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Your Guide to Multichannel Inventory Management - OLD

Multichannel retail and distribution is now a requirement for brands to be successful in ecommerce. Businesses not only need to be selling on multiple sales channels, but they also need to overcome the difficulties that come with the sales model, including tracking, managing, and shipping inventory. Inventory management can become very challenging very quickly, and if you don't have the structure and tools to secure inventory and fulfill orders, your business can crumble under the pressure.

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Purchases and production orders also add to the complexity of inventory and warehouse management in a multichannel structure. That's why inventory management software has become such a vital component of multichannel business operations (check out our article on the best inventory management software solutions for more). It provides multiple features that cross inventory, shipping, warehouses, and vendors, which collectively help prevent lost sales and unhappy customers.

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Challenges in multichannel inventory management

While using the right tools is the key to making a substantial impact on online marketplaces like Amazon and Walmart, you can still run into challenges. Multiple sales channels expose a business to a variety of risks, and ineffective solutions can quickly land you in hot water.

Some of the most common challenges faced by ecommerce businesses with multiple channels include:

  • Too much stock: This is a drain on financial resources that can limit future investment. Having too much inventory means incurring more storage fees and higher insurance rates. Ultimately, this results in a restriction of cash flow.
  • Wasted space: Having the wrong products in multiple warehouses impacts both finances and storage space. The less space that you have to fill, the harder it becomes to replenish the items that are selling well. Limited space can make it much more challenging to meet the demands of consumers, resulting in unhappy customers that may not return to your business. You are also incurring holding costs for storing the unmoving inventory, which cuts into your profits.
  • Overselling: When a business sells on multiple channels, they often find that they are at risk of taking payments for products that are not immediately available. Overselling is a significant risk for brands because it leaves customers unhappy. Canceling an order can ruin their experience, damage your reputation, and increase the likelihood of those customers never returning to your online store.
  • Inventory Visibility: Expanding your sales channels may also lead to storing inventory in multiple warehouses, splitting your stock across different locations. While this provides more fulfillment coverage, it also leads to a variety of challenges. Splitting the order can cause shipping costs to increase and potentially increased shipping time. Stock splitting creates a more convoluted ordering process for your storage units and selling channels if you aren't strategic about where you store inventory.

Today's consumers often bounce between channels seamlessly, always in search of the best products, the best service, and the best price. Keeping a brand’s presence consistent on the channels where consumers are shopping is vital to converting them to purchase.

In the digital age, consumers have more power than ever, and brands need to be where their customers are. Expanding often means a rapid deployment of growth into new sales channels. Some channels you might sell on include:

  • A dedicated ecommerce store on platforms like Shopify or BigCommerce.
  • Listings on marketplaces like Amazon, Walmart, or eBay.
  • Social media stores like Instagram Checkout and Facebook Shop.
  • Physical outlets in the real world, either through a traditional brick-and-mortar store, wholesale partnerships, pop-up shops, or new age retailers like B8ta.

As you can see, stock management grows increasingly more challenging as you diversify your mix of ecommerce channels. But in a consumer-driven ecommerce industry, inventory management is vital for profit-generation, efficiency, customer satisfaction, and positive supplier relationships.

Efficient inventory management is a critical component for modern businesses to overcome these operational hurdles. Using the right inventory management software eradicates many of the potential supply chain, sales, and inventory hurdles that can limit a multichannel business model.

Choosing the best software for multichannel inventory management

There are many options when it comes to finding the best and most reliable multichannel inventory software. Choosing the right software requires that you have a clear idea of your own business needs, the size of your business, and your number of warehouses.

In the digital age, inventory management is more strategic, and that means being aware of the features that you need and choosing the right mix of tools to prevent any redundancies. The key elements to evaluate so that you source and integrate the best software option for your inventory management include:

  • Inventory Control and Forecasting: As the cornerstones of your inventory management, these should be a priority when it comes to narrowing down your software options. Before you commit to software, consider the following elements:
    • Stock Keeping Unit (SKU) Flexibility: The best software allows for sophisticated SKU inventory management, so you can track individual products, product variations, and independently track bundles and kits. SKU flexibility provides immediate access to your product data and helps you better track your inventory.
    • Forecasting - History of a product’s sales is a core component of inventory forecasting. Your software should track and store sales data for years so you can refer back to it or use it in your inventory planning calculations.
    • Channel View: The key to more effective inventory management is gathering information across every one of your sales channels. The goal is to establish a single resource for your sales data, fulfillment data, and automated supply chain management. You should also be able to compile the data from each sales channel so you can get a holistic view of product performance.
  • Barcoding and Scanning: This is one of the most important factors to consider for larger businesses with multiple warehouses that have fluctuating inventory levels. It makes it much easier to collect real-time information from your warehouses. If you use barcoding technology, it will be a crucial aspect of your multichannel software management. However, not all multichannel inventory management software can integrate with barcode systems. Make sure that you have the tools that will work together, and that your operations software supports your barcode accessories.
  • Analytics: The analytics that you have access to in your software will also determine the effectiveness and efficiency of the tool. Do your research into what reports the software provides, making sure to prioritize in-depth access to the data that you need. Make sure that the information you have is actionable and measurable so you can make improvements and adjustments as your business continues to sell.
  • Customization and Configurability: This is a feature that is not available on all inventory management software. Your software must allow for customization because no two businesses operate the same way. The more that you can customize your multichannel software, the easier it will be to implement.

multichannel inventory management

Tips for improving multichannel inventory management

An inventory management system will only enhance your business if you use it in the right way. That means making sure that the solution that you pick is a high-quality match for your existing business model. You will be able to make a more informed decision regarding your inventory management solution if you take the time to consider:

  • The future growth potential of your business and scalability of your solution options.
  • The number of channels you are currently using and where you’d like to expand to next.
  • The systems and applications need to integrate into your inventory management solution.
  • Inventory update frequency and safeguards to prevent overselling across channels.
  • Your budget for inventory management tools.
  • How many suppliers your business relies on.

These primary factors for choosing a useful inventory management tool will help determine which software accommodates your current structure. However, there are a variety of additional features and capabilities to consider that can indicate how much the software will help your business scale.

Data Integration

Using an inventory management software means that you can avoid the time-consuming process of manual inventory updates. Manually updating your inventory on each channel exposes a business to human errors. Your chances of human error increase if you have products that sell quickly. There's always a chance that more units will sell while you are making the updates, causing inaccuracies.

A business that uses automation to handle these updates can respond quickly to orders and fast shipping turnarounds. The larger a company is, the more time and resources can be saved using electronic data interchange (EDI). This kind of integration allows for an improved synchronization between your sales channel listings and the stock that is available at your warehouses. It gives you a single location for evaluating and updating data relating to your inventory, which is then quickly reflected on all of your channels at the same time. Real-time syncing enables businesses to maintain control as their sales volume increases across multiple channels.

Supply Chain Automation

Order fulfillment is one of the final stages of the customer journey. However, it is also the most important –  you've now committed to providing your product to your customers. The last thing you would want is to be forced to tell them you don't have inventory. Improved inventory management solutions can help you maintain the integrity of the post-purchase experience.

When it comes to suppliers, businesses can have anywhere from one to thousands, and that can make managing stock challenging. How you work with suppliers will have a significant impact on your ability to restock and fulfill orders across your marketplaces, and requires a more efficient means of communication. Errors increase when you combine a broad portfolio of suppliers with a multiwarehouse structure.

You should also consider shipment tracking and update capabilities. Frequent shipment updates reduce customer anxiety, decreasing the risk of buyer's remorse. Automating these updates also means that your customer service team is not tied with order inquiries. Order tracking via an app or email updates can improve brand reputation as the customer feels much more confident about their purchase.

Additionally, inventory management software acts as a database for information about your suppliers. It will allow you to track the most critical information such as pricing, the minimum order quantities, and the production lead time for each supplier. Inventory replenishment becomes much more efficient, and it opens the door to increased levels of automation. Having this data in one place also allows you to optimize your reordering process. The most advanced inventory management software can automatically generate purchase orders when stock is low, recommending order quantities based on several factors.

Inventory management software is the key to avoiding the risks of supply chain management. The right software not only provides you with the data that you need but will also automate reordering as required.

Use Inventory Management Metrics

Data is the key to better inventory management. The problem is that there is so much data available to businesses that it can become overwhelming. That's why it's essential to know the best management metrics to be aware of, but it will depend on your multichannel inventory management KPIs. You should make sure to monitor these. Most business models will benefit from the following metrics:

  • Turnover: You need to be aware of how many times you sell inventory over a set amount of time. Keeping track of your inventory turnover will give you a clearer picture of what is selling and what isn't. You can calculate turnover using a basic equation - Cost of Goods Sold ÷ Average Inventory or  Sales ÷ Inventory.
  • Gross percent of margin: One of the most fundamental metrics to measure, your profitability is the key to the future of a business. Target profit margins vary by industry. Some business models might set a goal of roughly 35% gross profit, while in sectors like the food and drink industry, the goal is to meet a target of 40%.
  • Customer Fulfillment Rate: You need to measure how well your product orders are meeting customer expectations. They need to be delivered within the right timeframe as often as possible to maintain a positive order fulfillment experience between your customer and your brand. If your data reveals that you are not delivering your products within the given timeframe, then it becomes easier to identify an issue with your fulfillment process.
  • Carrying Costs: This is the overall cost of your inventory overheads. It will include all of the expenses that you incur in your storage setup. That means looking beyond necessary expenses such as rent and utilities and evaluating more in-depth metrics such as perishability, shrinkage, and ongoing insurance payments. It will also mean including the employment costs of your warehouse team.
  • Inventory Age: One of the most revealing metrics is how long it takes to move a unit out of your warehouse after it arrives. The longer that you hold an item in storage, the more it costs in carrying expenses. Inventory turnover is the cost of your goods sold divided by your average inventory costs. Within reason, you want as high a ratio as possible in your turnover ratio.

Most inventory management software and tools can help crunch these metrics for you. Tracking ongoing progress is essential if you want to optimize your business and make your investments count.

Optimized Product Control

The more that you develop an understanding of your sales trends and the demand levels for a product, the easier it becomes to manage your inventory. Taking control of your product supplies means being able to anticipate the demands of consumers better and ensure that you meet expectations.

The more that you understand your product selling patterns, the easier it is to streamline and improve inventory management across multiple sales channels and warehouses. Consider addressing the following aspects of inventory management:

  • Prioritizing high-performing products: The average business will often rely on the rule of thumb that dictates that 80% of online sales are generated by 20% of your products. Having a clear understanding of the most significant profit-generating products makes it far easier to ensure that your best-sellers are never out of stock.
  • Forecasting: Holding too much stock is expensive. Being aware of any increases or dips in future sales can be difficult to nail, but it can be beneficial if done correctly. Monitoring historical sales data and ensuring that you have an adequate supply of safety stock can alleviate many of the issues caused by seasonal fluctuations and warehouse management. You should also consider any promotions you are planning that might also impact your sales projections. If you have a big marketing push for a product coming up, you’ll want to make sure you have enough inventory to keep up with those sales.

Tools and resources for multichannel inventory management

There are a considerable number of available resources for those that wish to gain a better understanding of multichannel inventory management. These are often tailored to address the challenges of specific industries or to explore the benefits of using certain software.

In addition to tutorials on inventory management software, some other resources to investigate include:

  • Articles: There are some consistently useful articles on specialty websites like Inbound Logistics. While some will require payment to access, many are free. Many software companies like Skubana also host blogs, which include articles, webinars and case studies on companies that rely on inventory management systems.
  • Courses: For those that wish to develop a deeper understanding of their inventory management, there are a variety of online and offline courses available on sites such as com. There are free options available, but the majority will involve a cost. Prices can be anything from $100 to a few thousand, so it's worth looking around to ensure that you find the course that matches your business needs.
  • eBooks, Guides, and White Papers: Often, these types of guides and whitepapers can be sourced for free, although you may need to sign up for a newsletter or code. They will usually come in a PDF format such as The Essentials of Inventory Management available as an ebook, but there are also plenty of resources that are available as a paperback.
  • Videos, Webinars, and Presentations: It can be easy to get overwhelmed with the sheer variety of videos available on inventory management. However, these vary a lot in terms of quality, so finding the right channel is essential. Resources such as can provide you with several high-quality webinars focusing on customer demand and supercharging your inventory management. The webinar option is potentially more beneficial, although those benefits will come with a price tag. You can also access free webinars from different software tools.

Identifying and making use of the right inventory management tools is dependent on your ability to develop a deeper understanding of best practices.


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When it comes to enterprise resource planning and inventory management, having the right software is only the first step. Depending on the structure of your operations, you may need a few additional elements to be integrated into your system to achieve an ideal stock management process.

As mentioned earlier, barcode software data and multichannel inventory management software can streamline stock control, as well as increase how quickly you fulfill orders. Barcode scans mitigate the risks of delays, efficiency roadblocks, and missed sales. When data is such a cornerstone of the modern business environment, barcode systems and scanners can alleviate many of the time-consuming and error-prone aspects of inventory management. Your barcoding software and inventory management software should communicate with each other,  automating updates to your channels after orders are shipped.

The right multichannel inventory management software is a critical component of modern business. All businesses need the most efficient inventory strategy possible. That strategy has to prioritize consumer satisfaction and a smooth customer journey while balancing the budgetary restrictions of large inventory operations.

If you want to avoid overstocking and ensure customers receive their orders, then take the time to develop a sophisticated inventory management process. Choose the right software, and you will quickly see the benefits.

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