Multi-Channel Inventory Management: How Modern Systems Solve for Cross-Channel Challenges

“We are at a tipping point in retail,” reads Deloitte’s The New Digital Divide study. “A point where digital channels should no longer be considered a separate or distinct business.”

And the statement is true –– except that it isn’t only digital channels combining to form a cohesive shopping network. In-store channels and mechanisms such as mobile-local shopping and virtual dressing rooms are now being used as well to offer customers a “shop how, when, where and on which device you want” experience.

This move toward multi-channel –– be it in-store, via an ecommerce site or in digital marketplaces like Amazon and eBay –– has grown tremendously in retail over the past few years, and there’s no turning back. Digital and physical are completely interwoven, with digital technologies (such as mobile research and webrooming) increasingly influencing in-store retail sales.

To succeed in this competitive market, retailers are required to provide a seamless buying and browsing experience –– whenever and wherever the customer desires it. To accomplish this, real-time management of inventory across all channels is imperative to prevent lost sales due to out-of-stock product or, worse, a completed sale with no inventory to ship from the brand.

How can an online brand manage this required multi-channel environment while maintaining proper inventory count across every potential customer sales point?

Shift Away from Stifling Traditional Practices

Traditionally, inventory management was time-consuming, often involving redundancy and manual entries, which resulted in errors and a significant strain on the business. With the move to a single, cloud-based retail management platform, retailers are beginning to see a light at the end of the tunnel.

Let’s start a sample inventory and sales scenario to explain how this works.

A Story of Scale in Practice

Managing Inventory Across Channels

A retail store located in the heart of a downtown city sells natural beauty and health products for women, men and children, sourcing items from suppliers located across the country. To extend their sales reach beyond their physical shop, they also sell and market through their own ecommerce store and have a store on Amazon.

One of the retailer’s best-selling products is the coconut cream body and hand lotion. At the first day of the month they have in inventory:

• 104 in stock

• 8 allocated to Amazon orders to be shipped

• 5 allocated to their ecommerce store orders to be shipped

• Leaving them with 81 on hand products to be sold

On hand inventory is product that has not already been allocated to a pending sales order, with allocation preventing the double-selling of product and potential inventory issues. Since on hand inventory levels are always tied to their ecommerce and Amazon stores, it reflects this on the online product page so potential customers can place an order knowing the lotion is on hand and ready to be shipped out.

Managing Simultaneous Orders Across Channels

The next day, the retailer receives six Amazon orders, for a total of six products sold. With each sale, the central on hand inventory is reduced immediately and in real-time.

That same day, a bride-to-be visits their store and buys 10 lotions for her wedding party. This sale immediately reduces both the in stock and on hand levels, since the product left the store minutes after the purchase, with no pending shipment involved.

With their sales channels connected, each transaction automatically adjusts their inventory.

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Again, since all their sales channels are connected and synced, each transaction automatically adjusts their inventory, which is also tied to the retail platform’s accounting system. This allows not only for real-time knowledge of inventory levels, but retrospective reporting to view the movement of product month-over-month, season to season and year-over-year.

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Managing High Sales Dates Across Channels

Now, it’s Mothers Day and the lotion is flying off the shelves and selling briskly online. The retailer has set a minimum on hand stock level threshold, knowing her supplier’s turnaround time for delivery in advance. The stock level hits that 10 item threshold, and now it appears in the Low Stock report she runs at the beginning of each day. It also shows a recommended reorder quantity based on the pricing agreement she has with the supplier, which she set up previously in the retail platform, while also taking into account another 18 items allocated to pending sales orders. With a few clicks, she’s ordered new product and emailed it off to her supplier.

With two warehouses, each is tied together within the retail platform to manage inventory centrally.

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Six months later, she opens a second retail location. Now her company has two warehouses, and each is tied together within the retail platform to manage inventory centrally, as she did when she had the one retail store. To stock this new warehouse with product, she performs an inventory transfer of some product and places orders with her suppliers for other products. The transfer of goods and receiving of new goods from suppliers is all managed efficiently and in real-time within the retail platform.

Not only does this new warehouse expand her brand’s physical reach to customers, she now has a new warehouse from which to ship ecommerce and Amazon sales orders. When an order comes in, she clicks on ‘fulfill’ and in the drop-down menu, she can view how many of the products are on hand in each warehouse, and then assigns the fulfillment warehouse accordingly.

Modernizing Retail

In this modern world of retail, “from the customer’s point of view, ecommerce and brick-and-mortar businesses are no longer discrete,” states Deloitte. Indeed, with cloud-based retail platforms, inventory management is no longer disparate and in silos, but is as interwoven as the customer’s digital and physical shopping habits.

Are you a retailer struggling to make a decision on your next software purchase? Brightpearl’s retail tech stack report summarizes where US retailers are investing, to help you cut through the noise and make the correct choice for your business!