizes inventory with the online store and other connected sales platforms, as most e-commerce platforms can integrate with inventory management systems. Real-time synchronization allows customers to always see correct inventory levels, so the online store can avoid misinformation and maintain a good customer experience.

Tip:

Automated alerts for critical stock levels in the form of reorder reminders can give your online store a head start on planning restocking and avoiding lost sales. By setting critical thresholds for when inventory should be replenished, your business can maintain full control over stock levels and ensure that customers always have access to accurate inventory information. 

This proactive restocking strategy enhances customer trust in your business and minimizes the risk of stockouts.

Conclusion

Effective inventory management is essential to the success of any e-commerce business. By identifying and solving the most common inventory issues, you can improve efficiency, reduce costs, and deliver a better customer experience. Implementing an advanced warehouse management system like Rackbeat can help you overcome these challenges and optimize your inventory management.

If you’d like to know more about how to implement Rackbeat in your online store, you can book a non-binding demo with a Rackbeat specialist. The specialist will guide you through the system, help you optimize your workflows, and ensure that your online store is prepared for the future.