Inaccurate reporting (or lack of reporting altogether) is a huge challenge for many online sellers, so if this is something that you struggle with, you’re certainly not alone. The good news is that done correctly, effective eCommerce reporting can help you maximise the growth of your business, increase efficiency and drive down costs.
We recently outlined four eCommerce metrics that you should be reporting on for your business, and to help you better understand your opportunities and limitations, we have highlighted some additional inventory metrics that are also worth monitoring.
With the industry continually evolving and competition getting fiercer, your eCommerce analytics are no longer nice-to-know data, instead they provide crucial insight that is required to move your business forward.
Below, we have outlined three insights you should be obtaining, particularly if you are selling across multiple different selling channels:
The best way to maximise the profitability of your inventory is simply by monitoring your inventory performance.
Let's face it, as your business expands and you begin to sell across multiple channels, having an idea of metrics such as inventory turnover and product demand can help you to identify your most profitable product lines, as well as the areas that are costing your business and your opportunities for growth.
All in all, there are a number of different things you can, and probably should, analyse when reporting on your inventory. These include:
- Your top ordered products – By looking at which products are your best sellers, it will help you better optimise inventory management. This insight holds the key to growing your business.
- Your highest earning products – Similarly, your highest earning products can help you understand where you’re getting the most value.
- Your least successful products – It also helps to determine why this might be. For example, do these products perform better at certain times of the year? Do they perform better in certain markets or on certain channels? Is this excess stock costing you valuable warehouse space?
- Inventory churn - How often are your products sold and replaced during a certain time period? By analysing inventory churn, you can better forecast where you will need to reinvest cash in the coming months and identify underperforming products and channels.
- Total number of sales per product – Use this insight to identify trends, while also generating an understanding of which items sell best at different times of the year. This can allow you to target your promotions and offers to increase sales.
Regardless of which inventory reporting metric you are analysing, the important thing to keep in mind is that you should compare your inventory performance over a period of time. It’s also worth analysing this data without spikes/anomalies in sales, as this can otherwise provide an inaccurate representation of sales history.
For this reason, it is extremely beneficial to use a reporting tool that enables you to monitor stock performance over specific time periods. With dozens of customisation and viewing options available, a multi-channel eCommerce system such as Linnworks can provide you with a detailed look at the performance of your inventory.
Being able to anticipate stock demand can make a huge difference to the efficiency and overall success of your business. By forecasting your projected sales, you can align your stock with the anticipated demand throughout the year.
In other words, you can ensure you don’t have unnecessary excess stock during the times when demand for the individual product is low, but be ready with enough stock for expected peaks in demand.
This will specifically allow you to maintain your safety stock levels, which should essentially be high enough to cover both your suppliers’ transit times and customer demand. On the other hand it should be low enough to avoid costing your business money due to the high carrying costs.
A great way to overcome this is by determining re-order points. Once you have defined a minimum safety stock level, an inventory management system such as Linnworks can automatically re-order inventory. While it may be feasible to handle this manually when selling few product lines, as you scale your business this can become incredibly complex and result in human error such as overselling and dealing with disappointed customers.
A system of this kind can also allow you to view and analyse historical data, which will help you identify customer buying patterns. This insight is integral to be able to effectively forecast supply and demand.
Best and worst performing channels
While it’s incredibly important to report on the performance of your inventory, by drilling down on which sales channels are proving to be the most and least successful, both overall and for specific products, you will be able to make smarter business decisions.
Ultimately, you will be able to improve your multi-channel eCommerce strategy. For example, you may identify that certain product types perform better on certain channels, or within certain markets, which can help you optimise your inventory management and focus your promotional efforts.
Accurate eCommerce reporting does in fact rely on multi-channel software with extensive reporting functionality. By using a system that collates all of your inventory and order information, you will be able to obtain a more reliable comparison of your data.
Obtaining actionable insights
Metrics are great, but the insights they provide are even better.
Let’s take top ordered products as an example – you’ve identified your most successful product lines, but how can you use this data to get more from your business?
To start with, this data allows you to implement a more accurate order point quantity for each product line, which ultimately enables you to reduce the occurance of both overselling and over-purchasing, while also helping to increase efficiency, minimise risk and cut spending.
Why not go one step further and assess whether you have seen success in other markets with similar products? Or conduct some research to determine whether this product is in high demand in other countries and on alternative marketplaces.
Now take a look at your least successful products. Before you disregard them altogether, ask yourself whether they’re getting enough visibility? If it’s a case of seasonal demand, perhaps they could perform well in a different market.
Another area to look at is excess stock. You might benefit from liquidating this stock, which not only frees up valuable warehouse space, but also improves cash flow.
The ability to anticipate stock demand is also incredibly valuable and can even help you to determine your pricing. By digging deeper and looking at stock demand in different markets, you might also benefit from setting different prices for the same product. For example, it may be justifiable to charge a premium if the demand is high and additional research confirms that competition is low in that market.
The bottom line is there are tons of insights that can be drawn from your eCommerce analytics. While the metrics outlined above provide an overview of some of the areas worth reporting on, you may find yourself needing to retrieve data that is even more specific to your business.
With Linnworks custom reporting functionality, you will be able to access various pre-defined reports, and even obtain more comprehensive insights by requesting a custom query.
What reports are important to you? We'd love to hear which metrics you are reporting on for your online business, so please do drop us a comment below.