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Unit 9: Inventory Control

Don’t just store it; organize it! Notes
Nothing is more embarrassing – or potentially costly – than having to tell a customer that
you can’t find the product he or she just purchased online. As an online retailer, you need
to find a way to organize your inventory that can make picking orders as simple as
possible.

Meyer knows the pain of disorganization well. “In our first warehouse, with only used
parts, we have over 600 motorcycles in various stages of dismemberment,” he says.
“They’re all very heavy, so really, only a couple of people know where everything is. But
in our other warehouse, with everything entered in a computer, a trained chimp could
pick orders.”
Consider Outsourcing
Joel Bush believes entrepreneurs are better off letting somebody else handle the headaches
of inventory storage and order fulfillment. This view isn’t surprising, because Joel is CEO
of Amplifier.com, a company that handles inventory storage and shipping for 200 clients
in a wide variety of businesses. But his point remains.
“Handling inventory can become a time-consuming exercise that distracts time and
attention away from opportunities to keep growing the business,” he says. “Common
problems include keeping adequate stock of inventory, keeping track of it, arranging it
for efficient pick-and-pack operations. All of these problems are magnified during order
spikes and periods of rapid growth.”
Of course, if you turn over your inventory to a third party, you lose an aspect of control.
“If you do it yourself,” says Bush, “you have direct access to your inventory, and you
know the timing and quality of your fulfillment process. But, we do address these concerns.
For example, we deliver a robust suite of reports via the web that allow clients to keep
track of the entire process.”
The “Perfect” Option

If you can avoid having inventory at all, you have fewer worries. For instance, the Numero
Group sells digital downloads of a large number of otherwise unavailable songs.
And Meyer wistfully dreams of entrepreneurs who thrive as middle men. “We have to
have a staff of 18 or 20 people to pick our orders,” he says, “while other companies can be
run by one person online with a couple computers in an apartment, just processing orders
to a large warehouse somewhere.”
Our Bottom Line
The likelihood is that whether you’re selling retail or wholesale online, you’ll be dealing
with inventory management issues. Take the time to plan out in advance what you’ll need
for space and organization, and weigh the option of outsourcing your inventory. Your
inventory will grow along with your online retail business, so make sure you do it right.
Question
How do you think can an online retailer manage his inventories?

Source: http://www.startupnation.com/business-articles/1314/1/online-retail-inventory-management.asp

9.6 Summary

 Inventory management involves making decisions on the appropriate level of inventory
to keep on hand. Too much inventory can increase storage costs and the chances of spoilage.

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