{"id":480,"date":"2021-04-05T10:00:00","date_gmt":"2021-04-05T15:00:00","guid":{"rendered":"https:\/\/www.shipbob.com\/uk\/blog\/product-allocation\/"},"modified":"2025-10-03T21:35:41","modified_gmt":"2025-10-03T21:35:41","slug":"product-allocation","status":"publish","type":"blog","link":"https:\/\/www.shipbob.com\/uk\/blog\/product-allocation\/","title":{"rendered":"How Product Allocation Helps Meet Customer Demands Efficiently"},"content":{"rendered":"\n

Table of Contents<\/p>

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

What is product allocation?<\/a><\/p>\n\n\n\n

How does product allocation planning benefit ecommerce?<\/a><\/p>\n\n\n\n

3 product allocation strategies<\/a><\/p>\n\n\n\n

Product allocation best practices<\/a><\/p>\n\n\n\n

How ShipBob helps ecommerce store owners meet customer demand<\/a><\/p>\n\n\n\n

Partner with ShipBob<\/a><\/p>\n\n\n\n

Product allocation FAQs<\/a><\/p>\n\n\n\n

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

Remember when there was a toilet paper shortage?<\/p>\n\n\n\n

Thinking back to the early days of the pandemic, businesses that sold essential items such as toilet paper and hand sanitizer had to put a quantity limit on how much each customer could purchase at once. This strategy helped to ensure that demand was distributed fairly among all customers. <\/span><\/p>\n\n\n\n

That\u2019s just one example of why product allocation planning is important. Selling a <\/span>high-demand product<\/span><\/a>, launching in new markets, or expanding into new sales channels can impact the decisions you make on where to distribute your product(s) across different sales channels and warehouse locations to meet demand. <\/span><\/p>\n\n\n\n

Whether you sell in one country or internationally, run both a physical store and an online store, offer B2B ecommerce<\/a> services, or your inventory levels are low but demand is high, it\u2019s always a good idea to have a product allocation plan in place to optimise your supply chain<\/a><\/span> and improve customer satisfaction. <\/span><\/p>\n\n\n\n

In this article, you\u2019ll learn the benefits of having a product allocation strategy, how to implement it, and how ShipBob\u2019s fulfilment expertise can help you meet customer demand. <\/span><\/p>\n\n\n\n

What is product allocation?<\/h2>\n\n\n\n

Product allocation involves the process of distributing, tracking, and managing <\/span>ecommerce inventory<\/span><\/a> across a distribution network as well as sales channels to meet customer demand. Product allocation can also help maximise your l<\/span>ogistics operations<\/a> by strategically distributing product to optimise inventory<\/a> and reduce shipping costs. <\/span><\/p>\n\n\n\n

How does product allocation planning benefit ecommerce?<\/h2>\n\n\n\n

Product allocation planning can help you bulletproof your <\/span>retail supply chain<\/span><\/a>. Here\u2019s how: without thinking through how you will allocate products and forecast inventory based on past purchasing trends<\/span>, you risk stockouts, <\/span>backorders<\/span><\/a>, and other inventory issues that result in profit loss and low customer satisfaction. <\/span><\/p>\n\n\n\n

Product allocation planning is also beneficial when there is a sudden influx in demand but supply is limited. This could happen due to several factors, such as seasonality, manufacturing and <\/span>work-in-process<\/span><\/a> delays, as well as other factors that could limit the amount of product available. <\/span><\/p>\n\n\n\n

Here are just a few of the benefits of having a product allocation plan for your ecommerce business.<\/span><\/p>\n\n\n\n

1. Managing inventory allocation<\/h3>\n\n\n\n

With product allocation processes in place, you can decide how to best <\/span>allocate inventory<\/span><\/a> across your <\/span>ecommerce supply chain<\/span><\/a> by optimising inventory levels based on where there is the most demand. <\/span><\/p>\n\n\n\n

Proper inventory allocation can help you save significantly on inventory storage<\/a> costs by optimising inventory levels without overstocking (or not stocking enough to meet demand) in different locations. For instance, if you sell swimsuits and beach towels, you might consider storing more inventory in areas closer to beaches or popular summer vacation areas rather than colder areas that are far from the water. <\/span><\/p>\n\n\n\n

2. Avoiding inventory wastage<\/h3>\n\n\n\n

Effective product allocations ensures that you have the right levels of stock in the right place and at the right time. In some cases, inventory is wasted due to low demand but high inventory levels allocated in the wrong place or season. A product allocation plan can help reduce inventory wastage by optimising inventory levels across your entire network. <\/span><\/p>\n\n\n\n

If a business distributes too much inventory through a certain distribution channel that lacks demand, while neglecting those that experience high demand, that business will end up with a surplus<\/a> of unsold <\/span>dead stock<\/span><\/a> (i.e., unsellable inventory). <\/span><\/p>\n\n\n\n

3. Better understanding of customer behaviors<\/h3>\n\n\n\n

By making product allocation a priority, you ultimately learn more about your customers. By keeping tracking of historical order data, you can collect insights on your customers\u2019 buying behaviors. It\u2019s important to note that no two businesses are the same (compare seasonal vs. year-round demand here<\/a>).<\/span><\/p>\n\n\n\n

Understanding key info and customer data (e.g., which seasons and months buyers are likely to make purchase, which items are more popular than others, where they are located, and how much customers are likely to purchase at once) can help you not only make better decisions on your inventory but also help understand your customers on a deeper level. <\/span><\/p>\n\n\n\n

4. Promoting optimal store allocation<\/h3>\n\n\n\n

Say you run both a brick-and-mortar store and an online store. You can use historical order data to determine how much inventory to display in your physical store and how much to reserve for online orders. <\/span><\/p>\n\n\n\n

If your business has 500 purses in your available inventory that you plan to sell in both a physical store and through an online shop, and based on past order data you know that 70% of purse sales occur online, you can forecast demand and optimise product allocation by displaying 150 purses in your store and holding 350 purses for online sales. <\/span><\/p>\n\n\n\n

Of course, you should take other considerations into effect, such as if COVID affected your online vs. in-person sales, whether you will be reopening and relying more on in-person business, increasing your online spend budget, etc., and you may need to adjust accordingly.<\/span><\/p>\n\n\n\n

The same goes if you solely sell online and store inventory in multiple fulfilment centre<\/a> locations. You can determine where a bulk of your customers live and store more inventory in the warehouse(s) closer to where there is a higher demand. For example, you may find that your current fulfilment location is extremely inefficient at reaching the majority of your customers.<\/span><\/p>\n\n\n\n

That way, you can better optimise inventory storage and ensure that there is always inventory available at locations closest to your customers \u2014 which also results in lower shipping costs, average shipping zones<\/a>, and transit times. <\/span><\/p>\n\n\n\n

3 product allocation strategies<\/h2>\n\n\n\n

There is no \u201cone-size-fits-all\u201d approach to product allocation, and how you allocate your product(s) will be based on how your supply chain operates. <\/span>If you oversee a multichannel retail<\/a> strategy, you will need to take a more aggressive approach in how you allocate product across your network. <\/span><\/p>\n\n\n\n

Here are a few examples of production allocation strategies used in ecommerce. <\/span><\/p>\n\n\n\n

1. Equal allocation<\/h3>\n\n\n\n

Equal allocation refers to distributing your entire product line evenly across your distribution network, so each distribution centre has the same amount of every SKU<\/a> in stock. <\/span><\/p>\n\n\n\n

If your business sells shirts to customers at a brick-and mortar-store, and you also store inventory in several fulfillmen centres for online sales, both your store and every fulfilment centre would receive the same amount of every product (e.g., 20 red shirts, 20 blue shirts, and 20 yellow shirts).<\/span><\/p>\n\n\n\n

2. Trend allocation<\/h3>\n\n\n\n

Trend allocation focuses on the distribution of your stock based on where certain types of products are trending and where they are being sold. <\/span><\/p>\n\n\n\n

Let\u2019s say you sell discs for frisbee golf, and the sport is becoming more popular on the East Coast of the United States. Even though the game is played across the US, you might consider splitting inventory<\/a> across the US but storing the bulk of your stock in a fulfilment centre located in New York or Pennsylvania. <\/span><\/p>\n\n\n\n

If you can learn to master and predict product trends more accurately, then you can use product allocation to divert more product to the locations where there is the most demand. <\/span><\/p>\n\n\n\n

3. Universal allocation<\/h3>\n\n\n\n

Similar to equal allocation, universal allocation is another basic strategy that involves distributing all of your inventory across sales channels equally. This is more commonly used by businesses that don\u2019t have a large product line or catalogue . <\/span><\/p>\n\n\n\n

Depending on what you sell, this product allocation strategy could be all you need, but most businesses choose to optimise their inventory based on several factors to ensure demand is met and enough inventory is stored closest to their customers. <\/span><\/p>\n\n\n\n

Note: With some inventory management systems and logistics companies<\/a>, you can centralise your inventory across sales channels and fulfil orders using all inventory, regardless of the channel.<\/p>\n\n\n\n

Product allocation best practices<\/h2>\n\n\n\n

Depending on your supply chain, there are a number of ways to efficiently allocate product. Here is an overview of product allocation best practices: <\/span><\/p>\n\n\n\n

Use product allocation software<\/h3>\n\n\n\n

As you expand into new sales channels, distribution locations, and markets, implementing technology to help you track inventory will help you save time, eliminate human error, and create a more efficient supply chain<\/a>. <\/span><\/p>\n\n\n\n

Though it\u2019s possible to manually track inventory, online brands often use technology and inventory automation<\/a> tools, such as <\/span>inventory management software<\/span><\/a>, to track inventory in real time \u2014 especially if you store inventory in multiple locations or sell across different channels.<\/span><\/p>\n\n\n\n

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\u201cWe roll out new products and designs on our website 1-3 times a month and send new inventory to ShipBob each week. It\u2019s really easy to create new SKUs and restock existing ones using ShipBob\u2019s technology, which is especially important with high inventory turnover.\u201d<\/span><\/i><\/p>\n\n\n\n

Carl Protsch, Co-Founder of <\/span>FLEO<\/span><\/a><\/p>\n<\/blockquote>\n\n\n\n

There are several <\/span>inventory apps<\/span><\/a> on the market to choose from that integrate with the most common sales channels in ecommerce, from Shopify to  Amazon to Facebook, to connect to your tech stack, so you can track inventory all from one dashboard.<\/span><\/p>\n\n\n\n

Use demand forecasting<\/h3>\n\n\n\n

There are always going to be shifts in demand, but that doesn\u2019t mean you can\u2019t use data to make informed decisions. <\/span>Demand forecasting<\/span><\/a> is one of the most powerful ways to better allocate product to meet demand across your distribution centres<\/a> and channels.<\/span><\/p>\n\n\n\n

Forecasting demand can also help you make better decisions on other parts of your business, such as when to run a promotion or <\/span>flash sale<\/span><\/a>, when to hire more staff<\/a>, how much warehouse space you will need, and more. <\/span><\/p>\n\n\n\n

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\u201cI am a bit of an analytics nerd, so I love the ShipBob dashboard because I didn\u2019t have access to this level of visibility before. I also love the ability to see remaining inventory \u2014 that\u2019s so huge. Before, we were counting one by one in my house, but that\u2019s being taken care of by ShipBob now.\u201d <\/span><\/i><\/p>\n\n\n\n

Andrea Hamilton, founder of <\/span>The Finer Things 1920<\/span><\/a><\/p>\n<\/blockquote>\n\n\n\n

Maintain healthy inventory levels<\/h3>\n\n\n\n

Maintaining an optimal amount of inventory (also known as <\/span>stock control<\/span><\/a>) is one of the most important aspects of inventory management, from optimising stock levels in a warehouse(s) to stabilizing inventory storage<\/a> costs, to maintaining enough stock to meet customer demand.<\/span><\/p>\n\n\n\n

By keeping track of your inventory levels across a distribution network, you\u2019re also able to optimise your inventory replenishment<\/a> process. Once you have an understanding of how much product you want stored throughout your supply chain, you can use inventory tracking tools to set up automatic notifications of when an SKU has hit its <\/span>reorder point<\/span><\/a> and even put the reordering process on autopilot. <\/span><\/p>\n\n\n\n

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\u201cAnother ShipBob integration I love is Inventory Planner. It saves me hours every week in Excel spreadsheets, and I can raise a PO in minutes when it used to take me hours. <\/span><\/i><\/p>\n\n\n\n

For every order I placed for years, I was ordering too much or not enough. Between inventory forecasting tools and the ability to auto-create WROs, we don\u2019t have stockouts much anymore. I sleep better at night.\u201d<\/span><\/i><\/p>\n\n\n\n

Wes Brown, Head of Operations at <\/span>Black Claw LLC<\/span><\/a><\/p>\n<\/blockquote>\n\n\n\n

Partner with a 3PL<\/h3>\n\n\n\n

Product allocation impacts the speed of how quickly you deliver orders to your customers. That\u2019s why location is key here. You might have enough inventory to fulfil orders, but where you distribute your inventory is just as important. To meet customer demand, you have to be ready to meet customer expectations. <\/span><\/p>\n\n\n\n

For instance, it can be inefficient to store all your inventory in California if most of your sales are coming in from the East Coast of the United States. But if you don\u2019t have access to a fulfilment centre closer to the East Coast, then you risk paying more in shipping costs and slowing down transit times for your customers.<\/p>\n\n\n\n

To establish a product allocation plan that reduces logistics costs<\/a> and improves last-mile delivery<\/a>, you will need access to different fulfilment centre locations, inventory management tools, and the ability to track inventory in real time across your network from one dashboard.<\/p>\n\n\n\n

Many ecommerce businesses don\u2019t have the time, money, or access to the robust infrastructure needed to strategically allocate inventory. That\u2019s why many fast-growing brands partner with a third-party logistics (3PL<\/a>) company like ShipBob that takes care of the entire retail fulfilment<\/a> process, which can help you improve your product allocation strategy.<\/p>\n\n\n\n

How ShipBob helps ecommerce store owners meet customer demand<\/h2>\n\n\n\n

At ShipBob, we understand that product allocation can be tricky to manage. That\u2019s why we focus on supporting ecommerce store owners by helping them allocate products across different locations and sales channels to ensure there is optimal amount of product in right place(s) at the right time.  <\/span><\/p>\n\n\n\n

ShipBob offers expertise in helping businesses experiencing <\/span>various growth patterns<\/span><\/a>, including the ability to make better decisions on how much inventory to store at all times and where. <\/span><\/p>\n\n\n\n

Because ShipBob\u2019s fulfilment network is powered by a centralised tech stack, you\u2019re given access to <\/span>advanced data and analytics<\/span><\/a> tools that can help you make better decisions on inventory allocation by understanding where your customers are located and what an ideal distribution plan would look like. <\/span><\/p>\n\n\n\n

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With ShipBob, you get answers to questions like:<\/p>\n\n\n\n