The Guide to Shopify Inventory Management: Apps, Best Practices & More
September 23, 2021
Shopify order management and stock level tracking across sales channels becomes more difficult as demand increases.
If you’re at this stage (congrats!), it’s the time that most businesses start looking into inventory management solutions for their Shopify store.
Inventory management, also known as inventory control, is the process of acquiring, storing, and distributing your inventories through your different platforms.
It involves tracking how much stock you have left and predicting how much stock you’ll need based on sales.
A robust understanding of inventory management and how it works will help you prevent common problems caused by inventory distortion: overstocking, understocking, and overselling.
In this guide, we’ll explore:
- What inventory management is
- Why it’s essential for your online store
- The best Shopify inventory management apps
Now, let’s get started by learning more about inventory management.
Let’s say you own a french fry stall and you want to track sales and revenue and project future sales to create an accurate restock schedule.
You’ll need to know how many potatoes you still have, when your potatoes on-hand will go bad, how many french fry packs you’re going to sell, and how many extra potatoes you need in case of emergencies.
Gathering all that information is difficult without a system, especially if you have 10 stalls across the country.
You’ll end up buying too many potatoes and wasting money on them going bad, or buying too few and wasting money on lost sales opportunities.
Or worse, you’ll accidentally tell your customers that you have more in storage, only to find out you’re all out of potatoes.
You can avoid all that trouble with a good inventory management process.
With that, you can track how many items or stock keeping units (SKUs) you have across multiple locations and channels and predict how many more of each item you need so that you can determine when you need to restock and by how much.
Tracking inventory across your fulfillment network
Having a product inventory management process will tell you the exact quantity of each of your items in each of your fulfillment channels and whether you’re managing your supply chain in-house or through third-party logistics (3PL).
When you open an online store, you have the option of storing your items across multiple warehouses so that you can ship your products out from a location that is closer to your buyer.
The Shopify Fulfillment Network (SFN), for example, is a series of warehouses across different locations that stock, store, and distribute your product to different locations, all powered by Shopify.
You can avoid overselling and disappointing your customers by knowing how much of what you have in each location.
Synchronizing inventory counts across channels
In today’s online world, you need to be omnipresent to catch your audience’s attention—so selling across multiple channels is a must.
But if you’re selling on Amazon, eBay, and your own website, it becomes difficult to track how many items you should allocate to each channel, how many items you have left, and how many items you should restock on each channel.
An inventory management system synchronizes your data across different channels and makes restocking suggestions based on past data.
Let’s go back to the french fry stall example and say that you also sell frozen french fries on Amazon, eBay, and your website.
Instead of having to allocate exact quantities to each platform—11 kg to Amazon, 12 kg to eBay, 18 kg to your website, for example—an inventory management system lets you sell all stock (40 kg, in this example) across all sites.
It then updates your total amount of remaining french fries across all your channels every time you make a sale.
If you get one sale on eBay, the number of french fries across all your channels will decrease by one. Simple.
Timing your reorders and reorder volumes
In 2015, retailers lost 1.75 trillion U.S. dollars in revenue worldwide because of stocking issues—going out of stock or having too many items that are no longer in season—and returns.
And that number has risen since, primarily because of the COVID-19 pandemic that disrupted predictions and buying behavior.
Stocking issues result in a loss of sales and negatively impact customer loyalty—if you’re always out of stock, your customers will leave you for more reliable shops.
An inventory management system will keep track of your available items so that you know when it’s time to buy or produce more.
You can also use inventory management apps to tell your customers how much stock you have left per item.
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Inventory management is a necessary part of running an effective ecommerce business.
A sound inventory control system will provide insight into your inventory and allow you to understand how often you should restock each of your products.
Using various inventory management techniques can also help you keep an eye on your inventory turnover. This will help you figure out the right amount of stock to keep in your warehouse, thus preventing dead stock.
This is especially important for businesses that sell seasonal items—like winter coats and summer dresses—or perishable goods.
Having a system in place will help you save time and money and satisfy your customers by helping you:
Prevent understocking and overstocking
Ecommerce businesses with inventory tracking issues on Shopify often purchase too much stock (resulting in cash flow issues) or sell more products than they can supply.
Both of these problems are equally damaging to a brand’s reputation and bottom line.
In fact, 37% of your would-be buyers will move to a competitor when they find an item is out of stock. By the third time a consumer faces an out-of-stock sign, 70% will switch stores or abandon their purchase, according to Repsly.
An inventory management system helps you provide a better customer experience by preventing overstocking and understocking.
You’ll be able to tell shoppers how many products you have in stock and save your customer support team from the constant back and forth communications with customers.
You can also calculate your economic order quantity (EOQ) within this plan to map out your supply chain operations accordingly.
Imagine booking a plane ticket, getting to the check-in counter, and being informed that your flight was overbooked. You can’t get on the plane, and the airport is kind of a drag.
Overselling is infuriating and hurts both customer satisfaction and loyalty.
If you’re promised a seat in exchange for money, you want that seat. When an airline becomes unable to fulfill that promise, it tarnishes their reputation and reduces the amount of trust you have in them.
The same thing goes for overselling—selling a product you no longer hold in stock can cause angry customers and result in a tarnished business reputation.
By accurate SKU tracking through inventory management and displaying the status of your items on your distribution channel, you can avoid backlash from unfulfilled promises.
A system will help you track and forecast sales, which will help you predict how much inventory you’ll need during different parts of the year.
From there, it becomes a lot easier to understand how your inventory fluctuates over time and how product demand changes from season to season.
Sell on multiple channels
Manually tracking and fulfilling orders is relatively easy when you’re just starting out.
But imagine trying to sell frozen foods—french fries, nachos, chips, dips, popcorn, etc.—stored at different warehouses across the country on Amazon, eBay, your local physical store, and your Shopify website, simultaneously.
Once your business starts growing, it gets progressively harder to scale fulfillment and meet the demands of your customer base.
Managing inventory also becomes a messy nightmare: businesses that don’t have a solid system in place cannot track all the orders and sales that come through different channels.
They’re also not able to see how these orders and sales impact their inventory.
An inventory management system will allow you to easily manage all your sales channels and ensure that each channel has sufficient stock levels.
Manage cash flow
Inventory management gives you an accurate view of your cash flow and assets, enabling you to better understand how much you should budget for stock or invest in other aspects of your business.
For example, managing your inventory effectively will help you save money on storage costs by allowing you to purchase just the right amount of stock you need.
You’ll be able to make informed business decisions on how to use warehouse space, when to restock products, how to price products, and which products to stop stocking.
This, in turn, will allow you to invest more of your budget into marketing and customer acquisition.
How do Shopify merchants handle inventory management?
There are all kinds of merchants on Shopify.
Smaller merchants use Shopify inventory management apps and their sales channels to handle their inventory needs.
Enterprise merchants often have an IT team and an enterprise resource planning (ERP) solution that they build and maintain to handle the high volume of restocks and sales.
Mid-sized and growing brands usually use a mix of integrations to balance their sales channels with various fulfillment solutions.
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What is a Shopify inventory management app?
A Shopify inventory app is an automated digital tool that handles Shopify inventory tracking for you.
There are two general types of systems for inventory management: manual and automated.
Manual vs automated inventory system
Using Google Sheets or Microsoft Excel and inputting sales data, generating your SKUs, and updating your sheets every time you make a sale is the manual way of tracking.
A Shopify product inventory app, on the other hand, automates the entire process with little to no input from you.
Even if you know how to track inventory manually, doing so leaves more room for human error and wastes time on manual data entry and verification.
Choosing the right inventory control app will help you and your team free up time to focus on more critical aspects of your business.
Why you need a Shopify inventory management app
A good inventory control app will help you streamline and automate inventory management, save on and reallocate resources, and help you forecast trends.
You’ll also increase team productivity and accuracy because employees won’t spend large sums of time manually tracking inventory.
You should look into an inventory management app if you:
- Spend a lot of your time managing inventory
- Regularly run out of stock or have products oversell
- Find it difficult to track and update stock levels across all your sales channels
What to look for in a Shopify inventory management app
There are different inventory management apps, each with its distinct features, advantages, and disadvantages.
The best inventory management software for ecommerce provides detailed online store inventory tracking, auto-generated product orders, integrations with other apps, and a comprehensive data dashboard.
The app you choose should have:
Extensive and detailed inventory tracking
You should be able to track all orders and order fulfillment information and receive notifications on when to purchase additional stock.
Look for an application that accurately tracks the number of items you have at any given moment, updating within a few minutes of a sale so that you can prevent overselling.
Integration with other apps you use
The inventory app you choose should play nicely with the other apps you use.
You want an application with a Shopify warehouse integration. Look out for integrations with your accounting tools, website ecommerce tools, POS systems, and other tools in your tech stack.
Sales forecasting capabilities
While there are many variables involved with forecasting sales, your ecommerce inventory management app should offer a ballpark projection of market trends and growth rates.
Some applications even automate purchase order (PO) generation as soon as one of your items is low in stock, predicting the reorder quantity based on sales forecasts.
A POS integration
A POS integration is crucial if you also sell from a physical store.
This will allow you to automatically sync online and in-store orders and stock levels and make sure there are no discrepancies between stock levels in your online and offline sales channels.
Actionable reports and inventory analysis
Your app should offer reports and inventory analysis tools that fit your inventory management methods.
The app should generate various real-time reports and allow you to customize them as you see fit.
Based on our recommended features, you might be wondering, “What is the best application to keep track of inventory for a store?”
Let’s look at the best Shopify inventory management apps on the market, including their costs, features, and ideal use cases.
1. Stock Sync
Stock Sync is the most popular inventory management app in Shopify’s app store. With more than 900 five-star reviews, it’s also the best-rated app in its category.
Features: Thousands of Shopify stores use Stock Sync to update their inventory automatically, manipulate product pricing, manage multiple suppliers, export inventory, and sync to vendor websites.
It allows retail businesses to sync inventory with their physical store through several different methods. The app also supports scheduled inventory updates.
Cost: Stock Sync offers a free plan and a 14-day trial. Paid plans start at $5/month.
Best for: Growing businesses preparing to add more SKUs to their catalogs, as Stock Sync also works for empty stores.
Skubana, acquired by 3PL Central, calls itself “The Operating System of Commerce” and integrates with popular sales channels like Amazon, eBay, and Walmart.
Features: Skubana offers multi-channel inventory management, advanced multi-warehouse demand forecasting, and automated purchase orders.
The app’s dynamic analytics can help you reveal seasonal trends and calculate each of your SKUs’ true profitability to reduce expenses and improve your bottom line.
Cost: The app works on a custom pricing model, with a minimum $1,000/month fee.
Best for: Businesses selling on different channels.
Sellbrite, acquired by GoDaddy, helps Shopify store merchants sell their products on some of the largest online marketplaces, including Amazon, eBay, and Etsy.
Features: Sellbrite provides automatic inventory syncing of inventory across all channels to prevent overselling.
It supports multiple warehouse locations and integrates with Fulfillment by Amazon. Businesses that use Sellbrite get access to a centralized fulfillment interface to manage and fulfill all orders.
Cost: Sellbrite for Shopify has a free plan for up to 30 orders per month and goes to $99 per month for up to 2,000 orders.
Best for: Merchants who sell up to 2,000 orders monthly.
Stocky integrates with Shopify POS Pro to manage purchase orders, demand forecasting, and more.
Features: Stocky offers many advanced features, including demand forecasting, automatic stock updates, and stock transfers.
Its demand forecasting capabilities are awe-inspiring. The app can help you forecast demand based on seasonal trends and give you specific purchase order suggestions.
Stocky can also provide forecasts based on recent performance by looking at your latest orders and sales performance. This type of forecast is beneficial for new and non-seasonal products.
Cost: The application is free to install with a Shopify POS Pro subscription.
Best for: Merchants who sell on Shopify with a Shopify POS Pro subscription.
ShipHero is an inventory management app and warehouse management system with shipping and order management capabilities. They integrate with Amazon, eBay, and USPS.
Features: ShipHero allows merchants to sync inventory across all sales channels and implement automated rules to reduce manual tasks. Batch order processing, barcode support, purchase order management, returns management and advanced reporting are all features included in the ShipHero app.
ShipHero also supports kit creation, cycle counting, merged order notifications, and multi-warehouse inventory management.
Cost: ShipHero’s plans start at $1,850/month for five users, 10 stores, and unlimited SKUs.
Best for: Merchants who run their warehouses or use ShipHero for their fulfillment.
Pipe17 is an ecommerce integrator that connects your front-end and back-end features. It gives you more control and visibility over your entire fulfillment cycle, vendor services, and order and inventory flows.
It integrates with Shopify and other fulfillment, accounting, and customer service platforms like Amazon MCF, eBay, WooCommerce, ZenDesk, ShipStation, and Quickbooks.
Features: Pipe17 provides smart connections between your sales channels and fulfillment solutions. They enable multi-channel selling, automated inventory management, and order notifications.
The software uses automation to save time on repetitive processes so that you can focus on other parts of your business.
Cost: Pipe17 monthly plans start at $150/month ($125/month if paid annually) for 120,000 orders per year. You can upgrade your plan to 1.2M orders per year for an additional $2,500/year or $250/month.
Best for: Business owners who want an all-in-one, no code, no IT-team-needed integration solution.
Katana is a manufacturing ERP whose inventory management software is an excellent option for stores that produce their products rather than resell items made by others.
Features: Katana allows you to manage your raw materials, finished products, and sales orders all from the same place. Its visual dashboards make it easier to keep track of your production process and maintain optimal inventory levels.
Cost: There are two pricing plans available for Katana; Essential and PRO.
The Essential plan works for up to three warehouses and costs $99/month, billed annually, plus $29/month for each additional user.
The PRO plan works for unlimited warehouses and includes extra features such as batch/lot number tracking and a floor-level mobile app—it costs $299/month, plus another $39/month for each additional user.
Best for: Businesses that manufacture their items.
Peoplevox is a warehouse management system developed by Descartes, one of the biggest logistics companies in the world.
This app is a Shopify Plus exclusive, so if your store is on standard Shopify, you’ll need to use one of the other inventory management solutions covered in this guide.
Features: Peoplevox automatically scales to your order volume, so you never need to worry about a spike in sales affecting the app’s performance. It also has an offline mode that will help you avoid interruptions.
Cost: To find out how much Peoplevox will cost for your business, you’ll need to contact Descartes for a quote.
Best for: Large online stores and Shopify Plus sellers.
SKULabs is another option that larger online stores should consider for their inventory management software.
Features: All SKULabs plans include features such as real-time sync, barcode scanning, and same-day support. Their pro plan also includes inventory forecasting, batch picking, and express support. Their enterprise plan includes bonus features like custom reports, API access, and dedicated support that’s ready to help whenever you run into an issue.
Cost: SKULabs comes with basic, pro, and enterprise plans. Their basic plan is $499 per month for up to 2,500 monthly orders. Their pro plan is $799 per month for up to 5,000 orders. Their enterprise plan supports unlimited orders, but merchants must contact them for custom pricing.
Best for: Enterprise multi-channel sellers.
Trunk is an inventory management app that tracks and manages inventory levels across multiple channels in real-time.
Features: Trunk provides real-time stock syncing and bundling, so you can manage your storefronts on Amazon, eBay, Etsy, and other platforms within the same dashboard.
Features include real-time stock level syncing, low stock alerts, bundling & kitting, duplicate SKU syncing, and unlimited sales channels and listings.
Cost: Trunk comes with a 14-day free trial. Their pricing is based on the number of orders per month, with their essentials plan ranging from $35 per month for up to 100 orders to $279 per month for up to 10,000 orders.
Their pro plan includes bundling and kitting and duplicate SKU syncing. These plans start at $39 per month for up to 100 orders and $329 per month for up to 10,000 orders.
Best for: Multi-channel sellers who sell kits and bundles.
Add other apps to the mix
Of course, there’s no reason why you should stop at inventory management apps.
For example, the Shogun Page Builder app for Shopify offers a ton of value from the start. You can create custom landing pages, product pages, and blog posts from scratch without bothering with a single line of code.
Shogun features a drag-and-drop editor and an extensive library of elements—everything from simple blocks for text and images to advanced features, such as slider menus, accordion sections, and customer reviews.
You can use the editor to add, remove and arrange elements on the page in whatever way you want, and each element is highly customizable.
Master your Shopify inventory management with these tools and techniques
By now, you should know what inventory tracking is, how to track inventory in Shopify, and recognize that a sound inventory management system is crucial for running a successful ecommerce business.
With this knowledge, figure out the right app for your store so you can keep inventory under control and sales filing in.
#cta-visual-pb#<cta-title>Create your totally custom store today<cta-title>Whether you run a microbusiness or a huge brand, you can create an amazing custom Shopify store with Shogun.Start building for free
Rachel is a remote marketing manager with a background in building scalable content engines. She creates content that wins customers for B2B eCommerce companies like MyFBAPrep, Shogun, and more. In the past, she has scaled organic acquisition efforts for companies like Deliverr and Skubana.