How can outsourcing inventory management be beneficial for a webshop?

In the era of online shopping, we see many physical stores close down and move their business online. These past years, with the booming of online shopping, we see a great increased the number of webshops.
When moving a business from physical store to E-commerce, or when starting a brand new webshop, we can save money on facilities for a physical store, but still need facilities to keep inventory.

This blogpost will focus mainly on the options and benefits from outsourcing inventory management for webshops.

What is inventory management?

A lot of time and money is put into inventory management, and with the many daily tasks this includes, it becomes a great part of the supply chain and value chain.

Inventory management is everything from inbound- to outbound logistics. Let’s do a walkthrough of a classic setup.

  1. Transportation of products from production to warehouse
  2. Stocking the products with overview and easy access
  3. Receiving order of stocked products
  4. Pick and pack of the order
  5. Send order out to customer
  6. Handling of aftersales/returns

These are the basic steps of the daily tasks in connection with inventory management. It is important to maintain order and flow, as well as quality of the process.

How can a webshop benefit from outsourcing inventory management?

Overall efficiency

When outsourcing inventory management, webshop owners and staff can focus on their core competencies. – Hereby become more efficient in marketing, sales and other areas. More time to focus on core competencies, allows the webshop to become more competitive and strengthen brand and awareness.

Free up resources 

The first obvious resource we get to free up, after outsourcing inventory management, is time. With no time needed for picking and packing orders, we also save time on managing the staff for these tasks.
We also free up some capital by reducing sourcing and shortage issues. Furthermore, we get to trim management administration costs.

Save inventory space

When outsourcing inventory management, we free up a lot of existing space, or avoid the pressure of investing in additional facilities or building.
This extra space can be extremely beneficial, as you not only save money on facilities, but free up space for R&D, manufacturing, better environment for employees, and better chances of growing the business with additional employees and teams. 

Time and money

Become more demand driven by avoiding excess inventory. Developing an inventory management partner that uses inventory controls built into their processes provides a variety of benefits.
We already determined the possibility of saving time, but we can also assure lower minimums as well as the benefit of only paying for parts as needed.
Here are some of the cost benefits from outsourcing inventory management:

  1. Lowering purchasing costs because of economies of scale.
  2. Eliminating or minimizing commitments to larger inventories.
  3. Removing the necessity of placing large order minimums.
  4. Reducing the costs associated with carrying unused inventory

Dealing with specialists

Last but not least, it is important to keep in mind that when outsourcing inventory management, we are dealing with specialists. Just like we get to focus on our core competencies, the inventory management partner will do the same. These are highly professionals within the field of transportation and logistics. With they own distribution partners, they can easily assure day-to-day delivery and minimize cost and faults in connection to this area.

Example case

There are many options for managing inventory. Depending on what type of products the webshop is selling, different methods may be preferable. For this article we will use Sokkeposten and Lagerhotel24 as an example.

Lagerhotel24 is a distribution center for outsourcing inventory management.
Sokkeposten.dk is a webshop selling socks online.

For this case, the distribution center will manage all inventory, from inbound- to outbound logistics.
We will go through the process step-by-step.

  1. First, the webshop orders inventory from production. This is sent directly to the warehouse of the distribution center.
  2. Next, the distribution center registers the inbound products and stock them.
  3. A customer places an order on the webshop. This order goes directly to the distribution center, as the webshop and distribution partners’ platforms are integrated.
  4. The distribution center picks and packs the order and sends it same day.
  5. Customer is automatically notified with track&trace and shipping conformation.
  6. Customer receives order.
  7. In case of returning order, customer will return to the distribution center.
  8. Distribution center receives, inspect and handles the returned goods.

This is a great case for a company like Sokkeposten, as they save a lot of time, yet still keep the control. They also assure quality of the inventory management as they use professionals to handle this task. This means same-day delivery, trusted transportation partners and highly protected warehouse with 24/7 surveillance. 

Depending on the size of a webshop and the products, some might have employees packing orders all day long. Some days might be busier than others, which can make this task difficult and time-consuming. With a “Warehouse Hotel”, you get the extra hands on for the busy days, and avoid the possibility of orders not making the day-to-day delivery.

Inventory Management with PrestaShop

Inventory Management is a question of cost and ease. It is important to assess the cost of management the stock vs the cost of letting a company managing the stock for you. If you are one of those who manages the stock yourself, then there is still a plethora of options to make the stock management easier.

For the webshop owners who wish to handle inventory management in-house, PrestaShop offers a large variety of addons. These addons can make it easier to handle stock and orders.

See all the inventory management addons here.

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