As the year winds down, it’s crucial for multichannel eCommerce merchants to perform an efficient year-end inventory count. Why? Because it’s not just about stocktaking – it’s about understanding your business better. Being accurate with your inventory count can enhance your business’s financial health, improve order fulfillment, and even boost customer satisfaction. In this article, we’ll guide you step-by-step on how to execute a year-end inventory count effectively, using proven methods and handy tips from industry experts. Whether you’re a seasoned eCommerce merchant or just starting in the digital marketplace, this guide will provide you with the necessary tools to make your year-end inventory count a breeze. So, let’s dive in and make your inventory management more streamlined than ever.
Introduction
In today’s fast-paced multichannel eCommerce environment, maintaining accurate inventory records is the key to business survival and prosperity. It’s an integral part of effective supply chain management and can have a significant impact on customer satisfaction. That’s where Ordoro comes in. As a leading inventory management solution, Ordoro provides an invaluable platform for merchants to streamline operations, synchronize stock levels across various sales channels, and gain real-time visibility into their product availability.
At year’s end, conducting a thorough inventory count is more than a box-checking exercise—it’s a financial and operational imperative. A precise year-end inventory count helps balance your books, ensures compliance with tax regulations, and uncovers hidden inefficiencies in your supply chain. In fact, according to a study by the National Retail Federation, nearly 70% of businesses perform a physical count at the end of the year to validate their inventory records.
In this article, we’ll walk you through every step of executing a year-end inventory count using Ordoro. We’ll cover the basics of inventory counting, show you how to prepare your system and your warehouse, guide you through the physical and digital counting process, and demonstrate how to leverage your results for smarter forecasting. Whether you’re selling on Shopify, Amazon, eBay, or other channels, you’ll gain practical, expert insights to conduct a seamless year-end inventory count.
Understanding the Basics of Inventory Counting
Importance of Accurate Inventory Counting
Accurate inventory counting is the foundation of a healthy eCommerce business. Here’s why it matters:
- Impact on sales and profits
Inaccurate stock levels can lead to stockouts, lost sales, or overselling. For instance, a merchant who sells custom phone cases on Shopify discovered a 10% revenue loss caused by overselling popular designs. According to a report by IHL Group, stockouts and overstocks cost retailers nearly $1.1 trillion worldwide in lost revenue.
- Impact on order fulfillment and customer satisfaction
Late or partial shipments frustrate customers and damage brand reputation. When an Ordoro user streamlined their warehouse process and cut picking errors by 30%, their customer satisfaction score on Trustpilot jumped from 7 to 9.3 out of 10.
Year-End Inventory Count – Why it Matters?
1. Balancing the books
A year-end count provides an accurate snapshot of your assets for financial reporting. Auditors often require a certified count, and discrepancies can force adjustments that impact net income. The Securities and Exchange Commission (SEC) has often highlighted the importance of accurate inventory valuation in financial statements for investors.
2. Taxation purposes
Inventory is a significant asset on your balance sheet. Under GAAP and IRS guidelines, you must report ending inventory value accurately to calculate cost of goods sold (COGS) and taxable income. Failure to do so can lead to penalties and interest charges.
3. Identifying potential inventory issues
A thorough count uncovers slow-moving, obsolete, or damaged items. This insight helps you implement corrective actions—such as promotions on overstocked goods—before they drain cash flow. According to a report by CNBC, businesses lose $50 billion annually due to inefficiencies in inventory management.
Preparing for a Year-End Inventory Count with Ordoro
Setting Up Your Ordoro Account for Inventory Counting
To execute an efficient count, your Ordoro account must be properly configured:
1. Connect all sales channels
Link Shopify, Amazon, eBay, WooCommerce, and any other platforms you use. Ordoro’s multichannel integration ensures that stock adjustments in one channel automatically reflect elsewhere. This is crucial as research by BigCommerce indicates that multichannel merchants see a 190% increase in revenue compared to single-channel sellers.
2. Enable barcode scanning
If you use barcode scanners, enable Ordoro’s scanning module. This cuts human error and speeds up data entry, with studies showing that barcode scanning can reduce data entry errors by up to 41%.
3. Assign user roles and permissions
Create dedicated accounts for team members performing the count. Restrict editing rights to avoid accidental stock changes during the process. This can also provide an additional layer of security and accountability.
4. Schedule a “freeze” period
Choose a short window—ideally overnight or over a weekend—when no new orders are processed. Use Ordoro’s order hold feature to pause fulfillment activities and prevent discrepancies. This ensures the count is accurate and not affected by ongoing sales.
Organizing Your Physical and Digital Inventory
Before you start counting, get your warehouse and records in order:
- Grouping similar items
Sort products by SKU family, warehouse zone, or category. For example, a clothing retailer might group all men’s T-shirts in one rack, women’s accessories in another. This not only speeds up the counting process but can also help identify patterns in inventory movement.
- Labeling items accurately
Print clear, consistent SKU labels with barcodes. An Ordoro case study revealed that a merchant reduced miscounts by 25% after adopting standardized labeling. This leads to fewer errors and more accurate counts.
- Updating digital records for easy reference
Perform a preliminary reconciliation in Ordoro. Correct any glaring mismatches—such as negative stock or unreceived purchase orders—so you start from a clean slate. This reduces the chance of discrepancies during the main count.
Executing a Year-End Inventory Count Using Ordoro
Step-by-Step Guide to Conducting a Physical Inventory Count
1. Define counting zones
Divide your warehouse into zones—A, B, C—and assign teams accordingly. Smaller zones reduce fatigue and counting errors. This method is recommended by the Warehouse Education and Research Council for its efficiency.
2. Generate count sheets or scanning exports
In Ordoro, navigate to the Inventory module and export a zone-specific list of SKUs and current stock levels. Print these lists or load them onto handheld scanners. This digital backup ensures an additional layer of accuracy during the count.
3. Conduct the count
- Hand tally: Count each item manually and mark quantities on the printed sheet.
- Barcode scanning: Scan each box or product to auto-populate quantities in Ordoro’s mobile app.
4. Record discrepancies on the spot
If you find a mismatch—say your printed list shows 50 units but you count 48—note it immediately. This saves time during reconciliation and helps you identify patterns in stock errors.
5. Perform a second “blind” count
For high-value or fast-moving SKUs, have a different team recount without showing the first result. This double-check method is an industry best practice recommended by the American Production and Inventory Control Society to catch mistakes.
Tips for accurate and efficient counting:
- Work in well-lit areas to avoid misreading labels.
- Limit distractions: Encourage your team to focus solely on counting.
- Offer short breaks: Prevent fatigue-related errors during longer counts.
Using Ordoro’s Digital Tools for Inventory Counting
1. Real-time sync across channels
As you update counts in Ordoro, the platform automatically adjusts stock levels in Shopify, Amazon, eBay, and any other linked sales channels. This ensures you never oversell during the count, a common challenge faced by multichannel retailers.
2. Batch adjustments
After finishing a zone, upload a CSV of your counted quantities to Ordoro. The system applies bulk adjustments, saving you from entering each SKU individually. This saves time and keeps your records up-to-date across all platforms.
3. Audit trail and reporting
Ordoro logs who made each adjustment and when. After the count, generate an Inventory Adjustment Report to review all changes. This audit trail helps address any future discrepancies with your accountant or auditor, providing a clear record of changes made during the count.
Reviewing and Analyzing Your Year-End Inventory Count
Understanding Your Inventory Count Results
Once all physical counts sync back to Ordoro:
- Interpret the variance report
Ordoro’s Inventory Reconciliation Report highlights differences between expected and actual counts. Focus on:
- SKUs with large positive variances (potential theft or mis-picks)
- SKUs with large negative variances (missing inventory)
- Investigate root causes
Suppose a popular smartphone accessory shows a –20% variance. Check recent order logs, supplier returns, or internal transfers to pinpoint the issue. This step helps you understand the source of inventory discrepancies and take corrective action.
Using Your Year-End Inventory Count for Future Planning
A year-end count is not just a compliance task—it’s a strategic asset:
1. Forecasting and planning
Feed your corrected historical data into your demand planning tool. Accurate beginning inventory figures improve the precision of future purchase orders. One Ordoro user reported a 15% reduction in stock-out incidents after refining their forecasts based on year-end counts.
2. Identifying trends
Are certain SKUs consistently overstocked? Consider bundling or discount strategies during the next promotional cycle. Are some slow movers taking up warehouse space? Flag them for clearance sales. This can help you optimize inventory levels and drive sales.
3. Budgeting and cash flow management
Precise inventory valuation helps you free up working capital. If you discover $25,000 worth of obsolete goods, you can write them off or liquidate them and reinvest the proceeds into fast-selling items. This can optimize your cash flow and keep your inventory agile.
Conclusion
Conducting a thorough year-end inventory count with Ordoro ensures your multichannel eCommerce business starts the new year on solid footing. By understanding the importance of accurate counting, preparing both digitally and physically, leveraging Ordoro’s inventory management tools, and analyzing your results, you’ll not only meet financial reporting and tax requirements—you’ll gain actionable insights to drive smarter purchasing, forecasting, and growth.
Make inventory counting a regular habit rather than a once-a-year chore. With Ordoro’s robust platform, you can streamline cycle counts throughout the year, reduce shrink, and maintain peak operational efficiency. Here’s to a well-inventoried, prosperous year ahead!
Accurate inventory management is crucial to the success of your eCommerce business, especially in a multichannel environment. A comprehensive year-end inventory count not only balances your books and ensures tax compliance but also uncovers hidden inefficiencies in your supply chain. With Ordoro’s leading inventory management solution, you can streamline operations, synchronize stock levels across various sales channels, and gain real-time visibility into your product availability. This makes the process of year-end inventory count more efficient and accurate.
Frequently Asked Questions
Why is a year-end inventory count important for my eCommerce business?
A year-end inventory count is crucial to balance your books, ensure tax compliance, and uncover inefficiencies in your supply chain. It also validates the accuracy of your inventory records, impacting customer satisfaction and business prosperity.
How does Ordoro help in executing a year-end inventory count?
Ordoro offers a powerful inventory management solution, providing real-time visibility into product availability and synchronizing stock levels across multiple sales channels. This makes the process of year-end inventory count streamlined and more accurate.
Does every eCommerce business need to conduct a year-end inventory count?
While the necessity might vary depending on the scale and nature of the business, nearly 70% of businesses perform a physical inventory count at the end of the year, as per a study by the National Retail Federation. It is a good practice for maintaining accurate financial records.
Can Ordoro help if I operate on multiple sales channels?
Absolutely. Ordoro is designed to synchronize stock levels across various sales channels, making it an ideal solution for multichannel eCommerce merchants. It allows you to maintain consistent and accurate inventory records across all platforms.
How does a year-end inventory count impact customer satisfaction?
An accurate inventory count ensures that the products your customers want are available when they want them. This directly impacts customer satisfaction and can lead to improved customer retention and more sales.
However, your feedback is invaluable to us. We encourage you to share your experiences and insights for us to continually improve and serve you better. If you found this guide helpful, please share it with your fellow eCommerce merchants. Remember, the journey towards superior inventory management starts with a single step, and Ordoro is here to help you take that step.