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How to Master Inventory Management on Shopify

Best Practices, Blog

Proper inventory management is crucial to building a thriving Shopify store. Statistics from Shopify reveal that sellers accrue almost $2 trillion in costs due to inventory mismanagement. The losses are spread among overstocking, out-of-stock items, and preventable returns.

Interestingly, these aren’t the only problems associated with inventory management. Shopify store owners still have to battle with missing items, misplaced inventory, wrong product packaging, and delivery, among others. If you can establish a solid foundation for tracking inventory on your Shopify store, you’re on your way to building a genuinely agile ecommerce business.

What is inventory management for Shopify stores?

Inventory management for Shopify stores is the systematic approach to sourcing, storing, and tracking your inventory. With a proper inventory management system in place, you’ll have the right stock at the right levels, in the right place, at the right time, at the right price, and it’ll reflect on your Shopify store listings. That way, you can avoid preventable losses due to out-of-stock items, overstocking, and returns, and your brand has a better shot at survival, growth, and profitability.

Why inventory management matters for Shopify stores

Inventory management is crucial to the success of Shopify stores. If you can get this aspect of business right, you’ll reduce overall inventory costs, optimize order fulfillment, and position yourself to serve your shoppers better. Below are some of the benefits of proper inventory management:

Accurately track inventory and prevent stockouts

Shopify store owners understand that meeting customers’ needs is crucial to profitability. If you frequently run into stock management problems like overstocking, out of stock or overselling, you’re likely to have many dissatisfied customers. Ultimately, they would go elsewhere to make a purchase, and you may never see them again.

Better cash management and inventory accounting

If you have too much stock that you can sell within a reasonable period, you’re leaving your capital idle while wasting precious storage space. Knowing how much product to stock helps minimize the amount of dead stock on your shelves and levels out cash flow.

Improve multi-channel selling and demand forecasting

Proper inventory management facilitates seamless selling across multiple marketplaces. For example, suppose you’re selling on Shopify, Amazon, eBay, Etsy, and your business website. In that case, you’ll need to stay on top of your stock levels to convey accurate information to customers across each of these platforms. Inventory management also helps you accurately forecast demand, so you’ll always have what your customers need in stock.

Save money on inventory costs

Virtually every task involved in inventory management helps you manage your resources efficiently. If you stock the right amount of the right products, you won’t waste money on storage space. There’ll also be fewer cases of spoiled or expired inventory since your turnover rate will be optimal. Furthermore, the potential gains of having what your customers need in stock whenever they need it is unquantifiable.

Inventory transfers

When selling across multiple channels, you may frequently have to transfer inventory from one marketplace to another due to varying demand levels. If you do not follow the right inventory management practices during the transfers, it becomes harder to track your performance and monitor each channel’s inventory levels.

Challenges of managing inventory on Shopify

Shopify has a built-in inventory management software that’s adequate for tracking your inventory and managing sales on Shopify. However, the native Shopify app can’t cater to retailers’ unique needs who sell on multiple channels. Here are three common problems you’re likely to experience with Shopify’s native inventory management solutions:

Products that don’t integrate into Shopify

Shopify has a long list of restricted and prohibited items. If you sell one of these products on other platforms, you’ll be facing a significant challenge with multi-channel inventory management.
Often, the only available option is to have separate inventories for Shopify and other platforms. This complicates the inventory tracking process and can lead to inaccurate or inconsistent stock levels across the different channels.

Automated inventory replenishment

As your SKU library expands, your inventory management process is likely to become more complicated, and there’ll be more opportunities for inventory management errors. To prevent these problems, you need inventory management software that can automatically replenish depleted stock from suppliers.

Such a program should recommend order quantities by factoring in your sales volume on Shopify and other channels. Unfortunately, the native Shopify app may not be able to carry out the task effectively.

Functionalities across channels

The native Shopify inventory management software does not fully support multi-channel selling. For example, the app cannot estimate all the product variants’ channel-by-channel profitability in your online stores. This information is vital to evaluating the performance of your products on channels other than Shopify.

The features to look for with Shopify inventory management software

The Shopify App Store boasts numerous third-party inventory management software that can make up for the native app’s shortcomings. Brands that sell on multiple channels typically layer these apps over Shopify’s inventory management software to deliver the best results. But how do you know the right app to choose among the scores of available options? Here are nine features ecommerce store owners should look for in any inventory management app.

Multi-warehouse and multi-channel functionality

A good inventory management app must be capable of syncing your inventory across all sales channels and fulfillment centers. When you update your inventory, it should reflect in real-time or at most within fifteen minutes.

Order routing and automation

The app you want to choose should automatically route orders to the nearest fulfillment center to save on shipping costs. The order routing will be based on inventory availability across fulfillment centers, destination zip code, and delivery date. Your inventory management app should direct the order to the warehouse that will guarantee cost-effective and timely delivery.

Inventory control features

You want an app that allows you to adjust the number of units on your listings across channels. The inventory adjustments should reflect in real-time to prevent overselling or processing the payment for an order you cannot fulfill.

Comprehensive analytics and reporting

You should be able to generate real-time data about stock level, inventory turnover, sales margins, profitability, etc., from your inventory management app. All these metrics can guide your purchase decisions and help you satisfy your customers better.

Shared inventory across listings for the same product

The ideal app should be capable of tracking inventory across multiple listings for the same product. This is one of the shortcomings of the native Shopify app as it cannot effectively manage multiple inventory listings that rely on one source.

Automated inventory replenishment

Your inventory management system should be able to generate purchase orders once you have low stock levels automatically. Furthermore, it should recommend order quantities based on previous sales data. These capabilities will significantly streamline your stock replenishment process.

Locked Inventory

If you offer special promotions or pre-order sales, you may want to prevent the items from showing on listings. However, you’d still want them to show on your total inventory since you’ll be processing pre-orders and promotional sales orders. The best Shopify inventory management apps have features for locking such products.

Cross-channel capabilities

As mentioned earlier, brands that sell across multiple channels will benefit significantly from having a bird’s eye view of their inventory and sales data across each channel. For example, they should know how each SKU is shared across listings, the quantities of inventory in each warehouse at any given time, the amounts appearing on the listings across each channel, etc. Not all inventory management software can provide these vital pieces of information as desired.

How ShipHero makes inventory management easy on Shopify

If you’ve been looking for an all-encompassing Shopify inventory management app that allows you to expediently fulfill orders and manage inventory while still giving you the best shipping rates, ShipHero is here for you. We already serve more than 4,000 ecommerce brands and third-party logistics (3PL) companies, and you’ll no doubt enjoy our superior Shopify inventory management capabilities. Below are a few advantages of ShipHero over its competitors:

All-in-one inventory tracking

With ShipHero, inventory management doesn’t stop at knowing what’s left in your warehouse or fulfillment center. Our all-in-one inventory tracking feature gives you limitless capabilities, including but not limited to tracking a product’s shelf life, tracking movement across warehouses, monitoring sales data across each sales channel, figuring out the best shipping routes, and even providing customer experience insights. 

These features allow you to truly monitor inventory movement in and out of your fulfillment centers while ensuring you give your customers the best possible shopping experience.

Easy to set up Shopify integration

ShipHero is available on the Shopify App Store, and it seamlessly integrates with all the essential Shopify features. For example, the app easily connects with Shopify POS and allows you to swiftly and securely process customer orders as they come in. Beyond Shopify native apps, ShipHero also boasts numerous integrations that make it easy to connect shipping carriers, other ecommerce platforms such as WooCommerce, and other essential business software like QuickBooks Commerce.

And it still doesn’t end there. ShipHero further boasts over 20 partners that provide systems expertise and integrations to help you get more out of the app. FedEx, Hermes, LaserShip, DHL, USPS, WooCommerce, Walmart, and Tradegecko are just some of ShipHero’s illustrious partners.

Inventory reorder alerts

As already emphasized, the ideal inventory management app should be capable of automatically reordering inventory based on your sales records. ShipHero also ticks this box, and it can significantly streamline your stock replenishment process while helping your in-house buyers make better decisions.

Also, since the app can multi-channel integrations, it monitors your stock level across all the warehouses and factors in your sales data across each sales channel before placing the order. So, you can rest assured it’ll suggest just the correct quantity you need to satisfy all your customers and not just your customers on Shopify.


The native Shopify inventory management app can satisfy your needs if you only sell a few items on Shopify. However, when you start exploring other channels and expanding your SKU library, the app’s limitations become more glaring. You’ll have to manually input SKUs into individual listings and update your stock levels. Doing this is akin to going back to managing stock using excel spreadsheets, and there’s no doubt your stock managers can make better use of their time.

Thankfully, ShipHero, an all-encompassing inventory management software that integrates seamlessly with Shopify, is here to cover all of your inventory management needs. The software possesses the much-desired multi-channel inventory management capabilities to streamline your inventory management tasks and improve operational efficiency. What’s more? You’ll be incurring significant cost savings while leaving your customers pleasantly satisfied, just the attributes you need to stay ahead of the competition.

Get started with ShipHero today by clicking the button below.

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