5 Wholesale Inventory Management Tips for Ecommerce Distributors

Wholesale inventory management

As a wholesale distributor, you face unique challenges that other ecommerce businesses don’t. Your orders are larger, your daily shipping volume is greater, and your long-term customers are more demanding. Your wholesale inventory management solution needs to be up for the challenge. Here are some tips to turn your warehouse into a lean, mean turnaround machine:


Centralize your sales channels

Most wholesalers take orders through several separate channels. Many only take orders by phone, email, or fax. Others have a wholesale shopping cart where approved accounts can place orders online. Some ecommerce retailers have a separate price list available through their consumer-facing store. Those retailers tend to fulfill orders for wholesale customers alongside orders for retail customers.

With all the different ways that orders can be placed, how can you keep your wholesale inventory management system intact? The answer for many businesses is to reconcile inventory at the end of the day by counting orders manually. As you can imagine, this can take up a lot of time in a work week. On top of that, there’s a large margin for errors when manually adjusting inventory.

Fortunately, there is an easier way to consolidate your multichannel orders for your wholesale inventory management needs. By using multichannel inventory management software, you can bring all your orders together. Connect your shopping carts, marketplace listings, and even your direct sales together. As goods are purchased, inventory is deducted, and can be synced to the other channels if needed.

Reserve inventory for sales orders

Few things hurt wholesale sales more than running out of stock. Even if you offer backorders, many retailers would have to cancel and seek an alternative. However, you don’t have an infinite supply of everything you sell. You also can’t predict every order and their volume before they are placed.

There are still ways that you can reduce overselling and being forced to turn away sales. One simple method is to reserve inventory for orders as they come in. This allows you to keep track of the inventory quantities that are available for sale in addition to the total on hand. If the free count reaches zero, you’ll know that it’s time to stop sale until new inventory comes in. You can even synchronize that free inventory count to your sales channels instead of the total on hand counts.

Keep on-hand inventory at a minimum

Many wholesalers have been bitten one too many times by out-of-stock episodes. They may respond by ordering much greater amounts of stock than they really need. Often, this ordering method is encouraged by suppliers that offer attractive bulk discounts. However, while overselling can certainly harm profitability, overstocking your on-hand inventory isn’t the answer.

On-hand inventory is, by nature, a decaying business asset. After you’ve paid for the goods, their value will only depreciate over time. You’ll also need to pay the costs to store the inventory until it’s sold, and deal with shrinkage as time goes on. Wholesale inventory management is all about lean, cost-effective stock control. Don’t dilute that by overstocking.

You don’t want to waste space and money sitting on slow-moving stock. To avoid these issues, calculate the demand of each SKU to determine your stocking needs and adjust your orders accordingly. Once you have your base requirements, stick to them! Avoid buying too much of any SKU, even when the quantity discounts offered by the supplier seem worth it.

Establish an inventory count schedule

Wholesale inventory management is often a balancing act for a warehouse team. On the one hand, you want to keep inventory accurate and reduce shrinkage. On the other, you don’t want inventory management to get in the way of actually running your business. That balancing act may tip you away from certain inventory tasks, such as counting stock.

Inventory counting is an important but painful process for any warehouse. Counting is the best way to keep your inventory accurate and to catch discrepancies. But no warehouse wants to dedicate the time or resources to pulling everything off the shelves to count them.

Luckily, there is an alternative method that makes inventory counting a more digestible task. Cycle counting allows a warehouse to count inventory in one small fraction at a time. Cycles are usually done on a per location basis, where a certain area of the warehouse is counted each time. By rotating (or cycling) through each location, you’ll be able to cover your entire inventory with less downtime and headache.

Calculate reorder points and set alerts

Wholesale inventory management is all about keeping a lean and efficient warehouse. But as we discussed before, overstocking and overselling can both cause real damage to profitability. Carry too much of something and you face depreciation. Carry too little and you risk running out of stock too soon.

To address these opposing concerns, it’s important to put together an inventory reorder strategy. Setting regular reorder points for each SKU can help you keep track of how much of each item you want to keep in stock, as well as when to reorder that item. But how do you calculate the reorder point for a SKU?

This area of logistics management is called inventory forecasting, and is a very complex and scientific field. Luckily, there are some simple formulas that can be used with some basic assumptions in mind. You can use historical sales data to figure out the average daily quantity that you expect to sell of a product. Multiply this average daily demand by your average lead time to receiving goods to calculate your lead time demand. With a combination of lead time demand, ongoing demand between reorders, and a safety stock amount, you can set a realistic reorder point for your catalog items.