4 Shopify Inventory Management Tips to Follow in 2022

Shopify inventory management

The supply chain is a crucial part of every business’s operational function that has a long-term impact on profitability. This includes managing business inventory like raw materials, end products, work in progress, and Maintenance, Repair, and Operations (MRO) supplies. Effective control of the flow of these products in and out of your business comes with myriad benefits. 

For instance, you can reduce operational costs as you eliminate unnecessary spending on the commodities not required. This increases the available cash flow in your business, and you can channel the free capital into other income-generating activities. Also, as a business owner, you’d want an inventory system that provides room for growth in the future. In that case, here are five ways to create a Shopify scalable inventory management system:

Invest in the right inventory management software

With the advent of technology, gone are the days of using laborious and time-consuming traditional inventory management methods. As an entrepreneur, you can now rely on inventory management software to track your business inventory at all phases. According to market statistics, it was estimated that businesses using an inventory management system improve inventory efficiency by approximately 30% and experience increased productivity of about 25%.

Particularly, Shopify inventory management allows in-depth monitoring of the current products in your e-commerce store. It provides real-time metrics on the inventory amounts conducive for continuous operations or when to take advantage of increased demand. However, note that some inventory programs can come with excessive capabilities or features that your business may not need. Therefore, to avoid paying extra, you may want to invest in software compatible with your current needs so you can upgrade its functionality as you expand.

Here are some more benefits of using inventory management software

  • It optimizes operations, preventing human approaches’ miscounts or data entry errors.
  • It provides a central database to keep all your records, budget for inventory, and generate data-informed reports.
  • It eliminates the need to hire staff to perform repetitive tasks.
  • You can easily detect external threats such as theft and take the necessary precautions to prevent losses.
  • Other packages integrate purchase management elements allowing you to connect with your vendors and initiate and complete your inventory orders.
  • Facilitates management of multiple sales through instant processing and fulfillment of orders.

Overall, an automated inventory system ensures seamless stock management and fulfillment of customer demands. This way, your business remains competitive in the fast-paced market full of established providers.

Use data analytics to make sale projections

Sale projections can help determine how quickly you can sell the current stock and when you’ll require the next batch. For that reason, investing in an inventory management system that incorporates real-time data analytics for instant sales forecasting is best. With these market insights, you can scale your stock levels up or down at the appropriate time and prevent overstocking or understocking.   

For instance, you can analyze your historical sales to gauge future customer behavior. If you’ve been moving around 1,000 items each month, you’ll likely require approximately 1,000 products monthly.

Also, you’d want to keep an eye on other factors influencing consumer demand. That includes:

  • Seasonality: During the peak seasons, like the Christmas festivities or other important holidays, consumers tend to buy more to fund their celebrations.
  • Economic crisis: For instance, during the pandemic, there was a high decline in purchasing goods and services due to the demanding living conditions.

Therefore, to do this, ensure your analytic approaches provide a broader view of the whole industry for detailed information and accurate predictions. It should allow you to assess the patterns throughout the year to determine market changes and the inventory adjustments required to satisfy your customer’s needs.


Set par levels

Inventory par, also known as safety stock, is the minimum amount of inventory you should have on hand regularly. When the inventory levels are below the predetermined par level, it’s the right time to order more to ensure consistency. Nevertheless, some entrepreneurs tend to maintain too much inventory due to the fear of being caught short of stock. This comes with high risks as it’s susceptible to damage or depreciation, resulting in losses. Others are forced to sell the products at a throw-away price or ship them overseas to minimize wastage. Also, extra inventory requires storage, so you may incur high warehousing costs to manage the bulk.

Therefore, as an entrepreneur, setting appropriate par levels ensures your source and keep what you only require. Integrating this tactic into your inventory management system is vital, especially for perishable items that can go bad within short periods. For small businesses or startups still looking to grow their customer base, it’s best to maintain low safety stock levels that make sense in the meantime. You can adjust them as you evolve and attract more buyers.

Also, note that the par levels set might vary per product because there are fast and slow-moving products. For that reason, always keep an eye on the fastest selling items for reordering to prevent shortages and ensure optimum customer satisfaction.

Have a contingency plan

As your business expands, you might face many inventory management risks that can negatively hurt your venture. To prevent this, it’s best to determine your potential risks and develop efficient strategies to mitigate them. Some of the risks include:

  • Disruptions in the transportation of raw materials due to natural calamities
  • An unanticipated discontinued supply of products by your vendor
  • Miscounts on the amounts of inventory available
  • Inadequate warehouse space for storage
  • Cash flow shortfall to cater for reorders

These issues may arise anytime during the business, and you’d not want to be caught unprepared. Therefore, you may want to create an inventory system that provides solutions to potential problems. For instance, it should offer alternative ways to manage any defective or unwanted goods returned by consumers or foster strategic partnerships with your suppliers.


All businesses managing any form of inventory require an efficient inventory system that they can scale with. Therefore, consider choosing the right Shipping Solution to automate inventory management, using inventory data analytics for predictions, setting optimal par levels, and preparing a contingency plan. Remember, a well-stocked business translates to value to the consumers, provides a good reputation, and a competitive edge. All these sets you up for success in the long run.