If you think about inventory management and customer satisfaction, you might think they don’t have much of a relationship. However, they are more connected than you might think, especially for B2B and eCommerce businesses.
Inbound Logistics reports that 63% of businesses do not have visibility of the supply chain, leading to increased customer complaints. Without visibility of the supply chain, businesses are in the dark about their inventory.
That is why I am here to tell you how enhancing customer satisfaction through inventory management is the future of eCommerce. I will show how your business and customers are simultaneously satisfied and benefiting.
7 Inventory Management Strategies For Customer Satisfaction Success In eCommerce
Inventory management might be an aspect of your business that customers will never see. But its impact on customer satisfaction is undeniable and often overlooked. Let’s see how enhancing customer satisfaction through inventory management strategies is possible:
- Collaborative Demand Forecasting
- Real-Time Inventory Tracking And Visibility
- Order Visibility During Shipment
- ABC Inventory Analysis
- Safety And Just-In-Time Stocks
- Cross Docking Inventory
- Managing Inventory For Returns And Exchanges
Strategy #1 Collaborative Demand Forecasting
Demand forecasting is talked about all the time. It is where your business tracks the changes in demand through historical data to match demand for the present. However, something that is not talked about enough is collaborative demand forecasting. It is where your business, suppliers, wholesalers, and anyone linked in the supply chain collaborate in demand forecasting.
Whatever type of business you are running, collaborative demand forecasting brings up the accuracy of your demand forecasting. If you are a wholesaler, getting the data from your retailers can help you adjust the demand to manage inventory better. Better data means you can serve your customers better, there are no stockouts, and customers get the products on time. Customers are happy when demand forecasting is as accurate as possible.
And let’s not forget the business side of things. With increased demand forecasting accuracy, your business’s inventory is not over or understocked. Overall, inventory cost is optimal, meaning you have significant profit margins.
Strategy #2 Real-Time Inventory Tracking
Most businesses conduct regular inventory audits. This ensures the inventory changes are tracked accordingly and product quality is maintained. Imagine having to do manual checks for thousands, if not tens of thousands, of inventory. One way you can get around that is through real-time inventory tracking.
This can be done through an inventory management system to keep track of all the inventory in real time. It considerably reduces the time needed for audits and improves efficiency. As a result, product quality is maintained, and the inventory is managed quickly and efficiently. This leads to greater customer satisfaction as customers get the products quickly.
Strategy #3 Order Visibility During Shipment
One strategy that most eCommerce businesses offer is order visibility during shipment, so not offering it might hurt customer satisfaction. Inventory tracking and visibility are vital for customers. Since customers are shopping online for physical products, they do not get that immediate satisfaction. However, order visibility allows customers to see the progress of their product shipment. It creates an anticipation of the product, increasing satisfaction once the customer gets it, thereby increasing overall customer satisfaction.
Strategy #4 ABC Inventory Analysis
ABC inventory analysis is when you are categorizing your inventory into tiers. A is your best-selling tier, B is the next, and C is your least. It helps prioritize which of your products are selling so you know to stock more of that instead of the other tier products. ABC inventory analysis allows inventory optimization.
While your inventory is optimized, your ABC analysis ensures you never run out of essential inventory stocks. Amazon is probably the best example of a successful ABC inventory analysis. They have inventory ranging in the millions, but they do not stock all of them. They only stock the highest tier one, reducing inventory costs and ensuring optimum profit margins. So, ABC inventory analysis allows both customer satisfaction and increased business revenue.
Strategy #5 Safety And Just-In-Time Stocks
Think of safety and just-in-time stocks as an extension of ABC inventory analysis. Safety stocks refer to having excess stocks to prevent stock-outs, while just-in-time stocks are reordering inventory when stocks get low. These are two completely different strategies, but combining them with ABC analysis allows you to create a hybrid approach to optimize your business’s inventory. You are prepared for stockouts and overstocked inventory while simultaneously dealing with them. In the meantime, your customers are always getting their products thanks to your business optimizing its inventory.
Strategy #6 Cross-Docking Inventory
Don’t limit your thinking of inventory to what products you are holding. The supply chain also becomes a factor for inventory management in eCommerce. That is where another underrated inventory management strategy is cross-docking your inventory.
Think of cross-docking inventory as wholesalers who buy inventory for a retailer and then immediately send it to them. There is no need for storage costs for these inventories, and retailers get the products as fast as possible. The bonus from cross-docking is that costs for such products would be lower due to no storage or warehousing costs. Lower costs mean higher profit margins and an opportunity to lower customer prices. It is a win-win situation for both your business and customers.
Strategy #7 Managing Inventory For Returns And Exchanges
According to a Shopify blog, anywhere from 20 to 30% of products are returned in eCommerce. Any returned product has to be managed as smoothly as possible, so your inventory management has to be equipped to handle them.
Some returns will be defective products, so these need to be taken out of your inventory. Other returns might be caused by customers ordering the wrong size or product. These can be resold through your eCommerce store if the quality is maintained. With the right inventory management system implemented, these can be all taken care of to ensure a smooth product return.
For customers, they will be happy with a seamless product return experience. This will encourage the customers to return to your store and shop again. Even with an exchange, as long as the customers are satisfied, it suits your business. With a good return policy in place, this can all be possible.
Boosting Customer Satisfaction: 5 Benefits of Effective Inventory Management In eCommerce
All these strategies are great, but what are the main benefits you gain from them? Here are the main benefits of enhancing customer satisfaction through inventory management:
Benefit #1 Preventing Stockouts
The last thing you want for your store is to be out of stock when a customer orders from you. This is known as a stockout and results in missed sales opportunities. The customers will likely go to competitor stores to get the item they want, which you don’t have because of stockout. By preventing stockouts, your business can promptly fulfill customer needs and ensure customer retention who become loyal customers.
Benefit #2 Faster Delivery And Order Fulfillment
Most of the satisfaction from eCommerce shopping comes from receiving the product rather than the shopping experience. It is opposite to traditional shopping because it takes time for the product to reach the customer. So, efficient inventory management allows faster delivery times and order fulfilments.
Just think back to Domino’s 1980s marketing “Get your pizza under 30 minutes, or get your money back”. That one strategy skyrocketed sales because customers were getting the product as fast as possible.
This strategy would not be possible without Domino’s making sure their inventory management is optimized. Proper inventory management made it all possible, from the raw ingredients to all the supplies necessary for making the pizza. With the product in the customers’ hands quicker, you have a satisfied customer for your eCommerce business.
Benefit #3 Product Quality Maintained And Fewer Returns
Look, you cannot escape product returns in eCommerce. Most of the time, it is not your business’s fault either. Returns could be because of customers ordering the wrong size or product, or there could have been damage during shipment. These are out of your control, but product quality is yours.
If your product quality is excellent, your store will have fewer returns. This is all because efficient inventory management will ensure quality control. Regular inventory audits and real-time inventory tracking will mean you are seeing the quality of the product and can take out defective products from stock so that your customers are not getting them.
Benefit #4 Sustainable And Stable Pricing
There is nothing more that a customer worries about than the prices of products and services. That is where inventory management helps keep the pricing of products as stable as possible. An optimized and efficient inventory management system ensures your business is not spending too much on things like storage solutions. It keeps the prices of products stable and sustainable so that end customers are not suffering from price hikes.
Benefit #5 Catering To Different Customer Segments
While managing your inventory, an unseen benefit you gain is how you better handle your customer segmentation. Think back on ABC inventory analysis. It helps inventory management and customer segmentation because you better understand what customer segments are buying those products. Combining those data means different customer segments can be handled more efficiently for better customer satisfaction.
How A Bulk Order App Improves Inventory Management And Customer Satisfaction On Shopify
If you are a Shopify store owner, you know how vital customer satisfaction is for your business. However, managing inventory and customer satisfaction together is limited to Shopify’s base options for the website. It would take considerable coding knowledge to change the theme to implement a clever customer experience on your website, and it would be costly.
Shopify store owners can access the Shopify app store, which has third-party applications to ease the burdens on a store owner. Here is an example of a bulk order app with MOQ restriction and incremental increase features to help with inventory management and customer satisfaction:
The shop has displayed all the variants for this particular product on one page. On top of that, you can see that the quantity will only increase by 6. However, the bottom message states that a minimum amount of 12 cookies must be added. This is what is known as the minimum order quantity or MOQ restriction. So, what does this do for inventory management? The MOQ restriction allows the store to sell a minimum amount. Add the incremental increase of 6 with the MOQ, and the shop owner will know that the inventory will change in a fixed amount. This makes managing the inventory much easier and more efficient.
The incremental increase alone can help prevent overselling products with limited stocks and ensure customers choose the correct product amount. It reduces customer errors and the rate of returned products. These help with customer satisfaction; the customer is happy to receive the proper order and ensures the shopping experience is always consistent. The custom display of the variants complements all of this. Instead of multiple product pages, all the variants are available in one. Customers can pick the variants they want without switching between multiple product pages. When the customer meets the MOQ amount, they can only add the product to the cart. All the variants can be added together with one click instead of multiple ones, which eases the customer shopping experience.
So customers are satisfied with a great shopping experience, and the inventory is correctly handled behind the scenes.
Bottom Line
Enhancing customer satisfaction through inventory management can bring success to your eCommerce business. With the right inventory management strategies, your online store can reap the benefits on both ends, which is crucial to success in the future of eCommerce.
