An e-commerce business is not functional and sustainable without any proper e-commerce inventory management. As it touches many points in your e-commerce company, you must have solid planning. Think about carrying too much stock in your inventory! It will cause you high inventory holding costs. Besides, having a limited stock will increase the chance of missing sales and not able to deliver products at the right time. Both two scenarios not only won’t harm your financial health but also your reputation and also customer experience.
Overstock which is also called deadstock, are the products that you won’t sell. These unexpected products take up space in the warehouse. The more sadly part, these spaces could be used for storing other more successful products. The problem does not end here. The carrying costs of the stock will affect your revenue badly.
Having a robust e-commerce inventory management is mostly about finding the right balance between customer expectations and company interests. The ultimate goal of e-commerce business is making sure to have enough in-demand products to deliver to customers, without spending too much inventory costs. And also, the great percentage of online shoppers have shown that they’re willing to pay more for same-day shipping, overnight shipping, or in-store pickup to ensure that they get their product as quickly as possible.
Probably, the best summary of the right inventory management is made by the Goldilocks principle;
Having the right amount of stock, at the right price, at the right time, and in the right place.
That’s why having a robust e-commerce inventory management maintain a competitive advantage as it is so related to your costs, profits and customer loyalty.
When it comes to managing the inventory effectively, inventory management software is a real requirement which will help you to track orders and items from the supply chain to delivery. These smart solutions will let the business to see the various parts of its operations in one place and manage everything effectively without relying on manual, paper or spreadsheet processes.
So far, we’ve drawn the big picture and a quick summary of e-commerce inventory management. But, as we are pricing experts, we aim to melt inventory and online pricing in the same pot and look at this crucial business requirement from a different perspective.
At below, you’ll realize how to reduce over-stock products with pricing tactics and the correlation of inventory/pricing for some points.
Detect the over-stocked products and be the most competitive one.
If you are struggling to sell a product among your assortment and allocating valuable warehouse space for the items, you are continuously losing revenue and missing opportunity. To get rid of this burden, you have to sell this product group as soon as possible.
The most applicable solution for that problem is being the most competitive in the market in terms of price regardless of profit margins. As you are already paying for the holding costs and losing space in the warehouse, reducing the number of overstocked products (even with a loss) will be much more beneficial than not generating great margins from the unsuccessful product.
So, analyze the market, track your competitor prices and set your prices consistently below of them.
You can manage this process effectively without manual works through competitor price tracking software. This smart solution will allow you to track your competitor prices instantly, show you the price competition in the market and let you be minimum among your competitors.
According to statistics, as more than 60% of online shoppers worldwide considers e-commerce pricing as the very first criteria affecting their buying decision, the chances of selling the underperforming products will increase.
Use psychological pricing
In our article, we have dive into some psychological pricing tips. To keep your overstocked product in balance or reduce the number, certain psychological tips are practicable.
Let’s examine these points and ask yourself are these quick strategies suitable for you.
Place excess stock near more expensive product
This strategy is also called price anchoring which is referring to the tendency of an online consumer to rely heavily on the first piece of the price offered.
The logic here, you’ll increase the chances of selling an excess stock product if you place it next to another related, but the more expensive product and show the expensive one first. Placing a higher value on the initial product will make the cheaper option more desirable.
With that quick tactic, you’ll increase the chance of reducing the excess stock.
Bundle excess stock products
Another emotion evoker strategy from psychological pricing is grouping two different products (the minimum one should be the excess stock product) at a lower price.
We all spend the hard earned money for the products and sometimes, it makes feel us guilty. Because of that every single extra item with a reasonable price reduces this pain (to be honest I am also searching for bundling items while shopping online). So, in order to get rid of excess stock, bundle them with a successful product or group them each other to encourage online shoppers to buy these products.
Give excess stock products for free
We all love free products. Once an online consumer comes across the offer that provides free stuff, consumer behavior pushes the logic to purchase the free item. It is one of the most straightforward but also effective trick to reduce the inventory cost by eliminating the number of excesses.
So, offer the excess product for free with a promising product. This is a win-win! You both improve the purchasing rates of the promising product and get rid of the inventory costs.
We’ve tried to show you some quick tips to help you to reduce your inventory excess. Now, we’ll show you how to get advantage of your competitor’s stock-out products.
Detect your competitors’ stock-out products and get advantage of that.
Think about a scenario; if an online shopper wants to purchase a new TV and can’t find many options, he or she perceives the product more valuable. Therefore, the willingness to pay more for that product increases significantly. That’s consumer psychology!
Let’s continue with the scenario! Our online shopper is searching for a TV for her father and detects that it is out of stock on one of your competitors. Are you guessing who’s next?
Yes! You’ll be the next door for that online shopper.
What if you detect that your competitor’s product is out of stock in advance? There are plenty of options. Detecting the stock-out product of your competitor will increase immediately the chance of selling it. With the confidence of that intelligence, you can set higher prices which help you to fatten your profit margin.
Thus, the e-commerce retailer with competitive intelligence advantage and stock availability get the advantage in pricing. Thanks to the competitor intelligence software, e-commerce retailers can gain insights on their competitors’ stock availabilities, and if you detect that opportunity, increase your prices and start investing on the promotion of that product in different channels like social media, Google Adwords, price comparison sites…
Lastly a quick roundup. Inventory management is essential to your business. If you don’t give enough energy to e-commerce inventory management, you’ll come up with big pains such as losing revenue because of costs and a bad reputation. In order to make it proper, you may consider using inventory management software. Also, as we’ve shown some quick tricks, balancing your excess stock products with applicable pricing would be a wise and applicable move. Lastly, detecting the stock-out products of your competitors through a competitive intelligence software will definitely gain you a seamless advantage.inventory management