One of the most critical jobs in ecommerce is inventory management. But, the concept of managing inventory is a lot easier than the reality of inventory control. And you don’t want to lose a customer because you don’t have a product in stock when your inventory management system says that you do.

Ordoro changes this dynamic. Ordoro’s inventory management software keeps you in control of your inventory, on the supply side and the sales side, so that you can fulfill customer orders consistently and on time.

The Basics: Inventory Management

Inventory Management Definition

Your business relies on your inventory management system’s accuracy to fulfill customer orders on schedule.

What is the definition of inventory management? According to Investopedia:

Inventory management refers to the process of ordering, storing, using, and selling a company’s inventory. This includes the management of raw materials, components, and finished products, as well as warehousing and processing of such items.

What is an Inventory Management System?

Your inventory management system is a key factor in having a successful ecommerce business. Oracle Netsuite states:

An inventory management system helps organizations account for all incoming and outgoing stock to better meet customer demand and avoid the expense of overstock or loss of business with stock outs. The system impacts every essential business function including accounting, production, warehouse management, purchasing, sales and customer service.

Inventory management tracks your inventory whether it is on order, en route, in stock, being used to manufacture a product, or fulfilling a customer order.

Having an accurate inventory count lets you know where your inventory is at all times, and what you have available to use right now.

Periodic and Perpetual Inventory Management Systems

There are two inventory management methods for retail companies, both brick-and-mortar and ecommerce. These are Periodic and Perpetual inventory management.

  • Periodic: Updating your inventory and associated accounts after a specific period of time (i.e. quarterly or annually)
  • Perpetual: Inventory updates and their associated accounting transactions are made continually

Inventory Management Process

Your inventory management process is the series of actions you take to control your inventory throughout the buying and selling cycles.

Why is Inventory Management Important?

Inventory management is the foundation your ecommerce business is built upon. With an accurate inventory count, your business operates seamlessly, every piece falls into place. When inventory is mismanaged, mistakes multiply, like mis-picks, overstocks, mis-shipments, and out of stocks.

Benefits of Effective Inventory Management

  • Fewer missed sales
  • Better invested cash
  • More accurate reports
  • Early problem detection
  • Happier customers
  • Easy to reorder
  • Theft and loss reduction
  • Trusted information systems
  • Reduced warehouse costs
  • Cycle counts and end-of-year efficiency
  • Peak season efficiency

Inventory Management Tools & Techniques


Inventory management techniques you can use in your warehouse:

  • Economic order quantity: A formula for the ideal order quantity you need to purchase for your inventory using a set of variables like total costs of production, demand rate, and other factors.
  • Minimum order quantity: The smallest amount of set stock a supplier is willing to sell.
  • ABC analysis: You split your inventory into three categories to identify items that have a heavy impact on overall inventory cost.
    • Category A: Your most valuable products that contribute the most to overall profit.
    • Category B: Products that fall somewhere in between the most and least valuable.
    • Category C: Small transactions that are vital for overall profit but don’t matter much individually to the company altogether.
  • Just-In-Time (JIT): Arranging raw material orders from suppliers in direct connection with production schedules.
  • Safety stock inventory: Extra inventory being ordered beyond expected demand to correct for inadequate forecasting.
  • FIFO and LIFO:
    • First in, First out, assumes the older inventory is sold first.
    • Last-in, First-out, assumes the newer inventory is typically sold first.
  • Reorder point formula: Based on a business’s own purchase and sales cycles, which varies on a per-product basis.
  • Batch tracking: Group and monitor a set of stock with similar traits, which help to track the expiration of inventory or trace defective items back to their original batch.
  • Consignment: A consigner (vendor or wholesaler) agrees to give a consignee (retailer) their goods without the consignee paying for the inventory upfront. The consigner still owns the goods and the consignee pays for them only when they sell.
  • Perpetual: Basic inventory management. Counting inventory as soon as it arrives.
  • Dropshipping: A fulfillment method in which a store makes a sale, and then purchases the item from a third party and has it shipped to the consumer.
  • Lean manufacturing: You improve efficiency by eliminating waste and any non-value-adding activities from daily business.
  • Six Sigma: Gives companies tools to improve the performance of their business and decrease the growth of excess inventory.
  • Demand forecasting: An estimate of the goods and services a company expects customers to purchase in the future based on historical sales.
  • Cross-docking: Incoming trucks unload materials directly onto outbound trucks to create a JIT shipping process.
  • Bulk shipping: A cost-efficient method of shipping when you palletize inventory to ship more at once.

Types of Fulfillment

Inventory fulfillment can be handled in several ways, including:

  • Just-in-Time Fulfillment: When a customer makes an order, the e-retailer immediately purchases the product from their supplier, never before
  • In-House Fulfillment: Fulfilling orders all on your own
  • Outsourced Fulfillment: Taking your inventory and shipping operation and moving it to a privately-owned warehouse that stores inventory, receives, packs, and ships orders.
  • Dropshipping: You source the products you want to sell and mark them up on your site. When you get an order, you route it to the supplier, purchase the product, and they ship it out.
  • Amazon Fulfillment:
    • Fulfillment by Amazon (FBA): inventory is stored at Amazon fulfillment centers and orders are picked, packed, and shipped by Amazon once they’re received.
    • Fulfillment by Merchant (FBM): you store inventory in your own warehouses (or with your own suppliers) and you coordinate the picking, packing, and shipping of orders received from Amazon.

Inventory Management Tools

The right tools make inventory management a snap, so you can spend your time on marketing instead of getting caught up in managing inventory. Ordoro offers you the best inventory management software to organize and count your inventory, place purchase orders, warehouse your inventory, and pack and ship it to fulfill customer orders.

Why You Shouldn’t Use Free Inventory Management Software

Excel or Manual Inventory Software

When your business was run on a shoestring budget because you were just starting out, you may have used free Excel software to count your inventory. But, Excel doesn’t allow you to scale up as your business grows, costing you money in lost sales. Manual entries allow for more human errors, leading to lost time and money. Since Excel isn’t built for managing inventory, you can’t link it to your sales software, only one person can use it at a time, and it doesn’t operate in real-time.

Open Source Software

While open-source software is free, it has issues that make it problematic for inventory management. These problems include:

  1. Uneven software quality
  2. Long-term sustainability is difficult to maintain
  3. Software licensing is problematic for distribution
  4. Possible copyright infringement
  5. Iffy software security
  6. Weird quirks, bugs, an odd mix of features
  7. Default setup might not work for you
  8. Requires knowledge of coding for full functionality

Ordoro has the best inventory management software for small to medium-sized businesses and is the right inventory solution for ecommerce. Ordoro can streamline your inventory management workflow.

Get the Best Inventory Management Software

Why should you use Ordoro’s inventory management software? The simple answer is that it’s the best for online merchants!

How can my ecommerce business benefit from using Ordoro inventory management software?

Ordoro offers your ecommerce business a list of benefits, and keeps inventory information automatically flowing to and from each of your integrated channels, whether they’re on the sales or supply side.

  • Unify Your Inventory: Plug each of your channels, from marketplaces to webstores to suppliers, into the app for a multichannel business connected to the same inventory.
  • Shred Those Spreadsheets: Instead of copy-pasting numbers, Ordoro will track all of your inventory behind the scenes and help prevent stockouts by letting you know when inventory is low.
  • Sync Inventory without Thinking: Ordoro reacts to fulfilled orders and restocks by automatically updating and syncing product quantities across each of your integrated sales and supplier channels.
  • Bundle Orders with Organization: Make use of Ordoro’s built-in kitting engine to bundle multiple products as individual units for sale.
  • Ready, Set, PO: Take your products and assign each to their appropriate supplier in bulk. After you match them, issuing purchase orders (POs) to resupply is as easy as three clicks inside Ordoro.
  • Get the Goods Receipt: A goods receipt is generated alongside every PO, helping ensure you get the stock you ordered.
  • Raise Your Workflow’s Bar: Ordoro supports UPC barcodes, offering the option to scan, set, and search UPC codes for SKUs within Ordoro. The inventory management app assists with organization by letting you tag products with aisle and bin locations.
  • Crunch the Numbers: Ordoro has built-in Advanced Analytics that tracks all of your metrics, from cash tied up in inventory to best and worst selling products. Then connect with any of our number-crunching integrations like QuickBooks to tabulate your data.
  • Pick-and-Pack Errors Plummet: With Odoro’s barcode scanning feature, you can reduce costly fulfillment errors. Simply select one or multiple orders, hit a button, and the app will pull up the items that need to be picked, scanned, and packed, marking orders as complete once every item is accounted for.

Ready to Customize Ordoro Inventory Management Software for Your Ecommerce Business?

Ordoro inventory management software will simplify your ecommerce operations and give you more time to market your products. Schedule your demo to see how to implement Ordoro for your company.