Getting Started with E-Commerce Inventory Management in 2024

What is E-Commerce Inventory Management?

Efficient e-commerce inventory management means no more stockout, less lost sales, or excess ordering. E-commerce inventory management refers to the systems an e-commerce business uses to manage inventory.

An e-commerce inventory management system deals with sourcing, storage, tracking, quality assurance, demand planning, and supply planning. It addresses many more functions, but these are the highlights.

In essence, e-commerce inventory management is responsible for planning and executing the back-end operations of the supply chain. When an order comes in, it must be accurately recorded and the inventory updated accordingly. If new inventory comes in, it must be assessed for quality control. Warehouses must be secured and maintained if your business needs them. If you drop-ship, your inventory management function will deal with supplier relations and ensure proper delivery.

Why does E-commerce Inventory Management Matter?

The retail sector is cutthroat, and the competition is unfathomable regarding e-commerce. No matter what product you sell, someone will try to sell it cheaper or some variation. In this oversaturated online marketplace, nobody is unique. The only real way to compete is by standing out from the crowd. There are many ways to achieve this, but the most effective way is improving the customer experience.

Enhancing Customer Experience

This is where inventory management becomes crucial. The customer experience directly hinges upon your supply chain’s performance in e-commerce. If a customer orders a product, it must reach them quickly, in perfect condition, and at a good price. To meet these demands, e-commerce inventory management must be optimized.

Quick delivery is only possible if the product is available. Your e-commerce inventory management must have proper demand and supply planning strategies. Otherwise, you may end up with a stockout and many customers. According to Harvard Business Review, it’s not a good look, considering 31% of customers would rather go to a competitor than wait for restocking.

Similarly, customers expect products to be delivered in pristine condition. They have paid for quality and are entitled to it. With proper e-commerce inventory management systems, we can make these demands a reality.

One of the biggest reasons products are damaged or spoiled is inappropriate storage or mishandling. Both of these are the responsibility of the inventory management function. An appropriate amount of storage must be allocated for the inventory, as well as suitable conditions. On top of this, logistics and shipping partners need to be properly trained in handling products. This is one of the big complaints currently being leveled at Amazon, as more people are receiving wrong or damaged goods.


When it comes to pricing, inventory management is again a key factor. Optimized e-commerce inventory management can save a business over 10% in cost! These savings are largely due to better supplier relations and inventory management.

Think of it like this. Your business leverages inventory demand and supply forecasting. This means you have a good idea of how much space you will need. This allows you to spend as much as is needed on warehousing. The saved money from there improves your cash flow. At the same time, your supplier is providing you with products at a better price. This means you have more leeway to price your products at a good price for consumers without affecting your cash flow.

It’s all one big domino effect. When your e-commerce inventory management is optimized, all the other business functions experience a boost.

Your marketing team can promote your business as a customer favorite for quick deliveries. Your sales department can sell without worrying about stockouts or overstocking. Better cash flow means the business has much more mobility in decision-making.

The State of E-Commerce Inventory Management in 2024

Alas, even with all this seemingly common information, 43% of small businesses do not even deign to track their inventory. This is a major misstep, and while these businesses may be functioning as usual, they are missing out on many growth opportunities.

This is the time to ask yourself: Do I want to miss the opportunity to increase sales due to fewer stockouts? Do I want to always have the right products available to meet consumer demands?

E-commerce inventory management matters. Do not sleep on this untapped growth potential. Instead, learn with EA how to integrate a proper inventory management system into your E-commerce business. Let’s start on your journey to success!

E-Commerce Inventory Management for Beginners

Leverage Outsourced Inventory Management E-Commerce Solutions

Outsourced inventory management e-commerce solutions are the safest and best investment when getting started. However, inventory management is complex and can take time for entrepreneurs with so much already on their plates.

Outsourced inventory management e-commerce solutions are the perfect choice for most small businesses instead of overloading with work. As we have demonstrated, these inventory management services are affordable and can greatly boost business value. Outsourcing firms already have contacts and infrastructure, which you can access when enlisting their help.

Leverage Inventory Management Software

There are hundreds of options for the best inventory management software on the market, each providing specific features. Some are even tuned to work within certain industries, such as the medical or CPG sectors.

These software solutions are nothing short of miraculous. They can seamlessly track inventory as it is procured and sold. Imagine someone placing an order on your website. The order will be recorded, an invoice will be automatically generated, and your inventory management software will update the records to reflect the sale. The software will also track every distinct order and its progress.

By using RFID and barcode technology, every product unit is individually trackable. This allows you to monitor shipping and be transparent with customers. Have you ever bought a product online and received a product journey notification? It’s all done with inventory management software. With these metrics, you can also better plan delivery routes, saving on valuable fuel and labor costs.

Implement Robust Demand and Supply Planning

As mentioned earlier, one of the biggest challenges e-commerce businesses face is demand and supply planning. Being able to reasonably predict how much a product will sell is key to optimizing your inventory. You do not want to be the one with too much or too little stock. Too much, and you end up selling at cost or worse. Too little, and you leave customers disappointed and heading to competitors. 

Demand and supply planning curbs all that. It is a complex process by which businesses can determine future demand for a product. Then, based on this demand forecast, they can draw a supply plan that lets suppliers know how much they will need to have ready for shipping. It also helps warehouses prepare appropriately for storage.

AI tools are all the rage right now. E-commerce inventory management is no different, with myriad AI tools. These tools can generate detailed forecasts and projections of demand and supply. Feed them the relevant historical and market data, and they can make a reasonably accurate prediction. Of course, this prediction is useless if you do not know how to translate it into a business strategy. This is why we highly recommend finding a professional for the job.

Focus on Multi-Channel Inventory Management

These days, e-commerce sellers should have multiple online storefronts available. The best thing is, of course, having your own website. But even beyond that, having a profile and store on Amazon and other platforms is integral. This is what we call multi-channel e-commerce. Multiple stores are set up across platforms like Instagram, Facebook, YouTube, TikTok, and other social media.

With all these channels, you must also have a centralized inventory management system to keep everything organized. Maybe most of your orders come from Amazon and Instagram, and some come from Facebook and your website. All of these need to be tracked and fulfilled with the same level of care. Inventory management software can help integrate your inventory management with your sales channel. What is most important is not to forget that you are not just managing one storefront. The data from your sales channels must also be factored in when planning for demand. You will also likely deal with various platform fees and fulfillment arrangements, which must be tackled and planned individually.

Embrace Eco-Friendliness

The world is currently honed in on the ethics of consumption. Climate change and other environmental concerns are at the forefront of international business discourse, and governments are pushing for decarbonization. This is an often forgotten but relevant part of e-commerce inventory management. You do not just want your inventory management optimized; you want it to be sustainable. Using eco-friendly packaging, leveraging drone and electric-driven logistics, and phasing out plastic bags are just some of the initiatives expected by consumers today.

As an inventory manager, you must determine how to meet these expectations. This means searching and collaborating with decarbonized logistics providers, pushing manufacturers to use minimal packaging, and finding alternative storage methods that involve recyclable and biodegradable materials. All of these and more concerns need to be addressed and accounted for in your inventory management strategy.

Read here to learn more about the impact of sustainability on sales in the CPG industry.


In short, e-commerce inventory management is a critical junction in e-commerce operations that deserves attention. Investing in hiring a professional to manage inventory or buying software that helps via automation are the bare minimum requirements for 2024. Competition is only getting more fierce, and optimizing inventory management is an avenue to take advantage of to stay in the race.