It’s been a long-lasting debate on how aggregators and their baby brands manage to thrive in the e-commerce whirlpool. How are they able to stride so better? How do they quickly grasp the profits and combat against all the odds?
If you ask me, my answer would be “by managing the inventory process” excellently.
There, I spilled the beans. Now, you know that this post will explore the potential of inventory management and talk about how “inventory management” rescues the brand aggregators from their daily business challenges. From establishing a product in a marketplace to calculating the gross revenue, an aggregator requires an operation that can manage the entire process from the backend. Inventory management steps in here to serve as support that backs the product units/stock-keeping units (SKUs) and manages the organization’s entire life-blood across marketplaces.
The Hurdles Around Inventory
The wings of an e-commerce player like us have spread, covering multiple e-commerce segments, including being a direct-to-consumer retailer and a brand aggregator.
This two-dimensional hustle may seem to reap exciting profits, but the real hurdle surfaces when it has to manage inventory across the marketplaces and the branded sites. Since many aggregators procure inventory from various sources, the entire process from storing to moving it becomes imperative. When that movement stops and the inventory becomes stagnant, the idle stock not only hinders the new inflow but also slowly deteriorates the productivity of the entire warehouse management. Clearly, this is one of the parts where an aggregator misses not having an inventory management system in line that can plan the movement and clear the jammed boxes!
This stagnancy, aka overstocking, is basically the organization’s money in the form of a product. If they remain unsold, then a firm is bound to bear the extra costs that come with aged stocks. If the firm deals with perishable SKUs with less life, then the fear of “spoil and damage” grows exponentially. With all these issues clouding together, the stress of a firm is imaginable, and ironically, the marketplace only makes it worse!
In my experience, I’ve seen most of the brand aggregators are present in more than a 100 marketplaces. Such a huge bucket of marketplaces invites lots of coordination and multiple processes.
Consider product listing. Listing live SKUs on marketplaces isn’t easy as every marketplace today comes with its own set of dos and don’ts. As a person who’s been in e-commerce for some time, I’ve seen first-hand how e-commerce marketplaces can get down to banning a product from listing if any rules are violated, including rules related to product title. Take for instance the two examples:
- Red Cup Living 4357 Reusable Coffee Mug, Red
- Party Cups Best Offer, 15% Discount
The first title is perfectly fine and adheres to most of the marketplaces’ requirements. By its construction, it not only is free from any promotional words or actions but also clarifies the product.
In contrast, the second one scores less on both counts – neither the name is complete, nor it’s free of promotional words. Online retailers who chalked up drafting the second type of titles in the past obviously reflect that they lack accurate listing tools and smart processes.
Shift gear and consider situations where a firm fails to track the location or exact quantity of customers’ orders. In situations as such the probability of cancellation grows. Besides the pinches of lost sales opportunities and mauled brand image, the firm also bears the brunt of deteriorating account health at the marketplaces.
To combat this, firms employ multiple hands in warehouses and set up an overarching system to monitor and control inventory operations. However, this does little to answer the question – Is that what inventory management is all about?
Entrance of Inventory Management System
The 21st-century inventory management is at the cusp of experiencing a massive transformation, and it has gone beyond simply keeping an eye on stocks. Inventory management today assists e-commerce businesses in dealing with the complexity of marketplaces, managing inventory as per consumer demand, and supporting the entire firm in ensuring the cash flow doesn’t remain blocked in the form of products.
Smart retailers invest their capital in optimizing the process by bringing in experts into the picture. In a firm like ours, there are dedicated teams that look after the inventory. Their role starts from fulfilling the essential functions such as listing, overseeing product stock conditions, and working closely with the warehouse to undertake complex tasks like managing the marketplace, strategizing, and bridging the demand and supply gap.
Needless to say, it is humanly impossible to perform complex operations without making errors. Besides, the operation comprises a lot of mundane routine tasks where putting a person to do the job will add on to the process redundancy.
I strongly believe that a dynamic inventory management system, along with its automation rules, can better manage such routine activities without any error. Besides boasting process automation, a system as such works toward effort optimization, performance monitoring, errors identification, and even alerting managers whenever a rule breaks.
While we are on this subject, let me touch upon what we are doing at Ergode. Over here, we focused on how a system can empower the inventory management team. Hence, we started with a reverse engineering process to figure out what the team does and how a system can be of help.
The first point of consideration was ease of accessibility. We wanted everyone to use the tool from anywhere, so we developed a cloud based application. The second point of consideration was handling a wide set of rules and regulations. We work with more than 120 marketplaces, including the big ones like Amazon, Newegg, Sears, and Walmart to mention a few. As a result we built a huge repository of rules that can tackle the policies of the marketplaces and the modifications depending on the geographies they are present.
With respect to ease of usage, we made our application so user friendly that anyone, even someone without an iota of tech-knowledge, can use it.
In addition, we made sure that our system is smart enough to make small decisions by itself. If a team member uploads a product list on our inventory management system, the system can not only check the data against the rule sets and filter out the products that do not meet the marketplace criteria, but also lists the products on to the marketplace. On top of that, the system delivers real-time updates on price and quantity.
In totality our system reduced the number of errors, helped in overseeing account health, and most importantly, allowed our team members to focus on more critical aspects such as prioritizing the inventory types that perform better, planning ahead the procurement, and better coordinating with the warehouse to ensure smooth movement of stocks.
With our inventory management system, I realized that the man-machine combination brings out the true nature of inventory management as a practice. Besides getting live information on how products are performing in hundreds of marketplaces, the combo can tackle a challenge much before it starts going south.
The Benefits at Hand
With a potent inventory management team supported with a smart inventory management system, the benefits become apparent. At Ergode, we have seen the marketplace team receiving lesser MAP violations, orders becoming easy to locate, inter-departmental coordination becoming more transparent, customer service team knowing about the availability of products and, as a result, offering quick resolution pertaining to replacements, and the marketing team planning more promotional activities without waiting for the inventory reports.
Moreover, we could study the market pulse more accurately. For the business units, the live product reports always echoed the needs for the markets. Assessing the market demands became easier, hence performing market forecasting also became near accurate. This forecasting helped us maintain enough product on hand and identify the reorder points during demand spikes, thereby ensuring that the supply never runs out.
There’s More!
Inventory management can make or break a business – that’s my shortest summary on the importance of the topic. It makes sense to run a promotion when you are sure that your products are duly listed and even optimized on marketplaces. Likewise, filling up a 25,000 square feet warehouse will only add value when your inventory strategy is accurately devised. With a team of expert inventory managers in place, it becomes easy for a business to increase its vendor base, plan sales promotion on a marketplace, and decide on new launches.
In my opinion, it is a too wide topic to cover in a thousand words. While I draw a line on the transactional narration of inventory management, I am buzzing to get on to a sequel talking about the strategies. Stay tuned for “IM part 2 on strategies.”
Cloverbites By Rupesh Sanghavi 
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