Shopify Inventory Management and Capturing Inventory Demand

Your inventory is the most important part of your business. But, even large brands struggle to put in place an effective inventory management system.

Up to 43% of businesses don’t even track their inventory or use an outdated, manual process. Due to this poor inventory management, you’re bound to lose out on capturing sales and understand shopper intent. 

The worldwide cost of inventory distortion (including shrinkage, stockouts, and overstock) is an estimated $1.1 trillion.

With a smart inventory management process in place, you can cater to your customers better and keep them satisfied without overspending.

To help you set up a better system to track and plan your inventory, we created this easy guide to Shopify inventory management. 

Also read: Best Practices to Optimize Your Store Inventory

What is Inventory Management?

Inventory management is the process of sourcing, storing, and selling inventory with the goal of ensuring you are meeting customer demands while keeping your inventory costs lean.

To manage your inventory well, there are a lot of moving parts. You need to understand how your product is selling, ensure that you aren’t facing losses due to shipping or storage, analyze shopping trends to plan inventory better, predict future demand, and optimize your stocks better. 

Unfortunately, a majority of Shopify stores don’t have an efficient inventory management system in place. A large number of them even manage their inventory through a manual spreadsheet system. Due to this, many merchants end up missing out on tracking specific details like how products are selling and the purchasing trend of different products. 

A spreadsheet also doesn’t allow you to predict future purchasing trends, blindsiding you when there is a surge in demand. 

5-Step Checklist to Managing Your Shopify Inventory

1. Tap into your product analytics

Your product analytics can help you understand how your products are selling and plan your restocks and promotions better. Shopify analytics apps like RevTap help you understand your products better. You can analyze which products are selling well, which channels are driving revenue for specific products, and even understand which products are being abandoned, returned, and aren’t selling at all.

The app identifies and sets up product segments like ‘Most Reordered’, ‘Top Selling’ etc so that you can easily view all products under each category and identify problem areas in your inventory.

Here are some details to look into within your product segments:

  • Low stocks: Look through all your low stock products and restock them in a timely manner.
  • Trending items: By identifying all your trending products, you can restock them, ensuring you don’t find yourself stocked out.
  • Low sales: Identify items that have low sales so that you can plan promotions around them to sell them better.
  • Dead stocks: Monitor products that haven’t been selling well to plan your next steps, whether this is running promotions, slashing prices, or removing it from your inventory.
  • Most Reordered: You can take advantage of products that are reordered by placing a ‘Subscribe and Save’ widget on the product and capture recurring revenue.

2. Use back in stock automation to capture shopper intent

Stockouts are harmful to your sales, causing bad word-of-mouth, low customer satisfaction, and higher drop-offs. Even when you predict demand and restock as soon as an item is low, you’re sure to run into unexpected stockouts.

Also read: Out of Stock Management: How to Manage Stockouts on Your Shopify Store

You can tackle this by setting up a back in stock automation that lets your shoppers subscribe to your stocked out items and be notified as soon as it’s back in stock. The Back in Stock app allows you to set up and customize your sign-up form and even set up back in stock messages with different communication channels. 

This way, your shopper that are interested in a product that is out of stock can subscribe to it rather than leave disappointed. They can choose which channel they want to receive a back in stock message through— email, SMS, Facebook Messenger, or web push— and receive personalized messages. As the merchant, you can customize your back in stock messages to include discounts and reflect your brand personality.

Such an automation helps you bring back interested shoppers, ensuring you don’t lose out on a sure purchase!

What’s more, the back in stock automation also helps you understand how many shoppers are interested in the products, helping you stock up accordingly and plan inventory reorders better. Ensure that you’ve enabled the back in stock subscription widget on all products that are out of stock, especially top-selling and trending products.

Install Back in Stock app to set up back in stock alerts and capture sales from shoppers interested in stocked out items.

3. Use an inventory management app


It’s always best to have a weekly process to identify popular products, low selling items, and even ones that are running out. Such a weekly process allows you to stay on top of any surprise changes in your inventory. Your inventory management is easier to manage with a smart Shopify app.

Inventory planning apps like Stocky and Inventory Planner allow you to monitor your products easily. With an inventory management app, you can— 

  • Get alerts when stocks are low. 
  • Create purchase orders based on inventory forecasts. 
  • Understand the demand for specific products. 
  • Create a budget for your inventory purchasing. 
  • Compare different products and how they sell. 
  • Identify overstocks to reduce inventory costs.

Unlike a spreadsheet where you have to manually enter details, your inventory management app will collate the data for you and even find problem areas, from low stocks and dead stocks to future demands. 

Get started with an inventory management app for an efficient system that cuts down your inventory costs and helps you plan better. 

4. Do quality checks through reviews and feedbacks

Just managing your inventory isn’t enough. You also need to ensure that your products are of quality and meeting customer expectations. Look through reviews and customer feedback to understand the issues faced by your customers. 

You may find that customers had certain expectations about the product like an added feature or a specific color. To avoid this, you can edit your description and make it more specific, change the product image to be more accurate, or add a disclaimer to let customers know that the photographed product might be slightly different in color. 

Other reviews may point out quality issues or product defects. By closely monitoring your reviews on a daily basis, you can instantly flag these issues and take the product out of your Shopify store until the issue is resolved. 

Another way to find issues in your inventory is through customer feedback systems. Customer feedback, either from post-purchase surveys or through general customer surveys, can help you understand customer satisfaction and find pain points that your customers have.  

Use apps like LoyaltyLion’s NPS and Customer Satisfaction app or qrite to set up customer surveys and understand customers better. This will also help you find products that are well-performing and ones that aren’t.  

Also read: Everything You Need to Know About Getting Customer Feedback for Your Shopify Store

5. Predict demand with inventory forecasting

Inventory forecasting allows you to predict the inventory you need to fulfill future orders based on how your products have sold over a specific period of time in the past. This process uses your historic sales data, planned promotional campaigns, and other data points to provide you with future sales patterns.

Inventory forecasting helps you anticipate future sales based on historical sales, allowing you to understand annual sales patterns and maintain a well-stocked inventory for these fluctuating purchasing trends. Since forecasting future sales is dynamic, analyzing your historical sales data yourself just doesn’t cut it.

You need an inventory management app like Inventory Planner to predict demand on your Shopify store, analyzing your data and giving you real-time reports on which products will be subject to demand. The Shopify app collates your details to help you plan your restocks better, even taking into account seasonal purchase trends and promotions like BFCM.

This extensive guide helps you understand inventory forecasting better.

Why is inventory management important?

Your inventory is the central focus of your business. With a great inventory management system in place, you can manage your costs, plan your restocks better, lower stockouts, and sell better. An inventory management process helps you keep your customers satisfied.

How many products can you put on Shopify?

Shopify allows you to add an unlimited number of products on your store, regardless of your plan.

How do you measure to see if you are successfully managing inventory?

Compare the data before and after you’ve set up your inventory management process. Here are some questions you can ask yourself:

  • Is there a decrease in stockouts on your store?
  • Have you managed dead stock and ensured they are selling? 
  • Are you capturing in-stock subscriptions and bringing in purchases for items that are running out?
  • Have you been able to avoid overstocking? 
  • Is it easier to accurately predict future sales demand?

But, before you can measure the success of your inventory management process, you need one in place. We’ve listed 5 best practices to help you set up an inventory management plan that works.

Set up a better Shopify inventory management process!

We hope this guide helps you understand the importance of a good inventory management plan and how you can easily set up a system to do so.

Stockouts are the biggest inventory issues that merchants have. With an annual $25 billion in losses projected for individual businesses back in 2007, this loss has only gone up in the last decade.

The Back in Stock app is built to help you avoid losing shoppers interested in stocked out items. With such seamless automation in place, you can recapture sales and ensure fewer losses despite the stockout. Brands like Tesla and Amazon have set up successful back in stock automations that send alerts about the product’s stock update to their shoppers, ensuring they don’t lose a sale.

Install the Back in Stock app now to recover sales lost to stockouts.

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