Sellers Must Know About These Various Types of Inventories!
In the glorifying eCommerce industry, there are various factors that a seller must take into consideration. Inventory is one of the crucial factors of this evolving industry. If you want to make your business successful, you must know the importance of inventory in the eCommerce business. You need to understand the fact that without knowing about this crucial aspect of online business, you can not serve your customers well.
Apart from managing your inventories accurately, you must also know about the various types of inventories. There are so many diversified types of inventories that you may come across as an eCommerce seller while controlling or handling your business. All these are essential to understand in terms of implementing an effective and efficient inventory management system.
Restricting the overstock and down stock, reconciling the inventory-related issues, and managing it on multiple channels are various terms that you need to take care of. However, it is not an easy task, and you can do it without automation. An inventory management software like eVanik OWS can help you with it in an effective manner. In this blog, we are going to mention some of the various types of inventories that you must know.
Five Essential Types of Inventories in eCommerce Business
Raw Materials Inventory
Raw materials that you may soon turn into your inventories are considered a type of inventory in the eCommerce industry. Such inventories are basically small pieces, parts, and trash of products that are currently in your stock and soon may get converted into a product and become part of your inventory. You must know that there are two specific types of raw materials: direct and indirect.
Direct materials are used in finished goods; this type of inventory is usually present in a seller’s or manufacturer’s stock and available for the customers to purchase. Direct materials can be leather that can be used to make wallets, belts, shoes, etc. Indirect raw materials might be batteries, lightbulbs, etc. Indirect raw material inventories refer to all those items that have been used during the production process of any specific product category.
WIP (Work-in-Progress) Inventory
WIP inventory refers to materials that an eCommerce business needs to mobilize first and then assemble those products to get sold on various eCommerce platforms. This type of inventory also includes the price of raw materials and labor costs if required. For a better understanding, we can say that WIP inventories include such products that are unfinished and still require to go through the final finishing process. It refers to the various number of unfinished items that are currently available in your stock. The best example of WIP inventory is selling coffee online; it includes refining the coffee beans, putting them into jars, and then shipping them to valuable customers.
A wedding dress can also be an example of work-in-progress inventory as eCommerce retailers need to give them a final touch before delivering it to their customers. However, too much WIP inventory can put you in a situation where you must wait a bit longer to initiate a sale and generate revenue. On the other hand, this type of inventory also increases the risk of materials being misplaced, lost, damaged, or expired before getting assembled. However, you can get rid of these challenges by implementing the inventory reconciliation process with the help of automated software.
Finished Goods Inventory
Finished goods inventory is the essential type of inventory that you have listed on various eCommerce platforms to sell your products efficiently. The name defines it well, finished goods inventory is considered as the total number of products available in your stock to fulfill the demand of your customers. Let’s make it simple; any product ready to be sold on multiple platforms falls under this type of inventory. Finished goods are various products that have been manufactured by a seller or purchased by them from a third-party supplier or manufacturer.
However, handling the finished goods can be challenging, especially when you are a multi-channel seller. However, inventory management software such as eVanik OWS can help you manage the inventory on multiple eCommerce platforms by automatically adjusting them. Such software also provides you with an accurate inventory report as well.
MRO Goods Inventory
MRO refers to maintenance, repair, and operating supplies; it includes items that may be useful in a production process but are not integrated into the finished products, unlike raw materials inventories. These types of inventories have been used in assembling a product but have not been used to create a product. For example, maintenance and repair supplies such as light bulbs, motors, gears, and fluids are considered MRO goods inventory.
Apart from that, safety equipment such as respirators, face shields, masks, and office supplies products such as furniture, paper, and pens fall under the category of MRO goods inventory. MRO inventories are not for the customers but for the sellers or eCommerce businesses that they actually use to produce genuine products and later sell them on various online marketplaces.
Packaging Material Inventories
This type of inventory can be anything that eCommerce sellers and businesses use for packaging a product to keep them safe in storage and while in transit. Packaging material inventory is essential for online sellers if they handle the packaging and shipping part. Several products, such as packaging boxes, bubble wrap, tapes, and padding, are known as packaging material inventories.
However, eCommerce sellers don’t understand the importance of packaging material inventories and may not feel it necessary to store them. You must maintain such items on a regular basis because you may need them every time while packaging a product. Thus, it is also necessary to keep them in stock because good packaging impacts customers. Believe it or not but good packaging is also an essential part of the eCommerce business, and one must take care of it.
Thus, now you must have developed an idea about the various types of inventories involved with your eCommerce business. Along with the management of listed inventories, you should also consider the other types of inventories. If you miss out on others, you might miss out on managing the listed inventories at various eCommerce platforms as well. Poor inventory management can lead you to make your customer unhappy, and it may diminish your credibility in the market as well.
However, you can take help from inventory management software to manage it well. It can automatically adjust the inventories on multiple eCommerce platforms and send you an accurate report to escape the situation of overstocking and outages. In this way, you can keep an eye on all your inventories that are ready to sell and that you require stock for the production part.
Always remember that organizing inventories on spreadsheets is not going to help you in this digital era. That is why an automated and centralized inventory management system is the need of the hour, and you must attain one.