Does Shopify [.blue]keep track of inventory?[.blue] Everything you need to know

October 11, 2022

min read

With eCommerce now making up nearly 40% of total retail sales in the UK alone, it’s easy to see why businesses are attracted to Shopify’s no-fuss, low-cost approach to stepping onto the online shopping ladder. It’s a vast market that can be leveraged to bring in maximum profit.

For many, success is not only about what they are selling but how they manage costs and keep track of inventory. It’s no use having a great product if you’ve failed to monitor stock levels, or ended up with large volumes of inventory that you can’t shift because of a forecasting failure. So, what does Shopify have in place to help you manage your inventory and is it actually any good?

What is inventory tracking?

If you’re a seasoned seller, we’re sure you know what inventory management is all about. Inventory refers to the assets you hold stock of. This doesn’t only mean the actual product but includes raw materials or components that you might use to produce your final goods. Even dropshipping stores will need to keep a handle on inventory, which is where inventory management – or inventory tracking as it’s also referred to – comes in.

Inventory tracking is a system or process by which inventory is monitored and maintained so that a business can get a complete picture of what they have coming in and going out, and how they can use this information to make more profit. That’s inventory management in a nutshell but, of course, there’s a lot more to it.

The benefits of good inventory management

The most rudimentary inventory tools probably include a pen and a pad, or maybe a spreadsheet. This may well allow a basic overview of stock coming in versus going out, but it won’t take you very far if you want to seriously improve your cash flow. Using an in-depth inventory management tool provides several benefits, including:

  • Reducing overselling – Ensuring you have adequate stock for customers is priority number 1. A solid inventory system will help you forecast sales so you can make sure you have exactly what you need.
  • Minimising overstocks – Ending up with a surplus of stock can be incredibly costly. Not only do you have to store it but then possibly sell it at a loss just to get rid of it, which can also be damaging from an environmental perspective.
  • Managing batches and best before dates – For cosmetics, beauty or food products, being able to organise inventory and send out stock in good time is crucial to reducing overheads.
  • Enabling sales anywhere – One of the benefits of Shopify is being able to integrate with other platforms like Amazon or Etsy. Having an inventory tool that lets you manage all of your sites in one place is a huge time saver, whilst enabling you to follow an omnichannel selling strategy.
  • Automation – Whilst every business owner will set time aside for stock checking, receiving notifications automatically when stock is getting low will free up valuable time and stop lost sales.
  • Data capture – Inventory tracking will allow you to enter important information about your products, such as SKUs (stock keeping units), minimum order quantities, and lead times to make reorders quick and easy.

This level of visibility over stock and materials leaves you armed with absolutely everything you need to maximise sales opportunities and minimise risks. Even simple tasks like transferring stock from one place to another can be handled by an inventory management system, so you’re free to focus your efforts on other areas like marketing, product development, and customer satisfaction.

How does Shopify keep track of inventory?

Once you understand why inventory tracking is so important, you can consider if Shopify offers you enough. Shopify does keep track of inventory to a degree. In fact, Shopify offers three different levels of inventory management according to which Shopify plan you are on:

  • The basic Shopify plan starts at just $29 a month and allows you to assign and transfer stock between four different locations and manage your stock levels.
  • The Shopify plan gives you all of the above and includes an ABC analysis for $70 per month.
  • Advanced Shopify is the pinnacle of the plans and costs $299 a month. It gives you all of the standard features and allows tracking and transfers between eight separate locations.

The positive of using Shopify’s plans is that they sync up perfectly with your Shopify store and are already built in. This might sound helpful on paper, but the tracking tools available as part of your Shopify plan are on the more basic side. As mentioned at the start, the bonus of Shopify is how inexpensive it is. So, whilst it does offer some direction, it's best used for small businesses with just a few SKUs. If you want to get a grip on inventory management so you can level up your online shop, you’ll likely need something with more substance.

Does Shopify have an inventory tracking integration?

Shopify does have its own POS system that can be added to your plan. It’s designed to bridge online sales and in-person sales, and has inventory management built in too. To access the advanced features, you need to pay an extra $89 on top of your existing plan. The POS will advise which items could be marked down, let you create purchase orders, and get low stock reports. There is a 90-day limit though, so if you want to look at what sold well last year, you’re out of luck. This does make the Shopify POS a marginally better option than what you get with a standard plan. However, when you compare the features you get against the price you would pay for a much better third-party inventory integration, you could get a lot more for your money.

Why use a third-party inventory tracking tool?

Shopify has some solid basic features and, if you’re just starting out, it might be exactly what you need. Perhaps the main thing missing from Shopify’s inventory management is the option to track customer fulfilment. Around 80% of online shoppers are put off from buying if they don’t know when they will get their parcel. Offering customers total visibility on their purchase doesn’t just help them convert but keeps them coming back too.

In addition to this, capitalising on multi-channel selling opportunities gives you more places to sell, and having stock control across all platforms in one place makes it easier for eCommerce owners to do this. Shopify is limited on which platforms it shows stock information for. You might be able to see what’s been sold on Amazon, but if you also have an Etsy store, you’ll need a different way of balancing your inventory comings and goings. This might be more relevant to B2C sellers, but B2B companies might also find Shopify lacking somewhat. Shopify doesn’t have the option to customise B2B portals, which can be a huge advantage for wholesalers. Being able to set up bulk orders, regular repeats or even manage ownership at both ends can improve the B2B relationship for both parties.

Regardless of your industry, target customer or stock volumes, having a third-party take care of the entire inventory process for you removes the margin of error. Although Shopify does offer basic stock management and several plans, the responsibility is largely on you to make sure you’re on top of everything. You may need to manually organise any additional inventory requirements that Shopify doesn’t take care of and set your own alerts for stock taking. You’ll also have to pay to upgrade your plan, which could end up being more expensive than using a dedicated inventory tracking provider. Shopify’s primary function is to enable actual sales and it does this very well. If you’re planning to grow your business, maximise sales and create a cost-effective business model it might be better to find expert inventory tracking that does it all.

Get in touch to find out how Zendportal - the online order and inventory management software from Zendbox - could be just what your Shopify store needs to maximise sales.

Gilson Pereira
Head of Customer Experience at Zendbox

Resilient and forward-thinking, Gilson is responsible for leading the strategy, planning and execution of our customer experience (CX) goals, liaising with department heads to ensure every team at Zendbox works cohesively to provide our clients a positive and seamless experience across all touchpoints.

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