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Selecting a cloud inventory solution for an ecommerce business

Posted 2 years ago in Tech by Scott Scharf
Posted by Scott Scharf

A cloud inventory solution is one of the most important tools for an ecommerce business. Cloud inventory is the core of your operations, providing the infrastructure and technology needed to manage goods. There are many great cloud solutions which integrate with multiple marketplaces, shopping carts, and accounting platforms.

Unless you only sell digital things or services, you need a cloud inventory solution to get the best out of your business.

Epic beer

A cloud inventory solution will help you manage stock.

Benefits of cloud inventory

Ecommerce is in the cloud; your inventory solution should be in the cloud. Cloud inventory provides a range of benefits:

  • Productivity – a cloud inventory solution provides a structured workflow for ordering, receiving, and shipping. Supporting operational tasks this way helps your business run efficiently whether you’re a solo owner or have a team.
  • Multi-channel support – if you are selling on multiple channels (such as Amazon, eBay, and Shopify), the core value is that the inventory quantities are updated automatically  across all channels. If you have 100 widgets and sell 20 on one channel, a cloud inventory solution updates all the other channels with the remaining 80 quantity. This means you don’t sell products you don’t have in stock.
  • Analytics – cloud inventory stores all your sales data whether it’s from a single shopping cart or multiple channels. This gives you key metrics such as profitability per product, best/worst selling products, ordering guidance (reorder levels and sales velocity information), and consolidated sales.
  • Accounting integration – cloud inventory systems have access to all the sales order data, inventory costs, and costs of goods sold. This is key financial information needed to manage your business and can be pushed into cloud accounting software (like Xero).

Cloud inventory features

Key features – these are the key features you should expect from any inventory solution:

  • Integration with shopping carts and marketplaces
  • Inventory management
  • Purchase orders
  • Shipping integration
  • Integration with accounting platforms
  • Detailed accounting data – sales, cost of goods sold, and inventory costs

Optional features – these are the features that might be key to your business but are not included in every cloud inventory solution:

  • Point of Sale (POS) support
  • Kitting or bundling
  • Drop shipping support
  • Light manufacturing – support for turning materials into products
  • Electronic Data Interchange (EDI) support for business-to-business (B2B) orders and third-party logistics (3PL) warehouse integration

How to choose the right cloud inventory solution

There are a lot of cloud inventory options out there, so it’s important to do your due diligence when choosing the right solution for your business. Here are some of the critical questions to ask:

  • Does it have all the core and optional features you need (eg, multi-channel, drop ship, point of sale)?
  • Does it integrate with your marketplaces and shopping carts?
  • Does the investment make sense for your budget?
  • Do they support your target market, eg, do they have other customers in your space, whether that’s apparel, food products, light manufacturing, general products or something else?
  • When you contact the provider are they responsive?
  • Do they support your timezone? There are some great products internationally but not all have support hours that match your work.

Sampling of cloud inventory solutions

All of these offer Xero integration.

Multi-channel: TradeGeckoDear SystemsSkuBanaStitchlabsVeeqoUnleashed

Drop shipping: DuoPlane

Light manufacturing: Dear SystemsUnleashed

Amazon only: A2Xaccounting

Getting the right cloud inventory solution in place is a great step forward for your business. Once you optimize your ordering, receiving, and inventory, you can focus on growth and reaching scale.

Scott CC 2Scott Scharf is a thought leader, speaker, and blogger in the accounting technology industry and the co-founder and Chief Ecommerce Geek for Catching Clouds LLC. Scott has over 30 years of IT experience providing consulting and solutions for large multinationals and small businesses alike. He is an expert in ecommerce and cloud accounting technologies.

4 comments

Clayton Oates
May 21, 2015 at 1.28 am

G’day Scott

Great article, simple yet super informative, I especially like the way you have specified vendors that satisfy specific facets within the Inventory Management world.

You also touched on POS, I am wondering if you are able to expand some more on what you think should be considered when bringing POS into the Accounting and Inventory Mix. Traditionally some POS systems have tried to almost own inventory management. How do you see this playing out in the Cloud world where POS is still needed for the physical in-store sales with a link to the Accounting engine and also back to the Inventory solution? Or is this perhaps another topic that you are already working on 🙂

Cheers

Clayton

Scott Scharf
May 23, 2015 at 5.26 am

Clayton,
Thank you. I am glad this article was helpful. I am a big believer in providing as much helpful advice as possible and saving people time. Xero really is a great solution for ecommerce businesses with the support of the strong ecosystem.

I will write a follow up blog on POS options for ecommerce businesses.

See you at Xerocon Denver?
Take care,
Scott

Joshua Barneck
August 19, 2016 at 4.26 am

Funny you should mention drop ship, as this is a feature that Xero DOES NOT SUPPORT!!!!!! Since Xero does not support it, almost no inventory software supports it either. Xero has more than enough votes, requests, and business case logic to support this feature. Get it done!

Jay Gowell
March 23, 2017 at 9.30 pm

I recently read about some information about inventory management tools. It more interesting, if you’re planning is control all process without difficulty. Try Appositive, this tool contains inventory, order management, purchase order, suppliers apps and items management.

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