- by eSellerHub
Technological advancements, customer expectations and globalization have increased the need of higher productivity. You can make your inventory management software boost sales by with the help of automation storage and retrieval functions which can optimize manual picking processes which leads to increased profits. That’s because, by implementing automation, multiple areas of manufacturing or distribution facility will benefit you from savings in your inventory cost. Additionally, it is also important to manage your stock levels. When companies do not, they end up with extra inventory which leads to roadblocks that prevent financial success. For instance, companies with excessive inventory typically:
- Experience production delays or downtime due to incorrect forecasts
- Damage relationships with vendors that expect just-in-time delivery of finished goods
- Lose loyal customers who are frustrated with lack of available products
To remain on the toes during tough competition, companies must accurately measure their inventory at every stop of the supply chain, whether the manufacturer that creates finished goods, a warehouse that stores inventory, a transporter that delivers packages or a retailer that sells products. Let’s dig-in more in detail onto how your inventory management software can help to increase sales:
- The 20% Analysis
Try to research from which 20% of your products sales come from. Do analysis and check what’s selling well and which products are not doing well. For this, the inventory management software is crucial as it will quickly give you information about your inventory. In such case, where point-of-sale software is used, inventory management software automatically updates the information regarding your inventory every time when a sale is done. Remember 80/20 rule: around 80% of your sales comes from your 20% of your inventory. Additionally, calculate your profit by examining product prices. Generally profitable business enjoys 20-30% margin as they successfully manage their inventories by not incurring extra expenses.
- Prevent Backlogs
Backlogs happen when you get trapped up with the inventory that you can’t move especially the products like electronics, whose demand dims away and retreats with the new release and updates. The only way out is to overcompensate stocking too little. Other than that, remember FIFO (First in, first out) which means oldest stock must get sold first and then new stock. This especially applies to the perishable products so you don’t end up with unsellable expired items. There is no point in stocking something obsolete that you can’t sell. Backlogs can affect your revenue indirectly as customers have to wait for out-of-stock inventory to arrive. These results into customer’s dissatisfaction and tend to leave negative review which in-turn spoils your brand. To avoid it, opt for robust inventory management software that keeps you updated with the stock levels.
One of the best ways to boost sales is to do forecasting. Through the inventory management software’s forecasting abilities you can:
- See previous year’s sales during the same week/month
- Current year’s weekly/monthly/quarterly growth rate
- Manage promotions
- Monitor current trends in the market and act accordingly
- Plan for peak and holiday seasons
There are chances that companies can’t seem to catch up with the customer’s demand leaving them disappointed. This is the time when sales forecasting can be of great help, making sure business always meet the demand.
- Calculate customer acquisition costs and increase retention
To calculate the customer acquisition cost, divide total advertising expenses by new customers for defined period. After certain period, investment incurred for marketing expenses moves down as the company and its brand progress. This means you are left with more money to invest on products as per market demand. To identify the same, use surveys, capture feedback at the point of sale, and analyze the sales data. This all can be done with the analytics tool within the inventory management software. Knowing what customers are looking for, can prevent from selling of items that aren’t in demand.
- Invest in customized inventory management software
With the increase in the number of orders you receive, you would need a more personalized and robust software which is custom made as per your requirement and business logic. The commercial off the shelf software are made for mass and they might not have features that you require to efficiently manage your business operations. Supply chain visibility is lost as some system can’t be integrated with other systems that you are using to manage your other business functions, leaving companies with costly overages that impact the bottom line.
The Bottom Line
In a nutshell, retailers with the right inventory management software can boost sales and beat the competition with the ability to scale more, reduced errors and grow revenue and profits through operational superiority. If you wish to focus on expanding your business, it is essential to make sure you are efficiently utilizing your resources to maximize profits.
Looking to develop a bespoke inventory management solution? Let’s talk on how we can make it the best.