Physical Inventory Guide for eCommerce Businesses
Taking an inventory of all the physical products in your eCommerce store can be both challenging and time-consuming, but it’s essential to its success.
Having accurate records of what you have on hand at any given moment allows you to manage stock levels more efficiently, reduce misplaced items or theft, track customer orders more effectively, and better understand your overall business performance.
This comprehensive guide will provide you with everything you need to know about taking a physical inventory for an eCommerce business.
Why is physical inventory important for eCommerce businesses?
Physical inventory is important for eCommerce businesses because it provides a basis for monitoring and tracking the quantity of items in stock.
Having an accurate record of what products are on hand allows businesses to quickly identify any discrepancies or mistakes that have been made in order to prevent losses.
Additionally, having physical inventory records can alert business owners when they need to restock or replenish items that have gone out of stock, allowing them to better serve their customers.
Physical inventory also helps businesses better manage their costs, as understanding the quantities and cost of goods on hand can help inform purchasing decisions.
Lastly, physical inventory records provide evidence in case of disputes or discrepancies over product deliveries or returns.
By keeping a detailed record of inventory, eCommerce businesses can ensure their operations run smoothly and efficiently.
How often should businesses do a physical inventory count?
Businesses should do a physical inventory count at least once a year, but the frequency can depend on individual businesses’ needs.
For example, some businesses may need to do more frequent counts due to rapid sales turnover or operating in an environment with a high risk of theft. On the other hand, some businesses that don’t experience large shifts in inventory may be able to get away with doing counts less frequently.
Additionally, businesses that use barcodes or other automated inventory tracking technologies may find that physical counts are unnecessary. It’s important to consider the unique needs of each business when determining how often to do a physical inventory count.
Though it might require additional effort in terms of time and resources, having an accurate inventory count can help businesses save money and reduce potential losses in the long run.
How can businesses keep track of inventory levels?
Businesses must keep a close eye on inventory levels to prevent stockouts, maintain customer satisfaction and avoid potential loss of sales. Inventory management can be accomplished manually or through the use of technology-based solutions such as automated tracking systems.
Manual methods include keeping track of inventory with paper records or Excel spreadsheets. Automated systems, however, provide real-time data on inventory levels, making it easier to ensure that the right amount of product is always available.
Automated systems can also alert businesses when inventory levels reach certain thresholds, allowing them to quickly restock or adjust their production and purchasing activities accordingly. Utilizing automated inventory tracking systems helps businesses save time, money, and resources while increasing efficiency and accuracy.
How can businesses reduce the time and cost of physical inventory counts?
Businesses can reduce the time and cost of physical inventory counts by implementing technologies such as barcode scanning and RFID tagging. Barcode scanning allows for quick and accurate counting of items, as well as tracking of product movement throughout the warehouse.
This also helps to reduce stock discrepancies that can lead to miscalculations in inventory levels.
Furthermore, the use of automated software solutions can help with data entry, tracking of product movement throughout the warehouse, and alerting businesses when stock is low or running out. By implementing these technologies businesses can save time and money while keeping an accurate count of their inventory.
Common mistakes businesses make when doing physical inventory
A common mistake that businesses make when doing physical inventory is failing to properly count the stock. This happens when employees are not adequately trained or fail to pay close attention while counting, resulting in incorrect numbers that significantly impact a firm’s financial position. It is important to ensure accuracy and precision during physical inventories by providing proper training and guidance on the process.
Another mistake is failing to conduct physical inventories at regular intervals. Physical inventory counts are not only necessary to ensure accuracy, but they also serve as an important accounting tool that helps businesses keep track of their assets and liabilities over time.
By regularly conducting physical inventories, firms can identify any discrepancies or problems before they become too costly or damaging.
The organization is also key when it comes to physical inventories. Poor organization can lead to confusion, resulting in mistakes or a lack of accuracy.
The process should be organized and documented well in advance, with detailed instructions for each task and clear expectations for the inventory staff.
Conclusion
A physical inventory is an essential component of running an eCommerce business. Taking the time each month, quarter, or year to assess your goods and ensure accuracy between what’s in your books and what’s physically on the shelves can save you from costly mistakes down the line. With a few simple steps, you can use physical inventory to help manage your sales, develop forecasts and make more informed decisions for your eCommerce business.
