Shopify Inventory Management: Optimize your inventory management with Shopify Plus

As an online retailer, you know that managing inventory and products has a significant impact on your operational efficiency and sales. But how exactly do you overcome the challenges of inventory management in Shopify and take your ecommerce business to the next level?

In this blog post, we'll take a closer look at inventory management with Shopify. In doing so, we'll not only talk about the built-in features, but we'll also address the potential limitations you might encounter. To help you get the most out of your Shopify inventory management, we'll also show you how extensions and best practices can help you with your inventory management.

This will give you a clear overview of the options and solutions available to you to optimize your inventory management and increase your e-commerce success.

What is Shopify inventory management?

Your inventory is the amount of a certain product that is available for sale. With inventory tracking, you can avoid offering products that are out of stock. When you need to order or replenish products, you'll be notified easily.

In the Inventory section of the Shopify backend, you can set up inventory tracking, view your inventory, and adjust your inventory level. Inventory adjustment history for products and variants can also be viewed as their inventory is tracked by Shopify. It is also possible to analyze changes to inventory levels in the Inventory Reports section of Shopify.

Shopify inventory management is the heart of your e-commerce business. It includes all the processes associated with managing your product inventory and stock levels in your Shopify environment. These features are crucial to ensure that you can always keep track of your products, process orders efficiently, and provide a smooth shopping experience for your customers.

In Shopify Inventory Management, you can not only add, edit, and categorize products, but also monitor the current inventory. This allows you to know how many units of a product are available at any time and replenish stocks in time to avoid shortages.

Inventory management in Shopify provides a solid foundation for your e-commerce business, but there are many more features and extensions that can help you optimize your inventory management. Let's take a closer look at where the limitations lie and how you can take full advantage of Shopify's capabilities.

Limitations of Shopify Inventory Management

There are some specific challenges Shopify merchants may face with internal inventory management.

1. Many products are restricted or even banned from Shopify, limiting the ability to track them through the ecommerce platform. These restrictions often require manual intervention and the implementation of multichannel inventory management to track inventory separately from Shopify and other sales channels. Not only can this be time-consuming, but it also increases the risk of inventory count inconsistencies.

2. Auto-replenishment of inventory in Shopify is not done by default. While the platform sends notifications of low inventory, orders are not automatically triggered. Similarly, inventory records are not automatically updated when new products arrive. Implementing additional inventory management software is required to take advantage of these features.

Although Shopify provides reports on sales per day, week, or month, it does not provide comprehensive information on inventory turnover and the entire inventory lifecycle - from procurement to sales. This can limit the ability to make informed inventory management decisions and increase efficiency.

The above challenges highlight that despite many useful features, the Shopify platform also has its limitations when it comes to inventory management. Therefore, it is crucial to use appropriate extensions to overcome these challenges and ensure effective inventory management.

Inventory management across multiple locations in Shopify

Multi-location inventory management in Shopify is a powerful feature that allows merchants to efficiently track and manage their inventory across multiple locations. This is especially useful for businesses that carry products in multiple warehouse locations, shops or distribution warehouses. Here are some key points:

1. Manage multiple locations

Shopify allows merchants to maintain inventory in multiple locations and manage each location individually. These can be physical shops, warehouses, dropshipping warehouses or external logistics service providers. This gives retailers full control over their stock at each individual location.

To manage the inventory quantities within Shopify for multiple locations from a product or variant detail page, proceed as follows:

1. Select the desired product on the product page.

2. If the product has different variants, choose one of them.

3. In the ‘Inventory’ section, check whether the ‘Multiple locations’ option is selected for ‘Inventory is replenished at’.

4. If you want to add or remove locations, click on ‘Edit locations’, select or deselect the desired locations and save your selection.

5. To update the inventory quantity for a location, click on the displayed availability quantity, adjust it and save the changes.

6. Activate stock tracking for the product or variant by selecting the ‘Track quantity’ option.

7. Don't forget to save your changes by clicking on ‘Save’.

2. Automation of order fulfilment

Shopify allows you to automatically select the warehouse location based on proximity to the customer or the availability of a product. This means that orders are automatically fulfilled from the location that can deliver the product to the customer the fastest and most efficiently.

3. Availability and synchronisation

The system synchronises stock across all locations in real time so that both retailers and customers know exactly if and where an item is available. This transparency reduces overselling and stock-outs as Shopify immediately recognises when a product is sold out at a location.

4. Stock transfers between locations

Merchants can transfer stock between different locations to avoid shortages and ensure a balanced distribution of products. This feature is particularly useful for optimising warehouse capacity and meeting customer demand at different locations.

5. Reports and analyses

Shopify provides reports that help to analyse stock levels at different locations and understand which location is carrying how much stock and how efficiently it is being managed. This facilitates strategic decisions on inventory planning and order processing.

Advantages of Advanced Inventory Management

International retailers often face the complex task of managing multiple sales channels and potentially operating across multiple warehouse locations and 3PL service providers throughout the supply chain. As mentioned in the previous paragraph, there are also limitations to inventory management with Shopify that cannot fully address these requirements. This includes mapping warehouse space and shelf numbers, efficient inventory management, and paperless picking, which are critical to optimizing warehouse processes and ensuring a smooth supply chain. This is where external systems, particularly enterprise resource planning (ERP) systems, come into play.

ERP systems provide a comprehensive solution to optimize warehouse management through Advanced Inventory Management. They not only enable accurate allocation of shelf numbers and storage space, but also real-time tracking of inventory, forecasting of demand, and control of the entire supply chain. This results in lower inventory costs, reduced capital commitment, and more timely delivery of products and services. Errors in order fulfillment are minimized, which in turn increases customer satisfaction. ERP systems integrate seamlessly with existing e-commerce platforms and provide a holistic solution.

Advantages of ERP systems for online retailers

We have summarized the most important advantages of ERP systems for Advanced Inventory Management for you once again:

1. Automation: ERP systems automate many inventory management tasks, including inventory tracking, order processing, and goods movement. This reduces human error and increases efficiency.

2. Real-time information: With an ERP system, you have access to real-time information about your inventory at all times. This helps avoid inventory shortages and enables better planning.

3. Inventory control: an ERP system enables precise control over inventory, minimizes losses and ensures optimal inventory management.

4. Planning and forecasting: using historical data analysis and inventory forecasting, you can more accurately predict demand and reduce inventory costs.

5. Space optimization: an ERP system helps use warehouse space efficiently by suggesting optimal storage locations and minimizing space requirements.

6. Improved order processing: you can process orders faster and more accurately because you can monitor inventory levels in real time. This leads to higher customer satisfaction.

7. Cost control: by better managing inventory and ordering processes, you can reduce storage costs and increase profitability.

8. Compliance and reporting: an ERP system ensures regulatory compliance and enables detailed reporting on warehouse activities and costs.

9. Scalability: ERP systems are typically scalable and can grow as your business grows without requiring you to change your entire warehouse management system.

In summary, an ERP system can help increase the efficiency and accuracy of your warehouse management, reduce inventory costs, and increase customer satisfaction by providing better control, automation, and integration with your business processes. With an ERP system, you are optimally equipped to meet the challenges of warehouse management.

Implementation challenges and solutions

Implementing an ERP system for warehouse management can be an extremely beneficial investment for companies to optimize their warehouse processes. However, there are also some challenges that can arise during this complex project. One of the main challenges is integrating existing operational processes into the new system, as this often requires significant changes in the way of working. Data migration and consolidation of existing warehouse data into the ERP system can also be complex and requires careful planning to avoid data inconsistencies. Training employees to ensure they can use the new system effectively is another critical aspect that cannot be neglected.

Furthermore, selecting the right ERP system is crucial, as not all systems are equally well suited to a company's individual requirements. Integrating third-party software and hardware into the ERP system can also be a complex task. Finally, companies must ensure that their ERP implementation meets data security and integrity requirements, especially with regard to sensitive inventory data. Despite these challenges, well-planned and executed ERP implementations offer significant long-term benefits in terms of warehouse management efficiency, visibility and cost control.

Provider for Advanced Inventory Management and Shopify warehouse management

In addition to the global ERP programs, Shopify has introduced its own local ERP program for Europe in cooperation with partners such as NetSuite or MS Dynamics D365. This enables European merchants to seamlessly integrate local ERP systems into their Shopify stores. This integration option is available through existing Shopify apps, which means that ERP systems no longer need to be connected via APIs or custom solutions. This provides a direct and convenient solution via the Shopify app store for merchants in Germany, Austria and Switzerland.

This ERP programme includes Xentral, Pickware and Pixi. All three systems are not only Latori partners, but above all providers of advanced inventory management and some of our customers also rely on these tools.

Enterprise companies and retailers with a large product range in particular rely on the provider Pixi. But what makes Pixi so special? It offers a sophisticated logistics strategy that aims to create the ultimate customer experience. The provider brings the following benefits to Shopify merchants:

• Offers high, effortless scalability to keep pace with your expanding business

• Ensures delivery promises are met to ensure customer satisfaction

• Ensures 100% accurate stock levels to prevent overselling or supply shortages

• Automates order fulfillment to make processes more efficient and smoother

Latori customers, such as Asphaltgold and Melvin Hamilton, rely on Pixi to equip their warehouses for the challenges ahead and the continued growth of their businesses.

Conclusion

Implementing an ERP system for advanced warehouse management can be complex, but it offers significant long-term benefits in terms of efficiency and cost control. The local ERP program for Shopify in Europe provides seamless integration of ERP systems via Shopify apps to further optimize warehouse management and e-commerce operations.

At a time when online retailers are constantly looking for ways to optimize their operations and gain competitive advantage, warehouse management is becoming a critical factor. With the right solutions, you can not only manage inventory efficiently, but also increase customer satisfaction and strengthen your market position.