In simple terms, “overstocking” is when you order and purchase more inventory than you can sell. By overstocking, you end up with an excess of stock that will ultimately take up warehouse space without being sold in the near future – which can negatively impact storage costs.
On the other hand, it’s possible to “under-stock”. This means that you do not have the inventory you need to fulfill customer orders – meaning your customers are likely to cancel their orders as they feel the indefinite wait times may be too long. From there, you risk losing your customers to competitors in order for them to purchase the product and receive it as soon as possible. This can end up damaging your company’s reputation and be seen as untrustworthy and unreliable.
Both overstocking and understocking are harmful to your e-commerce business.
How Businesses Overstock & The Solution
One of the main reasons businesses overstock inventory is to avoid stockouts. As stockouts prove to be quite expensive, many businesses try to distance themselves as much as possible and end up over-ordering inventory.
By having a reliable, advanced, and up-to-date WMS (warehouse management system), businesses will know exactly when to replenish their stock in a timely manner and place inventory reorders. It’s also possible to purchase additional stock (without overstocking) in case of unexpected surges in demand or any other disruptions that may occur in the supply chain.
Having a WMS at your disposal allows for full visibility and transparency into your stock, inventory levels, and volumes. Managing your stock will become less stressful and more natural when an advanced inventory software system is integrated with your e-commerce business.
Simple Global Can Help
With a 3PL like Simple Global, we provide our advanced WMS that will allow you to view insights and manage your inventory and operations in real-time. With full transparency, you’ll be well informed and equipped to make accurate judgments on your stock and inventory levels.
With Simple Global, you can also utilize our global network of fulfillment warehouse centers to store your inventory. Using multiple fulfillment centers allows you to fulfill your orders in a faster and more efficient manner and send them out to your customers across the globe. Our shipping methods will not only end up costing you less but will improve your entire business operation.
To learn more about how Simple Global can improve your e-commerce business, click the link here: Simple Global Benefits.
Conclusions
Overstocking, understocking, and complete stock outs can happen if you’re not prepared. With an advanced warehouse management software that can show you real-time inventory visibility, you’ll be well equipped to know when to reorder stock and when to potentially buy extra stock without risking an overstocking situation.
Simple Global can provide your e-commerce business with all the necessary tools and information you need in order to run a smooth and successful business – while scaling and expanding your operations!
