As a business owner, you might have asked yourself many times about inventory. As simple as it may sound, displaying merchandise on your online store is a tricky task.
How much inventory do I display on my website?
Naturally, most consumers would think that all available products would be displayed. However, that is not the case. Someone once told me that if they were looking to go back to school and get their Ph.D., they would call their thesis “The Dangers of Transparently Displaying Our Inventory”.
Incredibly, this is a common issue that most online store owners need to tackle. Inventory exposure comes up in many conversations regardless of whether it's a 20 person company that does $10 million of sales a year or a billion-dollar company with thousands of employees. Every operations manager, shipping manager, warehouse manager, customer service member, and sales team member have the same three concerns:
1. Is my inventory correct?
2. Can I safely show them how many I have available to ship right now?
3. My inventory is correct, but what happens if there is a lag in processing web orders while internal order processing is going on simultaneously?
In thinking about our customer base, we see three common ways or options to approach inventory exposure on the website.
Option 1: Using Words Rather Than Numbers
The more popular choice is not to show any numbers and instead list products as In Stock or Out of Stock. Behind the scenes, we have a logic structure that helps dictate what those statues mean. Zero Stock is a term that should not exist in the world of eCommerce. It is pretty standard to apply some logic before an ERP system has allocations that exceed stock on hand. For example, if you have ten items available, you may make a business decision to label that product Out of Stock. Or, if you have 50 items available, you may make a business decision to label that product Limited Inventory. Using words instead of numbers can help you positively show low levels of inventory. We typically accompany this method with rounding logic that would reduce the existing inventory account by some factor. A common request is to show 90% of the inventory to drive that text display to always have some in reserve. Over half our customers use this or a variation of this method.
Other factors can complicate any method as well. A percentage of our customers have multiple physical warehouses that each carry similar inventory. Some have a warehouse on the West Coast and one on the East Coast; some customers have ten warehouses. Others use 3PL’s around the country to fulfill orders, including Amazon (FBA). The ERP system will show each warehouse and stock level. Now you have another decision; do I display my inventory by warehouse as well? Nomad can support this option. As a Nomad customer, we can give you a display on your product pages, search results, and product listings by multiple warehouses, and we can break down the stocking status of each item by warehouse. We actually can do that in the background autonomously based on the type of customer they are, as some companies designate customers to be fulfilled by specific warehouses.
Option 2: Number Display
The second option is to display a number, in addition to some sort of text display. We might say something like In Stock - 100 items. Similar to Option 1, when you have multiple warehouses, this becomes another business decision that customers have to make. Do you offer customers your total accumulated warehouse count for each item? It's not uncommon for customers to have shipment arrangements to make in-transit shipments between warehouses to fulfill an order from one shipper. Customers can also split shipments for each warehouse and receive a different order for the appropriate amount of inventory sent from each warehouse. They might decide to simplify it for their customers even though they have ten warehouses containing Item A. They just have us give an accumulated total, and the customer can buy up to that amount. The most common business view we see with Option 2 is a requirement from operations to prevent a situation with a customer that sees you have 300 of Item D available, place an order for three hundred when in reality you only have 200 or 250 that can be shipped. The best way to address that concern is to have a sound logic rule on what percentage of inventory to expose. It tends to be a percentage of items available based upon a tiered calculation. That is, if you had more than 100 in stock unallocated in your system on hand, you might have us show 90 percent of the inventory available. But as we decrease inventory by specific amounts, these percentages decrease. If you ended up only having ten in stock, you might have a show of only 10 - 20%. You can build as many tiers as you see fit.
Option 3: Combination
The third option to address inventory display is a combination of factors, including your ability to source additional products. Customers choose to display the inventory for specific items that they either can quickly produce or dropship. We have the unique feature to decide how you'd like to display inventory by item with Nomad. For some of your items that you're fulfilling directly or the orders with drop-ship capabilities, you know you'll ship all the time; you can show a stock quantity amount or show In Stock status and not have any logic to hold back a certain amount. For other items, you may not want to show anything at all, which is that we just don't report stock quantities. These types of requests are becoming more frequent as we see how unpredictable supply chains have been lately.
Remember, inventory display is not an issue that arose with eCommerce. It's a problem customers had before but had not thought much about. Suppose multiple Sales or Customer Service Reps are entering orders at the same time that exceed inventory on hand. In that case, they could both collide and end up having only one of the orders get allocated and sent through for fulfillment.
As you can see, Nomad can provide options. Your best bet is to sit with our team and discuss the different scenarios that accurately represent your situation. We have the flexibility to adapt our solution to your needs.