Stocks – 5 tips for sensible management and optimisation

One of the most important questions that online retailers face is how to manage inventory to always have the right amount of goods and products available at the right time. Optimal stock levels ensure smooth processing of all orders, customer satisfaction and ultimately play a significant role in the company’s success. If you often have too high stock levels, if products with low sales are already gathering dust or if you are constantly running out of stock due to quantities that are too tightly calculated, it is time to optimise your own stock levels.

In this article, we will tell you what options you have to organise your stocks, how you can optimise them and how you can sell low-selling products in a targeted manner.

What exactly is the stock?

The quantity of physical goods that are in a warehouse at a certain point in time is described as stock. Likewise, it already includes those goods that are in transit or are determined for accounting purposes. Your stock of goods is the same as the warehouse stock. It is also the basis for important key figures such as the storage period or the inventory turnover. The stock level is determined by means of an inventory or the ongoing recording of receipts and issues, which is also referred to as cash discounting.

Why is stock management so important?

Effective stock management and optimal warehousing are the foundation for ensuring that you are able to deliver at all times and keep inventory costs as low as possible. In this way, you achieve a high level of customer satisfaction and work economically at the same time.

Here is an example: If a customer orders an item that is shown as available, but you no longer have it in stock, you will inevitably have to cancel the order. Not only do you risk losing the customer, but you also risk a negative customer rating, which can have a very negative impact on your image.

Continuous stock management is equally important from a legal point of view. According to a ruling by the Higher Regional Court of Hamm, as an online trader you are obliged to keep your goods and delivery times up to date. If a product is no longer in your stock, you must update this immediately.

In addition, you risk violating the prohibition of bait-and-switch advertising according to § 3 para. 3 UWG. This states in the appendix: “The following business acts are always inadmissible vis-à-vis consumers: Misleading business acts […].

5. Enticement offers without indication of inadequacy of the quantity of goods or services offered within the meaning of section 5b(1) at a specified price, if the trader does not indicate that he has reasonable grounds for believing that he will not be able to provide or cause to be provided those goods or services or similar goods or services for a reasonable period of time in reasonable quantity at the specified price; if the period of provision is less than two days, it is for the trader to prove the reasonableness […]”.

The availability of goods and thus the stock level in your online shop must therefore correspond to the real situation at all times. False information about the stock can also lead to a warning.

What are the options for managing your stockpiles?

As an online retailer, you have several options for managing your stock. Essentially, these differ in that you can manage your stock yourself, outsource it to an external provider or have your orders processed by a supplier.

Manage stocks yourself with an inventory management system

If you decide to manage your stocks yourself, you will definitely need an inventory management system. This is one of the most important components to manage the warehouse flow, incoming orders and outgoing orders. With the functions that an MMS brings along, you can organise the entire warehouse management process. For example, the digital solution takes over the recording of goods receipts from unloading to inspection and registration, keeps an eye on inventory management such as shelf life or movements and supports employees in processing orders. Stocks are automatically updated in the merchandise management system. Returns can also be managed in it.

With an ERP system, you always have a transparent overview and control of your goods in stock. Since all steps in the warehouse process are recorded and you can create reports, for example, it is easier to optimise your own warehouse stocks.

Outsourcing the warehouse to a fulfilment service providen

In addition to managing your own stock, you can alternatively opt for a fulfilment service provider and thus outsource your logistics. The external fulfilment company manages your entire warehouse, stock levels, takes care of shipping, packaging and even handles returns management. When a customer orders something from you, the item is shipped directly from the fulfilment warehouse. The only thing you need to ensure is that stock levels are correct at all times.

The advantage of fulfilment is that goods are dispatched particularly quickly and you no longer have to deal with shipping or returns yourself. The disadvantage is that you pay a fee to the fulfilment service provider and are still responsible for the stock yourself.

No stock with dropshipping

How to optimise your stocks?

Basically, it is always worth considering optimising your stock. On the one hand, such optimisation reduces costs and on the other hand, it can improve your ability to deliver. The following 5 tips will help you to do this.

Tip 1: Set your stock limits

In order to remain deliverable and equally liquid, you work with a minimum and maximum limit for your stock. The minimum stock is the minimum amount of goods you should have in stock to be able to serve customer orders. The maximum stock limit prevents you from managing unnecessarily high stock levels that tie up a lot of your liquidity.

Tip 2: Reduce excessive stock levels

If your calculations of the key figures show that you have products with a long shelf life or that they have a decreasing turnover rate, correct your orders. Reduce the quantities and use the potential for cost reduction. On the other hand, increase the volume if you notice a high stock turnover rate.

Tip 3: Sort out items

Stocks with a low turnover rate should be sorted out of your warehouse as soon as possible in order to make room for other products and to regain more liquid funds. An example of this is seasonal goods. You should only keep this as minimal stock. In the next section, we will tell you how to sell low-selling products in a targeted manner.

Tip 4: Correct your ordering behaviour

Ideally, you should analyse your ordering behaviour and adjust it according to the current situation. In the case of expensive materials, it makes sense to order them only as needed. The same applies to products with low sales. In contrast, increase the purchase quantity of goods that turn over quickly and have a high turnover rate. You may also be able to negotiate a discount with your supplier when you increase the volume.

Tip 5: Increase order frequency and reduce order quantity

If you want to keep your stock low, it may make sense to reduce your purchase quantity but order more often. You keep your stocks short and gain capacity, which reduces costs. It is important to use well-founded data when ordering at a high frequency.

Important key figures for your stock

When managing and optimising a warehouse stock, there are some essential key figures that you should keep an eye on regularly:

• Average stock level: history over a financial year
• Stock value: accounting value of goods in a given period of time
• Inventory turnover: information about consumption and new procurement within a certain period of time
• Average storage period: How long goods remain in the warehouse and thus tie up capital
• Stock range: How long stocks are sufficient to serve all orders from customers
• Stock interest rate: Shows the percentage of interest that the tied-up capital costs you due to the average stock level.
• Interest on stock: Quantifies the interest you miss out on during the storage period.
• Optimal stock level: When the stock level balances delivery reliability and low warehousing costs.

Sales promotion of low-selling products from your inventory

Low-selling products in your inventory cost you money. They tie up capital, reduce your liquidity and take away valuable capacity. Take the opportunity to promote the sale of low-selling products with a suitable sales and marketing strategy. This contributes significantly to the optimisation of your stocks.

Discounts

Reduce low-selling products and offer your customers, business partners or dealers discounts for a certain period of time. How high you set the discount should depend on the margin. In the context of price calculation, a reduction in the sales price has the advantage that many people are more likely to buy.

Bundles

Put together a bundle with your low-selling products. You have different options. You can create an offer like “three for the price of two” or combine matching and complementary articles into a package with a reduced price. This in turn has the advantage that you also increase the order quantity of your other stock at the same time.

Exit Intent Popups & Newsletter Popups

Use Exit Intent Popups to increase overall orders and avoid shopping cart abandonment. The intelligent software of uptain recognises when a customer wants to leave the online shop and displays a personalised popup that brings real added value for the visitor. This can be a discount or contact to the service team.

You can also use newsletter pop-ups to attract newsletter customers. Newsletters are a great tool to promote the sale of slow-selling products from your stock.

Vouchers

You can also use voucher marketing or promotion codes to increase sales of slow-selling products. A personal voucher that you send with your newsletter conveys a certain exclusivity in contrast to a general discount.

Optimise your stock levels regularly

Do not neglect the topic of inventory. With a targeted and well thought-out optimisation, you will save considerable costs and increase customer satisfaction at the same time. With the right tools, such as our pop-ups, you can start marketing your low-sales products directly. We will be happy to support you with comprehensive advice.

If you have any further questions, please do not hesitate to contact us. We look forward to hearing from you!