How to Use Shopify Inventory Management to Handle Your Business [PDF]

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How to Use Shopify Inventory Management to Handle Your Business Operations by Tucker Schreiber How to Sell Online Dec 17, 2015 4 minute read 22 comments









Are you finding it difficult to identify your best and worst selling products quickly and easily? Do you wind up with way too much or way too little inventory? Are customers placing orders for items that are out of stock? Whether you’re selling online, in-store, or anywhere in-between – you’ll always have to take note of your inventory and be able to manage it with ease. In most cases, the old pen and paper approach just doesn't cut it. Luckily, Shopify's inventory management has you covered. In this post, we’ll take a look at how it takes the hassle out of your everyday business operations.

The Importance of Inventory Management In the past, we’ve talked about how you can potentially be losing money with poor inventory management – and that’s a scary realization for any business owner. A few of the most significant benefits you can expect from a good inventory management system include: Never over-ordering products Avoiding tedious inventory recounts with a pen and paper Eliminating any chance of wasting money on slow moving products Improved efficiency and productivity by implementing devices such as barcode scanners Totally removing error-ridden manual processes Getting loyal and repeat customers by always having the products they want on hand Let's take a look at how Shopify can help with your potential inventory woes.

Are you losing money by not using these 8 inventory management techniques? Click here to download (.pdf)

Managing Your Inventory With Shopify

Managing several variations of a single product can be tricky if you don’t have a proper inventory management system in place. With Shopify, you have the ability to offer any number of versions for a single product to reflect different sizes, materials, colors and more.

Setting Up and Organizing Your Products The first step to solid inventory management is setting up and organizing all your products. There’s more to it than just assigning a barcode and giving each product a name. Think of classifications that make sense in your business. For example, Shopify lets you group products by category, type, season, sale and more. We organize these groupings through collections. So if you're selling t-shirts, maybe you want to categorize them in a fall collection. Or, if you're selling iPhone cases, maybe you want to categorize them in a collection based on their material. You can start to automate the organization process when you use smart collections to sort products according to price, vendor and inventory level.

Assigning Barcodes to Your Products Depending on your business and amount of inventory you have, you might be looking to assign barcodes to your products. Whether you have existing barcodes to be assigned to specific products, or you need to create brand new barcodes for fresh inventory you plan to stock, Shopify lets you do both. You can use barcodes to keep track of every product you sell, and get Shopify’s wireless barcode scanner to ring in customer orders instantly on the spot anywhere if you're selling in-person.

Tracking Inventory Levels Failing to track inventory levels can be a huge blow to your online or retail business. You’ve probably had it happen before; a customer is shopping on your store, sees an incredible product they want and completes a checkout. Little do they know that behind the scenes, it’s out of stock! You have to email them, tell them the situation, refund them, and more – it's just not a pleasant experience for anyone. With Shopify, you can seamlessly track stock level, set up automated reminders to place orders with your supplier, or to manufacture more product when the count hits a certain number, and update inventory numbers when you receive a new shipment. Note: If you want to continue to sell an item even when its out of stock, you can indicate longer shipping times on the product page.

Gaining Insight into Your Inventory and Sales Which products produce the highest demand? Which are less popular? How does your inventory management reflect these trends? Shopify’s inventory management system helps you see exactly how your inventory is moving. Why does this matter? Because it can help you plan future orders, forecast sales, create successful marketing campaigns and design special promotions around your inventory numbers. If your store is on the Professional plan or higher, you can see a full report of sales by product with reports too!

Continued Learning If you're keen on learning more about inventory management and how it affects your shipping strategy, be sure to take a look at our shipping and fulfillment guide.

Added Functionality With Apps

Whatever you can think of that might make your life easier when it comes to managing your inventory, chances are the Shopify App Store has it. With numerous inventory apps and plugins to choose from, you can sell across multiple channels, set up reminders, automatically request product reviews from customers and so much more. A favourite app of mine is Back in Stock. If a product of yours sells out and the product page is still getting traffic, visitors can sign up to be instantly notified when the product is back in stock! Installation takes less than 30 seconds. Simply hit Get App and a button saying ‘email me when available’ will immediately appear on all relevant product pages. Be sure to take a look at some of our top inventory management apps in the Shopify App Store.

Conclusion Now that we've taken a look at how Shopify's inventory management system can help with your inventory woes, it's time to take action, get organized, and start selling. Have any tips and tricks for staying afloat when it comes to inventory management? Let us know in the comments below.

About the Author Tucker Schreiber is an entrepreneur and content crafter at Shopify. He writes to inspire and educate readers on all things commerce. Follow @tuckerschreiber









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Join the discussion… GN Creative • 2 years ago

Shopify is very simple and easy to manage products and SKUs if you don't have numerous items with multiple sizes and colors. If you do, it fails miserably. For example, a very simple report that shows SKU / Units in Stock / Units Sold all next to each other would be extremely valuable. I can see how many of something I have left and exactly how many or how quickly they are selling to be able to tell if I should order more. However, Shopify is somewhat flawed at the base because they track products by "Product Title" rather than unique SKUs -- if I change the title to try to make it more appealing, that resets my Product sales for that item. Also, not showing images in product reporting makes it impossible to know exactly what item is what, when we have 1,000+ items. Product inventory and SKU reporting should look like this: https://docs.google.com/spr... I know that Shopify's answer is going to be "use a 3rd party app", but it is extremely frustrating to pay $180/mo + $200/mo for simple inventory management. This SAS model just eats away at profit margins month after month. It is not that complex, but Shopify's base management of SKUs and products does not handle multiple variants well. 3

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Tucker Schreiber

GN Creative • 2 years ago

Hey there, Thanks for the comment. I definitely understand your frustrations as a storeowner myself. I'll pass the feedback along to our product team on your behalf. Thank you! • Reply • Share ›



GN Creative

Tucker Schreiber • 2 years ago

Thanks Tucker. I have had some extensive conversations with people on the product team at Shopify. I just think sometimes it helps to get issues out in the open for discussion. That being said, Shopify has made many improvements to the inventory management system since we have been using it. There are many things with product management that they handle head and shoulders better than other eCommerce platforms I am familiar with. For instance, the tagging system, the new product editor and smart collections are huge. • Reply • Share ›



Baby & Company

GN Creative • 2 years ago

Completely agree. We're managing thousands of SKUs from dozens of vendors, and not being able to export a simple sell-though report (or get by vendor, by color, or by season sales reports) is extremely clumsy. Also, you should be able to pull up a product in the Shopify backend and see the specific sales orders when that product was purchased, as well as the original inventory levels and current stock levels for that certain variant. It's a major frustration to have to rely on external apps to gain such simple insights into the business. Hope they make the product updates soon. • Reply • Share ›



Davidson • 2 years ago

Hi Tucker. Thanks for the informative article. Does Shopify have any guides that walks a user through how to set up and establish everything? Thanks • Reply • Share ›



Christina Smith • 2 years ago

Well this was misleading. I about jumped out of my seat thinking Shopify had implemented a barcode for inventory. Not sure when Shopify decided to spend most of it's efforts on POS when it was built around e-commerce businesses. Is it really so much to ask to have a barcode capability for online businesses to scan orders out and decrease errors. To be able to scan for inventory instead of doing it all manually This is where a large e-commerce business like ours finds Shopify failing for us. Am I missing something? Because we find ourselves doing everything manually with Shopify. • Reply • Share ›



Technource • 2 years ago

Informative post. • Reply • Share ›



Rosendo A. Cuyasen • 2 years ago

There are many inventory system you can use to connect to Shopify. What we are using today is the Channel Advisor and connect this to our online shop which is The Smooth Shop The good thing here is that when we submit and sync our product from channel advisor it automatically update our listings. But we are still looking for better solutions to lessen our inventory system cost. Any other suggestions? • Reply • Share ›



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• 2 years ago

The challenge we face with using the inventory management within Shopify is that we have multiple inventory locations; multiple brick and mortar stores as well as an commerce site. We have seen some useful improvements recently such as the 'transfer' feature however it still falls short of the most basic need of managing levels of inventory separately. Of course the option of integrating other apps is available but none provide the basic requirements effectively and it also an unjustified cost as compared to competition. • Reply • Share ›



Shop Yoga • 2 years ago

Awesome article. Thank you. • Reply • Share ›



robertobrien • 2 years ago

I really want to use to use the POS for my Loose Leaf tea shop; But because it does not allow me to sell 3.5 ounces I am unable to deploy it. So I use Shopkeep instead. I just cannot get my customers to stick with full ounces. I really wished the US would go metric. BTW, Tucker Great article as always. And Shopify has made some huge improvements to their inventory keeping and POS intergration. I really like the fact the POS has pics of the stock items.It helps choose the correct item at checkout. We have so many similar items. • Reply • Share ›



lindsay @ VAUGHAN • 2 years ago

I would love to be able to track (and invoice for) consignment sales. • Reply • Share ›



cannuck211

lindsay @ VAUGHAN • 2 years ago

We run ~ 15k SKUs with Shopify and I hate to say it but the stock control works superbly..at least for us. Even when most of our SKUs are 'one off's' selling in our studio, on line and on Amazon. Amazon is tricky though and we needed help setting up the system. For Consignment sales there is a very good app that is not expensive. Its called Vendor Payout and is absolutely invaluable. https://apps.shopify.com/ve.... Easy to use and set up. My consignment artists can log into their sales 24/7 and we can see consignment sales in real time. Rob Banh (a good bloke) is the developer and I highly recommend it. If there is one "Wish Point' that Shopify keeps missing is with regard to Promotions. Free shipping is to the most powerful option but the existing Shopify system does not allow this to be used...specifically, if we want to offer Free Shipping on orders say $100+, within Canada for a single collection then nope it will not work. You can offer FS for all your collections as one total group but this is not really an intelligent option. There is no app available that I can find to do this. So come on Shopify, get your act together and listen to your customers - and help us grow our business! Nigel Hayes @ www.sidestreetstudio.com • Reply • Share ›



Jenna Compton • 2 years ago

This is a great article outlining what you "should" be doing in order to keep inventory running smoothly. If you're a store owner trying to decide if you should invest in an inventory management app, we've outlined some critical questions you can ask yourself: http://bluestout.com/blog/e... Thanks for the article, Tucker! • Reply • Share ›



cannuck211 • 2 years ago

Ah, Further to my earlier post regarding 'Consignment Sales' in reply to Lindsay. There are a few issues that we have found regarding stock control with Shopify...happily not big enough to pay for an App. Perhaps the most surprising is the absence of a cost price. It is easier for us as we have relatively fixed margins but not being able to include a cost price? How do you work out your margins? And secondly...there is no ability to add a retail price on the 'Inventory List'. Not a killer issue but sure as hell no retailer was involved in the development of the stock & order system. I don't believe that any of these issues are rocket science for the Shopify developers - far from it. But with funds from last years IPO - recruit, buy, loan, beg a professional retailer or even a consultant to help advise your developers. Retail is detail and your customers need these details to manage their businesses. :) Nigel Side Street Studio PS. Don't forget to fix the Free Shipping Prom when your developers are discussing 'what to do next'! • Reply • Share ›



WS McKay

cannuck211 • 2 years ago

I agree - cost price is a given and a must I would think. I have been asking about that as well. I hope for the Canadian price we pay that it is coming very soon. • Reply • Share ›



Chris Lykins • 2 years ago

I too am a bit confused by the "use a third party app" mindset. I really enjoy using Shopify for my web business—site looks great, far better than what Square was able to offer as far as their marketplace goes. I am confused however at how Square could have such better, not the best, but better understanding of inventory and reports. I had to upgrade to the Professional plan just to see what items were selling best, how many had sold, best hours, etc. (all this in spite of paying the additional $40 for the retail portion which really only allows you to use the chip reader card reader, nothing more (a piece I had to $100 for.) All told, as a small business, I'm paying close to $200 a month just to have many of the basics that are offered for free with Square. I realize of course that the added cost gives me a better web presence, but the additional costs for standard retail requirements (the point of shopify) really makes no sense. Hope to see some improvements in this area in the future. Great article, btw. • Reply • Share ›



Ray Khan • a year ago

It's hard to believe that Shopify has not addressed better methods of Inventory management. It's a major flaw in an otherwise decent product. Hoping this will change in the near future. • Reply • Share ›



Michael Rowan • a year ago

My problem with the shopify inventory is that you can't track a SKU that are parts of other SKUs. Example: I have product A and product B as customers buy these, inventory is decremented accordingly, no problem so far. Then I add product C which is simply a bundle of 4 product A and 6 product B. When someone buys product C I have to manually adjust quantities of A and B. So I can't really use the shopify inventory system.... I know, I know try a third party app, but I have looked (although not recently) and there is not one that fixes this inventory problem. I thought it would be a common problem for a lot of shopify users and would have been addressed by now but I guess it is not...... • Reply • Share ›



Paul Simpson • 8 months ago

Another great app for inventory planning is StockTrim (https://apps.shopify.com/st.... It will automatically read your products & sales history then tell you how much you should keep in Stock and when/how much to order so you don't run out and avoid bloated inventory levels. You can install it in a few minutes • Reply • Share ›



Egnition • 8 months ago

:We have a great app for Shopify inventory management - https://apps.shopify.com/re... which will put bestselling products up and can push out-of-stock products down using flexible settings and algorithms. Check it out! • Reply • Share ›



Chima Peter • 2 months ago

It is time to take action • Reply • Share ›



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