10 Ways to Improve Your Shopify Inventory Management When Selling Food
1. Track Your Product Sales Patterns
Start by entering a sale for a product you’re selling in Shopify. Product sales are broken up into multiple line items on your orders, which helps make tracking units sold of each product more manageable. The sale of a single item will create one line item in the order, while two items would create two separate line items, and so on.
2. Know What Products You Need to Hold on to for Backorders and Which You Can Sell as Is
Perhaps the most frustrating part of selling on a marketplace is dealing with back-ordered products. Backorders occur when an order is placed, but the product you sold is currently out of stock.
Depending on the marketplace that your products are sold through, this can be a quick fix or take much longer. For example, Amazon will automatically backorder any items you don’t have in stock and notify your customer once the inventory has been restocked. However, if you choose to sell via Shopify instead, it’s up to you to determine how to handle these orders. Some options are:
- Have them place another order for items that are in stock now and ship them together.
- Include complimentary items that may not be out of stock at all because they’re readily available from suppliers.
- Offer a discount code for their inconvenience.
3. Create a Reorder Points System for Your Products
A reorder points system helps keep track of the average amount of time it takes you to sell out of a product until your next restock.
This is especially crucial if you run an online store, as having these numbers will make future decisions much easier when it comes time to choose which products are worth making or not. This also creates an accurate forecast for your business, which allows you to be more confident in your purchasing decisions and stock levels.
Reorder points can be generated by tracking how long it takes to sell specific products over time via Shopify sales data. According to QuickBooks Online, most businesses typically see certain products selling slower than others.
Here are some questions to ask when determining your reorder points.
- How long has it been since you last received inventory?
- What is the average time between when you receive inventory and when it’s sold out?
- What is the lowest number of units currently in stock that would still allow customers to order this product?
Once your customers can’t order a product, they won’t know about restocking times. If their purchase is urgent enough for them to really need certain products right away, they could go elsewhere to make the purchase instead if their desired item isn’t available. This will hurt your bottom line, which is why it’s better to be proactive by setting an arbitrary reorder point.
4. Assign a Supply Level for Each Product
It’s helpful to know when you should place an order for more of a product so that there is enough inventory stocked when customers want to buy them, but not so much in stock that they sit and expire.
To optimize your supply levels, assign units sold per day to each product. Then, multiply that number by 30 days in order to get the average monthly unit sold amount for that product. If the number you come up with is higher than what you keep stocked in your store, then it may be time to reevaluate which products are worth making at all!
5. Create Handy Spreadsheets and guides to Help Track Sales Data and Keep Track of All Your Products
A huge part of inventory management comes down to efficiency, namely in making sure the product is available when customers want to buy it and easy for you to track and stock.
There are many ways to do this depending on your needs, including using tools like Google Sheets or Excel. For example, some users have found it useful to create a spreadsheet that lists all their products by ID number with data on how long each item has been sitting in inventory (or if it’s currently sold out). You can also download an app that does this automatically for you! Another option is creating a handwritten guide that lists each product by name, size/color option, and price. These are helpful when you’re in the store stocking products.
6. Understand the Importance of Inventory Turnover Rates to Avoid Losing Money on Warehouse Space
It’s said that the average business only turns its inventory twice per year, but research indicates that most businesses need to turn their inventory at least four times per year in order to be profitable. This is because your space doesn’t pay for itself, which means that it costs your money every day that items are sitting around in storage instead of being used for profit! If you have a warehouse worker with time on his hands who could easily help you out by moving products, then it might help to use him as an extra pair of hands to speed up the process.
7. Utilize Barcodes & RFID Tags to Track Inventory with Ease
There are many benefits to using radio-frequency identification (RFID) or barcode scanning devices in order to track inventory. Depending on what you sell, items can be tagged with both forms of technology, which allows you to quickly and easily check stock levels while out in the warehouse or getting ready for a big shipment. The main benefit is that this allows you to manage your inventory more efficiently because it takes less time than manually counting each product, allowing you to move on to other tasks sooner.
8. Don’t Be Afraid to Outsource or Automate Your Inventory Management Methods
As mentioned above, there is a lot to know regarding inventory management. If you are having trouble keeping up with things or trying to run your business while being bogged down by too many responsibilities, then it might be time to hire someone (or invest in an app like food manufacturing software) to help you out! You can find virtual assistants on platforms like Upwork, for example.
9. Avoid “Out of Stock” Messaging as Much as Possible
Some sites will automatically send customers a notification when it appears that the product they want is out of stock (e.g., running low or coming back into stock soon). However, this could hurt your bottom line if done incorrectly. For instance, say you sell products at $20 each, and there is also a 10% chance your customers will receive a special bonus product for free with their order. If the customer didn’t receive the bonus item, then that may be all they need to decide not to buy from you again! Instead, try using “out of stock” messaging only when absolutely necessary. This way, you won’t lose potential buyers who are willing to pay full price if given a chance to do so.
10. Track Where Customers Are Coming from to Get More Specific Feedback on Where You Should Focus Your Efforts
Another strategy is tracking exactly where people come from when they make purchases on your site:
- Where are your best-selling products?
- What pages do these products appear on?
- Which internal links are most commonly clicked?
- Where do customers go when they leave your site?
Knowing this information can help you determine which products to focus on, what promotional techniques work best for certain products, and which pages could use improvements.
