Introduction

Customers expect e-commerce businesses to fulfill orders and deliver in a timely manner. When there are stockouts, you compromise customer satisfaction and risk losing sales or even worse, your customers.   

Proper inventory levels are crucial to your e-commerce business. Too much stock will tie up your capital, while too little will lead to lost sales. You can avoid high-cost stockouts by replenishing your inventory on time and restocking your best-selling SKUs efficiently. However, many businesses need to do so. We'd like to walk you through how you can prevent the issue of overstocking.

What is Overstocking?

Overstocking occurs when you order more inventory than you need, resulting in excess goods in your warehouse. Expired or outdated stock can damage profits, leading to higher inventory storage costs.

Common causes of inventory overstock

Customers' demands are misjudged

Businesses have found it challenging to forecast demand since the pandemic, resulting in excess buying.

Overcorrecting for stockouts

The fear of losing hundreds or even thousands of dollars in sales from stockout may lead businesses to overcorrect their inventory, incurring similar, if not more costs.

Inaccurate inventory planning for seasonal demands sales campaign

Struggle to manage inventory levels and end up buying too much inventory, resulting in higher costs. Additionally, they may miss out on opportunities to boost sales by not strategically pricing products or promoting their brand. To overcome these challenges, businesses need to understand and address them to take advantage of seasonal opportunities and increase their profitability.

A lack of demand forecasting

Accurately planning inventory procurement is essential for businesses to avoid over-ordering and unnecessary costs. By gaining insights into future demand trends, businesses can make informed decisions about how much inventory to order for each SKU. If they fail to anticipate a slowdown in sales for a particular SKU, they may end up ordering more units than necessary, resulting in excess inventory. In such cases, it may be necessary for businesses to adjust their reordering strategies to avoid unnecessary expenses and optimize their inventory management.

How can overstock impact your business?

Cash flow

Excess inventory ties up your cash flow and prevents you from reinvesting in your business. This is especially detrimental for new businesses, where every dollar is vital to the growth.

Storage space occupied

Without sales, goods are occupying prime storage space that could have been replaced by inventory in demand. Not only does excess stock reduce your profitability, you will also incur undesirable storage costs.

Raised risks

The risks of storing goods for a long time include theft, tampering, corrosion, and obsolescence. If you cannot sell overstock, it may be necessary to dispose of it. Leaving products in landfills may harm your reputation and bottom line.

How to avoid overstocking with Sellerwizard?

Overstocking is a serious issue for businesses, so it's important to tackle the root causes.  With Sellerwizard Inventory Report, you can eliminate overstocking issues with efficient fulfillment services and AI-powered intelligent features. Through this tool, you can track your inventory in real-time and get advanced SKU tracking, which allows you to improve inventory management, stock control, and optimization.

Forecast demand efficiently

In Sellerwizard Inventory Report, you'll be able to keep track of historical sales and current inventory performance across all your e-commerce platforms, which helps you plan for demand. By doing so, you can accurately forecast future markets and order the right amount of inventory, ensuring you don't overstock.

Easily Monitor Inventory Movement and Sell Rate per week:

With this AI-powered tool, you can track inventory levels and sales performance in real time, which can help businesses make informed decisions about restocking and sales strategies.

Identify aging stocks that aren't selling and costing you money to store:

It's easy to identify slow-moving inventory that's wasting storage space. Sellers can take corrective action if they identify these items early, such as lowering prices or liquidating inventory to free up storage space and recover some of their investment. It helps sellers reduce waste and improve cash flow while optimizing inventory.

Conclusion

Efficient and timely order fulfillment is essential for e-commerce businesses to meet customer expectations and avoid the risk of losing sales and customers due to stockouts. Maintaining proper inventory levels is critical to ensuring business success, as overstocking and understocking can harm a company's bottom line. 

Fortunately, Sellerwizard Inventory Report offers several AI-powered features to help businesses optimize their inventory management and control, including efficient demand forecasting, real-time inventory and sales monitoring, and identifying slow-moving inventory to reduce waste and improve cash flow. By leveraging these advanced features, businesses can improve inventory control and ultimately boost profitability.

You can connect your stores (Shopee, Lazada, Tiktok Shop, Zalora, Shopify, and more). This tool is available in Malaysia, Singapore, Thailand, Indonesia and the Philippines.

Get Started with Sellerwizard

If you're interested in using Sellerwizard, request a free 20 mins demo to connect with our expert team.