Top Tips for Improving Your Inventory Management
Top Tips for Improving Your Inventory Management

One of the biggest benefits of e-commerce is that it takes much of physical retail and makes it virtual—no longer do you have to worry about arranging an aesthetically pleasing store layout, paying rent on such space, and relying on in-person customer service that can often go awry. But one thing that can’t become virtual in e-commerce is your inventory. Time and space in the real world still matter in the e-commerce industry, and with traditional brick-and-mortar retail costs out of the equation, the margins in inventory management matter more than ever. You don’t want to find yourself paying for empty warehouse space, nor for dead weight. And when you pay for your raw materials or wholesale items, one of your biggest goals should be making sure those costs don’t go to waste. You can do this with improvements in where and how you store your goods. Here are some of our top tips for improving your inventory management and more efficiently organizing your small business.

Inventory Software

It seems self-evident to embrace technology here, but some small businesses still try to manage their inventory in a generic spreadsheet program—or worse, by doing it longhand. Digital inventory management systems can go above and beyond doing things the hard way by automating purchase orders, monitoring low stock, and performing data analyses. Managing inventory can be overwhelming for even the most level-headed retailer. Your first step toward handling that feeling should be finding a system with an intuitive user interface and expansive capabilities to keep your business fully modern across the board. Familiar names in technology such as Oracle, QuickBooks, and SAP all offer inventory management systems that can aid your small business in keeping tabs on everything your virtual sales floor has to offer.

Embrace Analytics

Information is king in e-commerce, and you should want to compile and track as much data about your inventory as possible. It pays to know everything about what sells and what doesn’t, from size and shape to color and other characteristics. Tracking the data within your inventory can help you better grasp your sales-to-inventory ratio, which lets you know how much inventory you can expect to need on hand. All retailers are searching for the sweet spot—they neither want a lack of available inventory, nor too much inventory on hand going unsold, gathering dust, or wasting valuable warehouse volume. A vast library of metadata about the products you sell can be extremely useful in shaping your inventory as you go forward.

Separate Inventory Bins

Once you’ve mastered the digital side of inventory management, it’s time to advance to mastering the physical aspects of your inventory and avoid finding yourself out of stock at the most inopportune time. Further subdividing inventory into groups can help manage the replenishment of stock. One popular method of inventory management is the “two-bin” approach. These “bins” can be actual bins or simply separate locations within a larger space. Inventory is divided between a first and second bin. When the stock runs low, replenish the first bin with items from the second. When the second bin is empty, it’s time to re-order stock. This keeps running out of stock from sneaking up behind you.

Another useful tactic is the “ABC” division of inventory, which sorts inventory based on its turnover rate, or how quickly it sells. Division A is your most popular products, which you’ll tend to exhaust the fastest. Generally, by what inventory managers call the “80/20” rule, where 80 percent of your revenue comes from 20 percent of your inventory, represented in this division. Divisions B and C are your slower sellers, which account for more space but less revenue—Division C can represent as little as 5 percent of your revenue but as much as half of your inventory. Knowing what’s in which category can help you ensure you’re devoting your attention to the proper places.

Retailers can avoid dead stock by embracing “just-in-time” inventory management. By ordering materials only as needed, retailers can avoid having surpluses at all. However, the tight schedules of the just-in-time approach may have retailers feeling apprehensive.


A picture is worth a thousand words, but when it comes to sorting items, a splash of color can be all the words you need in order to make sense of a full complement of inventory. Sometimes it’s hard to tell what’s new, what’s old, and what absolutely has to go. Color-coding labels can help inventory managers determine the order in which inventory should leave the premises, whether that’s personnel at a warehouse or you in your basement. Another benefit of color-coding is in making expiration dates clear on time-sensitive inventory. With a full complement of colored labels, you can explore various sorting techniques that by their nature are sure to be memorable. ChromaLabel supplies stickers in 38 different colors for maximum color-coding ability. That’s more than a few spins through the color wheel.

Drop Shipping

If handling the ins and outs of inventory management gets to be too much to bear for your small business, perhaps outsourcing your fulfillment operations completely is the best plan of attack. In drop shipping, you no longer control your stock, but rather act as an intermediary between the customer a third-party retailer or wholesaler. This is great from a convenience standpoint, as you will no longer be responsible for having your stock on your premises, but you lose a great deal of quality control in drop shipping, as the inventory never comes into your possession between the buyer and the third party. Because of the adverse effects that the absence of quality control can have on your small business, this should only be a last resort if you cannot handle any inventory management whatsoever due to extreme circumstances.

There’s a lot to learn about efficient and well-organized stocking, and this guide to the top tips for improving your inventory management only scratches the surface of what you’ll need to know. Though the set of requirements and responsibilities in this aspect of your business is a wide one, you can be sure that ChromaLabel’s lines of stickers, tape, and labels will greatly assist you and your warehouse operators in running a well-organized small business. 


Update from April 2021

Organizing and regulating inventory can be a massive job! We have several different products to make inventory control a little less stressful and more organized. We can also customize labels to suit your business or specific inventory management needs.


Top Tips for Improving Your Inventory Management
Inventory control

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