If you’ve ever shopped anywhere only to find you can’t get that item you need, then you’re familiar with stock availability (or unavailability) in action.
A vital part of supply chain management is to meet demand while optimizing inventory and associated costs — but it’s also one of the most challenging parts of running an ecommerce business.
Not knowing how much stock you have available at any time can lead to higher logistics costs and profit loss.
In this article, we will cover:
- Roadblocks to improving stock availability
- Benefits of stock availability management
- How partnering with 3PL like ShipBob can help
Stock availability: Why it matters for your ecommerce supply chain
Stock availability refers to knowing how much ecommerce inventory is in stock to meet customer demand. In today’s complex and dynamic retail environment, real-time stock availability management helps optimize inventory levels, reduce costs, and improve profitability.
As ecommerce supply chains become more complex with the rise of on-demand logistics, advanced technology and automation tools are used to enhance inventory visibility by offering real-time inventory tracking capabilities.
This allows businesses to expand into different sales channels and split inventory across distribution centers effectively.
4 stock availability challenges for ecommerce stores
The most common challenges that online retailers face is real-time visibility into stock levels — especially as they expand their logistics operations. Here are common challenges online businesses face when it comes to understanding stock availability.
1. Increased inventory carrying costs
Carrying costs makes up about 30% of total inventory costs and will depend on your storage needs, the number of SKUs you sell, where you geographically store inventory, your inventory turnover rate, and whether you keep fulfillment in-house or outsource it.
To ensure there is always enough stock to meet demand, it’s not uncommon for online brands to overstock. But when excess inventory doesn’t get sold, you risk paying to store what’s known as “deadstock” or inventory that becomes unsellable (damaged, expired, or outdated).
The investment spent on carrying costs can be used in other areas of your business that don’t stunt business growth. That’s why it’s important to know how much inventory you have available at all times, so you determine when it’s time to restock inventory.
2. Slow inventory turnover
Failure to have the right stock availability to fulfill customer orders means you could record lower sale numbers and having a low inventory turnover rate (meaning you are not selling through inventory fast enough). In most cases, an inventory turnover ratio of 2 to 4 is ideal, and it indicates that how frequently you restock covers your average sales cycle.
Knowing how much inventory you need to purchase before customer orders come in ensures you always have enough to meet demand. But it’s a challenge to understand how much inventory is needed without visibility into stock levels. That’s why it’s important to implement tools and processes to provide full visibility into inventory in real time.
3. Regular stockouts
Underestimating customer demand, not planning for major supplier delays, or having a lack of funds to purchase new inventory can all lead to products being out of stock. However, having visibility into stock availability provides insights to help better prepare for the unexpected.
By using technology to track inventory and gather insights, you can better prepare for the unexpected, from a delay in manufacturing to a sudden surge in demand.
4. Maintaining customer expectations
Almost all customers surveyed avoid shopping from an online store after one bad experience.
Customers not only expect fast and affordable shipping, but they also prefer having visibility into stock levels. If a product says it’s in stock on your online store and a customer makes a purchase, sending an email notifying them that items are backordered (or won’t be back in stock) will likely disappoint them.
6 ways to improve stock availability
Stock availability requires oversight of the entire supply chain, from forecasting demand to understanding production lead times.
Many direct-to-consumer (DTC) brands hold back from growing their business due to a lack of supply chain visibility. But with ecommerce continuing to rise, there are several tools and resources available to help DTC brands build supply chain resilience, so they can grow their business faster.
From technology to processes, here are some of the most actionable ways to improve stock availability oversight.
1. Use a reliable inventory management system
When it comes to managing your inventory across multiple warehouses, it’s an essential to implement an inventory management system in place that provides both visibility, data, and real-time tracking.
Inventory software helps automate time-consuming inventory tracking tasks, so it saves you time while reducing human error. To help you prevent stockouts, the right software can calculate the ideal amount of inventory you need based on past inventory trends and purchasing behavior.
However, many online brands prefer not to invest in their own logistics infrastructure and technology, so they rely on a 3PL like ShipBob.
ShipBob offers order fulfillment solutions along with access real-time inventory management tools. Since ShipBob operates a global fulfillment network, you can track inventory across your distribution network at any time, without relying on spreadsheets or multiple dashboards.
“We have access to live inventory management, knowing exactly how many units we have in each location. It not only helps with our overall process in managing and making sure our inventory levels are balanced but also for tax purposes at the end of the year. ShipBob simplified the entire process for our accountants and for us.”
Matt Dryfhout, Founder & CEO of BAKblade
2. Implement demand forecasting
Demand forecasting will never be 100% accurate, but with the right tools and systems in place, you can reduce the number of out-of-stock items, save time, and make better decisions that keep your business running smoothly.
With clear stock availability oversight, including current levels and past trends, you can decide when to reorder, where to store certain SKUs throughout your network, and when it’s time to run a promotion or a flash sale to deplete old stock.
As your business grows, it can become harder to forecast demand. Many 3PLs like ShipBob offer demand forecasting tools, including advanced analytics and distribution metrics to help you track inventory performance over time.
“One of the greatest features of ShipBob’s software is the inventory management functionality, which lets us track inventory change and velocity over time. Being able to monitor which styles are selling quickly helps us always keep our best sellers in stock.”
Ryan Casas, COO of iloveplum
3. Use inventory reorder points
Once you have insight into stock availability in real time, you can predetermine inventory reorder points, so you know exactly when it’s time to reorder based on historical trends and forecasting data.
To calculate reorder points manually, you can use this simple formula:
Reorder Point (ROP) = Demand during lead time + safety stock
Even though the calculation is simple, it can be a time-consuming process to manually calculate reorder points, especially since demand fluctuates.
Fortunately, many inventory apps are designed to help determine an optimal inventory reorder point so you can set an automation notification when inventory is low.
4. Distribute your inventory
Distributing your inventory across multiple warehouses can make it challenging to keep track of stock availability. But optimized inventory allocation across a network is essential if you want to reach more customers and offer them fast, affordable shipping options.
When you have customers located across the globe and you have a high order volume, it is recommended that you spread inventory across multiple warehouses. To do so, you will need access to real-time inventory data, so you can strategically store the right amount of SKUs at each location to meet demand.
Distributed inventory at locations closest to your customers will ensure that orders are delivered faster and more affordably. Additionally, in case of an emergency (such as bad weather or warehouse closures), an order can still be fulfilled by another other location as a backup.
“Now we’re at two [ShipBob] fulfillment centers, and being able to have the analytics and see how everything is working together has been extremely helpful for me on the operations end.
It definitely helps me with inventory management and seeing what’s going on. Even though we’ve grown, I haven’t spent more time on the business from an operations standpoint.”
Dana Varrone, Director of Operations at Organic Olivia
5. Carry out inventory audits
The costs of warehouse staffing, storage, inventory shrinkage, and depreciation costs should be closely monitored and calculated at all times.
By carrying out regular inventory audits, it is possible to make certain that the inventory recorded in the system matches the actual inventory you are carrying. This helps you identify inefficiencies, such as inventory that is selling too slowly or too quickly, so that you can optimize product availability while keeping holding costs low.
However, conducting inventory audits can be time-consuming and difficult to scale is the process is done manually using spreadsheets.
By storing inventory with a 3PL like ShipBob, you don’t have to worry about conducting regular inventory audits, and you still have access to inventory data and insights to maintain inventory control.
“We utilize ShipBob’s Inventory API, which allows us to programmatically retrieve real-time data on how many units of each product are currently stored at ShipBob’s warehouses. We currently use this API to generate custom reports to tie this inventory data into our accounting platforms.”
6. Cultivate healthy supplier relationships
Healthy supplier relationships are beneficial as they can help track stock availability, knowing you can rely on your supplier to stick with a consistent delivery timeline. However, manufacturing delays occur often, so it’s always a good idea to maintain a good relationship with multiple, trustworthy suppliers.
By communicating well with your suppliers, you can better collaborate on order volumes and timing, and negotiate better terms to save on costs.
ShipBob optimizes stock availability for ecommerce success
If you’re looking for a solution to increase stock availability oversight, ShipBob may be able to help.
ShipBob is a best-in-class 3PL that uses premium, advanced technology that offers full visibility into logistics operations. Once you connect your online store (and other sales channels) with our technology, you can choose which of our fulfillment center locations to store your inventory in.
Once we receive inventory, orders are automatically sent to ShipBob to be picked, packed, and shipped. With built-in inventory management tools, online brands can split inventory across the globe, forecast demand, and track inventory on hand at each location — all from one dashboard.
Here are some of the other ways ShipBob’s technology optimizes stock availability capabilities.
Set reorder point notifications for your inventory
ShipBob tracks inventory days on hand, so you can pull data and pre-set reorder point notifications for each SKU. This way, you can be automatically notified when inventory hits that threshold and order more.
We also help you figure out healthy buffer inventory levels so that orders can continue to be fulfilled even in the face of supply chain failures, transportation delays, or unexpected surges in demand without putting too much capital into inventory.
“ShipBob’s analytics tool is really cool. It helps us a lot with planning inventory reorders, seeing when SKUs are going to run out, and we can even set up email notifications so that we’re alerted when a SKU has less than a certain quantity left. There is a lot of value in their technology.”
Oded Harth, CEO & Co-Founder of MDacne
Calculate key metrics for proper inventory stocking
Gaining an understanding and full view of inventory activity and fulfillment metrics is what empowers retailers to make data-driven decisions.
ShipBob’s analytics reporting tool offers access to an easy-to-use dashboard that displays forecasted demand, inventory performance and so much more. You can view real-time product availability, pricing, and even the status of each SKU with just a few clicks across multiple fulfillment locations.
With ShipBob, you will always know which inventory is in transit, how much is available per location, average units sold per days, days of inventory left, when it’s time to reorder, and much more.
“We have a Shopify store but do not use Shopify to track inventory. In terms of tracking inventory, we use ShipBob for everything — to be able to track each bottle of perfume, what we have left, and what we’ve shipped, while getting a lot more information on each order.
The analytics are super helpful. We download Excel files from the ShipBob dashboard all the time and use them to analyze everything from cancelations, to examining order weights, to checking on whether ShipBob is shipping orders on time.
Even the way their warehouse receiving orders (WROs) work for sending inventory is very straightforward.”
Ines Guien, Vice President of Operations at Dossier
By outsourcing fulfillment to ShipBob, you get access to best-in-class 3PL services with an international fulfillment network and technology that provides stock visibility and real-time insight into your supply chain.
With ShipBob, you easily expand into new fulfillment locations and track all stock availability from one powerful dashboard.
To learn more about how ShipBob can help you manage stock availability and grow your business, click the button below.
Stock availability FAQs
Here are answers to the most commonly asked questions about stock availability.
What does stock availability mean?
Stock availability refers to knowing how much inventory is in stock in real time to meet customer demand. As ecommerce supply chains become more complex, advanced technology and automation tools are used to enhance visibility by offering real-time inventory tracking capabilities across distribution centers to meet customer demand.
How do you maintain stock levels?
The secret to maintaining optimal stock availability lies in better managing replenishment cycles, working well with suppliers, conducting inventory audits, and maintaining a healthy level of safety stock. Since stock availability management is a time-consuming initiative, there are a wide range of inventory management tools and technology on the market that provide real-time tracking and visibility. This helps online brands expand their logistics operations and maintain healthy inventory levels without needing to be involved in the day to day.
How do you ensure stock availability?
By using an inventory tracking system, it is critical to track and analyze historical stock availability data across your distribution network, so that you can continuously meet customer demand based on past sales trends. Being able to access data to forecast demand can help you make better decisions on when it’s time to reorder inventory at the SKU level.