Without a full and varied inventory, your ecommerce store can never become a runaway hit. Customers want to see virtual shelves lined with hundreds of exciting items at affordable prices. Spending some time on building and maintaining your inventory will pay off in a big way. Proper inventory management is one of the keys to success in the world of ecommerce. There are five basic metrics that help you measure the health and flexibility of your stock. Add a few tools to help you measure each of these statistics and watch as your supply chain issues start to disappear.

Fulfillment Capabilities of Suppliers

Your true inventory doesn't just include the items you have in stock. You need to consider the restocking ability of your suppliers before committing to sell hundreds of items when they can only provide you with ten per month. TechCrunch recommends discussing these issues with your suppliers and requesting firm commitments from them. If you can't secure this kind of contract, make sure your customers are aware that your inventory could fluctuate. You will also need to invest in accurate tracking to ensure you aren't selling items that aren't in stock when the supply runs short.

Profit Margin

Many ecommerce sellers set up their prices based on their competition. This causes hundreds of businesses to fail within a few months of opening. You need to calculate a fair profit margin on each item when determining what your price point should be. Remember to subtract a percentage of your total operating margin in addition to the item's original cost. Even taxes and depreciation need to be removed from the profit on each item, according to JL Sears Consulting. Find a profit margin formula and calculate the real profit you are making during each sale. You may need to consider serious pricing or sourcing changes if your margins are too low.

Inventory Turnover

You need to track how quickly or slowly your inventory is moving out. The time that elapses between you ordering an item and selling it is the turnover rate. F. Curtis Barry & Company says that each ecommerce niche will have a different ideal turnover rate. If items are moving too slowly, you can use discounts or liquidation to free up your capital for different short-term purposes. Keeping an eye on your turnover rate also makes it easier to determine which promotions or marketing campaigns are the most successful.

Total Variation

Customers have come to expect a vast selection when they shop online. If you can offer a full range of different products, you can capture a wider audience and encourage repeat sales. Consider your total variety of different items when tracking your inventory, recommends RackSpace. You may want to add a few dozen new products to a niche that is selling particularly well on your website. Measuring the success of certain inventory sections could help you steer your business right into a prime niche. The flexibility of the ecommerce platform is one of its biggest benefits for retailers.

Productivity

Examining your inventory's productivity can help you notice small flaws or catches in your ecommerce process. JL Sears Consulting says that many companies discover ways to increase order size when they begin tracking the average number of items included in each purchase. Larger orders cost your company less in packaging and labor costs.

Ted Hosford has worked as a business software consultant for many years and enjoys sharing his knowledge through blogging. Visit Ordoro.com to find drop shipping software solutions.