{"id":1710,"date":"2020-06-19T12:30:26","date_gmt":"2020-06-19T12:30:26","guid":{"rendered":"https:\/\/www.shipbob.com\/au\/blog\/multichannel-inventory-management\/"},"modified":"2025-09-23T20:01:41","modified_gmt":"2025-09-23T20:01:41","slug":"multichannel-inventory-management","status":"publish","type":"blog","link":"https:\/\/www.shipbob.com\/au\/blog\/multichannel-inventory-management\/","title":{"rendered":"Multichannel Inventory Management: Challenges, Considerations, and Solutions"},"content":{"rendered":"\n

Table of Contents<\/p>

** Minutes<\/p><\/div><\/div>\n

What is multichannel inventory management?<\/a><\/p>\n\n\n\n

Single channel vs. multichannel inventory management<\/a><\/p>\n\n\n\n

Common pitfalls of multichannel inventory management<\/a><\/p>\n\n\n\n

6 qualities of a good inventory management system<\/a><\/p>\n\n\n\n

2 types of automated multichannel inventory management solutions<\/a><\/p>\n\n\n\n

Strong multichannel inventory management: ShipBob + Zentail integration<\/a><\/p>\n\n\n\n

FAQs about multichannel inventory management systems<\/a><\/p>\n\n\n\n

Conclusion<\/a><\/p>\n<\/div>\n\n\n\n

What do you want to learn?<\/p>\n\n\n\n

What Multichannel Inventory Management Software Is<\/strong><\/a><\/div>\n\n\n\n
Request Fulfilment Pricing from ShipBob<\/strong><\/a><\/div>\n\n\n\n

If the case for selling on multiple channels wasn\u2019t appealing enough before, recent months have made it abundantly clear that sellers should be active on more than one store.<\/p>\n\n\n\n

Not only are marketplaces like Walmart seeing massive surges in growth, but others like Amazon have rolled out sweeping changes recently, serving as a reminder that sellers can\u2019t put all their eggs in one basket (think Amazon\u2019s FBA shutdown of nonessentials causing shipping delays and disruptions in ecommerce sales during the COVID-19 pandemic).<\/p>\n\n\n\n

But expanding to new channels doesn\u2019t always come naturally for sellers. Oftentimes, sellers are challenged with the need to scale operations quickly \u2014 and one of the most important tasks involves managing inventory on more than one channel (also known as multichannel inventory management).<\/p>\n\n\n\n

What is multichannel inventory management?<\/h2>\n\n\n\n

Multichannel inventory management refers to the oversight of stock levels, reorders, and inventory forecasting across sales channels. It helps track and plan for inventory turnover<\/a>, and is where supply meets demand.<\/p>\n\n\n\n

Single channel vs. multichannel inventory management<\/h2>\n\n\n\n

When you\u2019re selling on one channel<\/a> like Shopify, BigCommerce<\/a>, or Amazon, you\u2019re usually managing one pool of inventory<\/a>, one set of sales data, and one set of product listings. Your main challenges are controlling costs and ensuring there are no discrepancies between your listed quantity and what\u2019s actually in your ecommerce warehouse<\/a>, what\u2019s being shipped, and what\u2019s being restocked.<\/p>\n\n\n\n

Each time you add a new sales channel, this process becomes exponentially more cumbersome. Multichannel retailing<\/a> forces you to factor in various buying behaviors, turnover rates, return frequencies, shipping speeds, and demand across channels \u2014 in addition to the usual complexities of inventory management<\/a>.<\/p>\n\n\n\n

You not only have to rebalance inventory according to what\u2019s in your warehouse, but also what\u2019s concurrently listed on multiple channels. For example, if you sell the same products on multiple channels, you\u2019ll need to manage and merge SKUs<\/a> so you know which are identical products and manage the inventory accordingly.<\/p>\n\n\n\n

At any point, orders could be flying in from multiple channels at the same time. It\u2019s easy to lose track of stock levels and rack up backorders<\/a>. Without a system built specifically for multichannel inventory management, it\u2019s nearly impossible to keep your head above water and prevent capital from getting tied up in inventory as you grow.<\/p>\n\n\n\n

Common pitfalls of multichannel inventory management<\/h2>\n\n\n\n

Poor inventory management is a $2 trillion problem today. This is exacerbated by a lack of automation, centralisation, and visibility as some sellers try to create workarounds. Below are the top issues to be aware of so you can avoid falling into common traps that so often become a sinkhole for businesses.<\/p>\n\n\n\n

Overselling<\/h3>\n\n\n\n

Retailers lose $634 billion to out-of-stock items each year<\/a>. One major contributing factor is phantom stock, or stock that is listed as available at a storage location within an inventory system but isn\u2019t really present. This can be the result of a typo, inaccurate entry, or lacking software.<\/p>\n\n\n\n

Decentralization \u2014 or the lack of software to synchronize sales across every channel and update listed quantities in real time becomes an even bigger problem if you decide to promote a product that\u2019s low in stock; Items could sell out on multiple channels at once, forcing you to cancel orders or suffer other consequences of stockouts<\/a>.<\/p>\n\n\n\n

Overstocking<\/h3>\n\n\n\n

Overstocks are the cause of $471.9 billion<\/a> in losses each year in retail. This is usually a result of poor inventory planning. For example, sellers may ballpark and overestimate their anticipated sales volume, leading to higher inventory carrying costs<\/a> and less room in their warehouses for newer or more profitable items.<\/p>\n\n\n\n

Another common issue is when sellers only list a portion of their inventory on one channel and another portion to another in an attempt to mitigate overselling. When a channel shows \u201cout of stock\u201d prematurely, they end up losing out on potential sales.<\/p>\n\n\n\n

Poor use of warehouse space<\/h3>\n\n\n\n

To increase omnichannel fulfilment<\/a> coverage and fast shipping on every sales channel, many will divide their stock across multiple fulfilment centres<\/a>. But without insight into how to do this strategically<\/a>, you could easily face higher shipping costs, longer delivery times and split shipments<\/a> when a single order is sent to separate warehouses.<\/p>\n\n\n\n

Inaccurate forecasting<\/h3>\n\n\n\n

Poor data quality has a domino effect. And in ecommerce, it\u2019s particularly difficult to backtrack once inventory forecasting<\/a> goes haywire since business is turning all the time.<\/p>\n\n\n\n

It doesn\u2019t help that 54% of sellers still lack forecasting software<\/a> according to a Zentail survey and try to manually calculate moving targets. Those same sellers often stick to a standard 30, 60, or 90-day<\/a> forecasting model. They lack centralised, real-time data to catch new buying behaviors and reorder (or scale back) products at a moment\u2019s notice.<\/p>\n\n\n\n

High order defect rate (ODR)<\/h3>\n\n\n\n

Lack of inventory control<\/a> can lead to canceled orders, incorrect shipments, delivery exceptions<\/a>, or late deliveries. When these get out of hand, your seller performance will take a hit. On Amazon, an ODR above 1% is cause for suspension.
<\/a> On Ebay and Walmart, the threshold is 2%. Beyond understocking and poor data quality, an inventory storage system<\/a> that fails to link together your different warehouses can kill your efficiency.<\/p>\n\n\n\n

6 qualities of a good inventory management system<\/h2>\n\n\n\n

It goes without saying that software can alleviate hurdles and risks that come with running a multichannel inventory business. Most sellers find that they need some combination of the features listed below when evaluating inventory management software<\/a> for both their present needs and as they grow.<\/p>\n\n\n\n

1. Integrations with your marketplaces, warehouses, 3PLs, and apps<\/h3>\n\n\n\n

The right system will have direct integrations with the marketplaces, vendors, 3PLs, and apps you work with that affect inventory tracking<\/a>. It should serve as the central command centre, where you have full visibility over the status and location of your stock.<\/p>\n\n\n\n

This allows for complete, consistent, and accurate data, which is needed for multichannel inventory management. It keeps your whole team \u2014 from your warehouse staff to purchasing managers \u2014 on the same page.<\/p>\n\n\n\n

2. Near real-time inventory updates<\/h3>\n\n\n\n

One core component of any ecommerce inventory<\/a> solution for sellers is the ability to automatically and continually update listed quantities. You should never have to update quantities by hand. When an order comes in, your multichannel inventory management software should immediately reserve inventory for it (even as payment is processing) and update your listing to prevent backorders.<\/p>\n\n\n\n

In addition, you should be able to set inventory thresholds or buffers so that once total inventory for a SKU reaches a specific level, it becomes available for purchase on only one channel to prevent overselling.<\/p>\n\n\n\n

3. Forecasting<\/h3>\n\n\n\n

Demand forecasting<\/a> is foundational to a scalable inventory plan. To be effective, your system needs to be able to account for many more factors outside of historical sales data. Those factors include:<\/p>\n\n\n\n