How to Manage Your Inventory Selling Online

Understanding and successfully managing the backbone of your business, your inventory, is crucial. To strike the perfect balance and achieve success, you need to use the proper inventory management software along with common sense.

managing inventory

Proper Balance of Inventory

You have a delicate balance to uphold when it comes to stocking your inventory. You need to have enough to satisfy demand, but not so much that you’re tying up capital in the process.

Too Much Inventory Costs Money

Excess inventory can incur high costs, and the more money you have tied up in inventory, the less you’ll have to cover essential daily expenses such as rent and payroll. A shift in customer demand can render merchandise obsolete, causing clutter and adding labor hours to handle the excess. A low inventory turnover, especially with perishable items, is problematic as well.

Too Little Inventory Loses Customers

On the flip side, too little of inventory can result in lost sales. If you run out, you risk damaging your brand and reputation, ruining your customers’ experience, and losing out in the long run.

It’s important to understand these metrics and strike the proper balance between customer service and logistics costs.

Effective Inventory Management for Small Business

It’s also important to choose a method for storage and shipping that best suits your business.


If you’re starting strictly from home, designating the proper space for your inventory will help you keep track of items and streamline your shipping process. For example, a home office for popular, fast-moving items keeps them quick and accessible without hassle. In contrast, you can use a garage or off-site storage to house less popular or large, cumbersome items.


Outsourcing can prove to be quite appealing as a way to keep track of inventory. In this approach, you give a third-party vendor control in the complete fulfillment process. For instance, you can take advantage of seller marketplaces such as Amazon FBA or Shopify, allowing these businesses to manage the entire process for you, from storing to shipping. You can also go hybrid, splitting responsibilities between yourself and a third-party marketplace.

Regardless of how you store and ship your inventory, be mindful of the FIFO (first in, first out) principle, especially with perishable items. Even in the case of non-perishables, items can depreciate and wear out.

Accurate Sales Analysis and Future Business Projections

The right inventory management software coupled with common-sense and educated guesswork is key to successful business analysis and projection.

  • Develop a unit sales projection per month.
  • Use past data if you have it.
  • Use factors for a new product. For instance, if you’re selling a great new video game, you could base forecast sales on a similar game you sold in the past.
  • Project prices. Add units of different sales items in one column, set the estimated prices in the second, and then multiply units times price to calculate sales for the third.

With the right inventory management software, you’ll reduce costs, improve cash flow, and boost your business’s bottom line.

Starting your own home-based business can be daunting and filled with uncertainty, but it doesn’t have to be. With confidence, determination, common sense, and the right tools in your arsenal, achieving your own personal success is possible.

About the Author

+ posts