It can be one of the trickiest challenges a small business faces—how to effectively manage inventory and prevent overselling your stock.

Luckily, while it can be super tough if done wrong, there are many simple ways to get your inventory management squared away. 

It’s more important than ever in today’s super competitive eCommerce world to effectively manage stock. And, a large part of that is to avoid taking on too many backorders. 

Tips for managing inventory and keeping your customer happy


So, with that in mind, here are a few straightforward and easy-to-implement tips to stay on the right track when it comes to managing inventory.

Take control of your inventory management

First of all, take full ownership of your inventory management. You can do it!

That means making sure your warehouse is in good condition. That means all your stock is sellable. 

Breakage is normal, but you need to correct inventory to accurately reflect what can be sold.

If your warehouse is in bad condition and you aren’t correcting stock errors as they come, you’ll quickly feel the pain of a mismanaged inventory. And, you will not like it.

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Set standard stock levels 

If you don’t want to keep customers waiting (angrily) for backorders, another key tip is to maintain standard inventory levels. 

Set a minimum quantity of product to have on hand at all times (not just some of the time) to take care of regular forecastable orders. 

These standard levels allow you to accurately predict when it’s time to order more. If you can, having a person dedicated to purchasing (and forecasting) will save you a lot of headaches.

Get real-time updates

It’s one thing to set standard levels, but it’s quite another to track levels and make sure they stay where you want them to be. How to keep track of inventory all depends on your particular situation.

Generally, you want to adopt a system that tracks inventory as close to real-time as possible. By integrating a real-time tracking system with cutting-edge scanner tech, you can avoid many backorder and stock issues. 

And, voila! You’ll see how much stock you’ve got on hand at all times.

Depending on your eCommerce platform, the inventory management software you can find will differ. Do the research and find the one that best suits your business and platform.

FIFO is your friend

Things get more complex when your warehouse is stocked with perishable goods. The adjective ‘rotten’ becomes literal real quick.

If you’re a small business owner in this position, you’ll love the first-in, first-out (FIFO) method. 

It’s not hard to get your head around. Basically, it means you move your oldest inventory (or your ‘first in’) before the rest. 

Literally, it is first out the door and into your customers’ loving hands. This way you don’t get stuck with rotten stuff that can’t be sold.

But the FIFO method doesn’t have to apply only to perishables. You can treat non-perishable inventory just the same. 

Packaging that sits on your shelves for a long time can end up looking worn, dated, and shabby. You don’t want to ship that shabby stuff to your savvy shoppers (sorry).

Forecast demand accurately

It’s easier said than done, but if you can accurately predict future sales you’ll be a long way towards managing inventory better than many other small eCommerce businesses. 

While there are a lot of variables at play here, try and keep a tab on a few key factors. Such as:

  • your previous year’s sales
  • your growth rate
  • macro-economic conditions
  • industry trends

Inventory forecasting is the magic key to countering most stock issues that come up before they do. It’s the small business’ version of the Farmer’s Almanac.

Again, it pays to have someone on board to focus on forecasting and purchasing. They can look into their crystal ball to help avoid overselling stock.

Do regular audits

There’s nothing like a good audit to get your inventory in a better place. 

With an inventory audit, you’ll be able to ensure your physical inventory matches the one you see on your computer. 

There are a few inventory audit procedures you can use, depending on your particular circumstances. 

You can do it little by little with a method called cycle counting. You accomplish a full inventory audit over the course of a year. 

Or you can do some spot-checking on an ad hoc basis, as you decide it’s needed. This method won’t assure complete numbers but can give peace of mind for particular SKUs (stock-keeping units) you are concerned about.

Lastly, carry out a full physical inventory audit where all stock is counted in one go. This usually happens once a year and can require you to close business for a day. In terms of inventory accuracy, the peace of mind is unrivaled.

Get a back-up plan in place

It’s no secret that sometimes things don’t go according to plan. And, that’s OK!

But, you need a back-up plan to fall back on. This is as true of inventory management as any other moving part in your business.

Think about it. What if your supply shipments get delayed? Or one of your suppliers gets into financial difficulty and can’t fulfill their orders?

Building in contingencies for just such incidents will buttress you against their impact if they do occur.

Make sure you consider all the what-ifs and plan for how to handle them. That way, instead of a disaster it becomes merely a minor setback. 

Always keep some safety stock

Speaking of back-up plans, a good way to stay insulated from external shocks (i.e. a pandemic) is to keep a bit more stock than you need. Just in case. 

Then you can enjoy the peace of mind that you’ll be able to keep up with orders if a supply chain issue pops up or a surprise rush happens on a certain item. 


Peace of mind

That’s the true goal. If you set up your inventory right and install the right guardrails, you won’t have to worry so much.

Bonus: your customers won’t either.

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