“What gets measured gets managed,” Management Consultant Peter Drucker once famously said.
And it thus comes as no surprise that keeping an eye on real-time sales and inventory reports based on accurate data is tremendously important when running an e-Commerce store, in order to make the best decisions to grow and develop your business further.
But here’s the good news – it’s never been easier to have these dashboards for timely, real-time intelligence at your fingertips.
SHIFTING FROM GUT-BASED TO EMPIRICAL DECISIONS THROUGH TECHNOLOGY
A wide range of technology to help managers shift from making gut-based decisions to empirical ones based off data, statistics and analysis is readily available today – from e-Commerce platform-building tools like Shopify, to accounting solutions or even inventory management software.
By automatically synchronizing data through communication with each other, savvy use of these cloud-based solutions will significantly reduce the room for manual mistakes, offering real-time visibility over stock levels, sales, costs and profits.
It should thus never be ‘too early’ for any e-Commerce business to adopt these cloud-based technologies and build upon a solid foundation for continued success, as contrary to popular belief – spreadsheets are not a viable long-term solution to keep track of goods and money coming in and going out, especially when numbers and stock exponentially rise over time.
So don’t allow for these human errors and the possibility of forming bad inventory management habits to creep in. Misleading information can only harm your business, and should therefore be avoided as much as possible.
A well-integrated system of cloud-based solutions will allow you to make those well-informed empirical decisions in a timely fashion.
KNOWING ALL THE ASPECTS OF THE E-COMMERCE SUCCESS EQUATION
As tempting as it may seem, relying only on sales reports to ascertain the health of your e-Commerce business can be extremely misleading as well. Yes, cash is king – but when it comes to the supply chain, inventory management is the queen.
Sales figures alone are not enough to make well-informed business decisions. Additional aspects such as inventory turnaround, stock on hand, incoming stock, moving average costs, safety stock and reorder points play a crucially important role too.
For example, the speed at which stock is being converted into money (inventory turnaround) is a much more influential element for e-commerce business success than actual revenue per month. Even if some items are successful cash-cows, having other items that remain forgotten (and unwanted) in the warehouse is having locked-up capital which is not being invested further.
Another vital element would be the importance of accurately calculating safety stock levels and reorder points, for avoiding out-of-stock situations when your business is unable to bring in revenue from customers that are actually willing to pay, simply because it cannot fulfil the orders.
Sales reports can tell you what is going well – but not what had the potential to do well. Keeping an eye on a varied range of health indications for the flow of goods and money is thus undoubtedly a smarter approach.
Last but not least, the profitability of your business absolutely has to be the key factor in deciding if it is ultimately worth continuing on with your e-Commerce shop, or if something has to change.
This is especially crucial when dealing with multiple suppliers and products. And in order to calculate this, we would recommend choosing only one of the following methods to calculate profits – margins, or markups, and to not mix them.
SPOTTING TOP PERFORMERS
Big picture metrics are great, but metrics split by channels, locations, customers, products and team members can all provide extremely useful insights as well. In fact, these in-depth reports could be the best indicator of which channels or products might be the best to invest more in, or similarly provide you with insights as to what might need to be removed.
With multi-channel sales increasingly getting trendier in the supply chain world, having real-time access to sales reports by channel, or inventory reports by location can greatly help managers make quick decisions on where to invest more effort in, and also how to adjust the stocks and resources for a statistically-greater chance at success.
By using an integrated cloud system that syncs sales on all channels with inventory movements and accounting records, all these reports are now available in a few clicks, no matter how granular they need to be and no matter how complex the business is.
BUSINESS INTELLIGENCE AS A COMPETITIVE ADVANTAGE
It goes without saying that e-Commerce competition is fiercer by the day, with new competitors sprouting up in your space seemingly overnight.
So do consider strong and early investment in savvy business intelligence, to ensure a solid understanding of the metrics that matter – not just for data reliability, but also for real-time reporting that allows for the fast, educated and informed decisions your business requires.
Whoever adapts the fastest to changes in market conditions, while empowering their business with the latest technology – will be the most likely to emerge triumphant in winning the hearts, minds and wallets of customers.
It’ll go a long way towards helping you secure success for your e-Commerce business in the long run.
Adelina Peltea | From ecommercesos.sg