How to Choose Your Inventory Management Software- The Essential Guide

inventory management software guide

If you are seriously considering investing in inventory management software in order to better manage your eCommerce business – this post is for you! Inventory management software will help you:

  1. Track the products you sell.
  2. Easily and quickly locate items.
  3. Help you restock before you enter the ‘red zone’.
  4. Ensure you are not over-selling beyond inventory capabilities. 
  5. Synchronize your inventory among multiple sales channels. 

Sounds great – right? Definitely! But:

  • Which features are crucial when choosing inventory management software?
  • How do you choose the right inventory management software based on the size of your business – enterprise Vs.SMBs (small and medium businesses).  
  • What are the advantages and disadvantages of cloud-based inventory management software? 
  • What is the importance of inventory management software for businesses which have both an online and offline presence? 

These are the crucial questions when trying to decide which inventory management software is right for you, follow closely and I will be touching on each of the above questions in the following paragraphs.

Which features are crucial when choosing inventory management software?

The most basic inventory software should have the following features – what I like to dub ‘the essentials’:

  1. A barcode assistant. 
  2. Tools for reporting. 
  3. Forecasting inventory levels. 
  4. Inventory fluctuation alerts. 
  5. An accounting plug-in. 
  6. Inventory synchronization capabilities. 

Inventory Management Software for Manufacturers 

Admittedly, not every eCommerce seller manufactures his or her own products, many of you use dropshipping as your primary supply method. But for the benefit of those of you who do handle the manufacturing end of things, you need to keep an eye open for a few additional features:

  • Tracking materials.
  • Tracking levels and inventory for finished products and their components.
  • Reorder automation.

Software integrations such as maintenance and/or ERP (Enterprise Resource Planning).

erp systems for retailers

Source: ResearchGate

Whichever inventory management software you do decide on, sellers who dabble in manufacturing should also consider:

  • Do I need inventory management software which integrates with my warehouse management system?
  • Is having my reordering process automated a priority for me?
  • Do I need to monitor machine/employee activity ?

Managing Warehouse Inventory 

A common scenario for mid to high volume eCommerce sellers is maintaining a warehouse with items especially when you have a large concentration of said customers in a specific state such as Texas for example. Geography aside, here speed is of the essence – you want to find a given item as soon as possible in order to get it processed, packed and shipped out. ‘The essentials’ here include:

  • Upgraded barcoding systems which support a variety of standards (such as QR codes for example).
  • A system which supports multiple location coordination.
  • Storage unit tracking (such as shelving).
  • An order picking assistant ie collecting items in specified quantities based on customer orders. 

Inventory management software geared towards sellers running a warehouse makes the process more efficient and eliminates human fallibility. For example, to our mind stocking toys next to t-shirts may make sense when arranging warehouses alphabetically. But when leveraging the powers of algorithm-based software, the system may realize that a large percentage of people who order toys also order diapers in the same shipment bundle. To you this makes no sense alphabetically and it would also be very hard for you to detect this type of shopping pattern, but for the software this is ‘apparent’ and will help you streamline everything from picking to packing orders. 

Inventory Management Software for Retail 

When you sell an item on eBay, Amazon, or on any marketplace and even in a bricks & mortar situation, there is one sentence you never want to have to hear yourself say:

‘Sorry Sir/Ma’am – we currently do not have that item in stock!’

stockout risks inventory sync

Source: Repsly

Not only have you let down a customer and lost a sale in the process, you can be sure that they will not be shopping with you anymore! Then again, from a business standpoint if you have too much inventory on-hand, storage space costs money by the day whether you are using Amazon’s FBA or doing self-storage. And even if the merchandise is sitting in your garage, you don’t want your capital sitting in depreciating merchandise instead of in an account which offers you at least minimal interest or invested in merchandise which has a high turnover rate. If you are using dropshipping, you are in luck in this department but I do recommend you have one or even two secondary suppliers in the event that your primary supplier starts shooting blanks one odd September day.

customer reaction to over selling

When choosing inventory management software for retail you want a system which will help you maintain ‘just the right amount’ of inventory. You will want to make sure these essential features are included:

  • Order picking assistance. 
  • Automated reordering capabilities.
  • Tools which can predict inventory fluctuations.
  • A barcode assistant.

Simplifying Retail Inventory Management in 4 easy steps:

How to choose the right inventory management software based on the size of your business

Size matters’ or so ‘they’ say. What is true in life is true in business, especially when choosing the correct inventory management software best suited to the size of your eCommerce business. If you are a small or medium business or just starting out, you may be in the market for free inventory management software – getting all the features you wanted may be hard but this will save you an extra expense. Here are three free open source inventory management software programs. Please keep in mind that we are not affiliated with any of these solutions nor do we have any paid agreements with them to recruit new users. I put these options here solely for the benefit of my readership.


Delivrd inventory management software

This is a cloud-based solution which offers its free subscribers one location and 25 SKUs making it ideal for eCommerce sellers who are focused on a specific niche. WooCommerce and Shopify users will be delighted to hear that Delivrd integrates directly with these marketplaces. The free version offers:

  • Barcoding capabilities.
  • Pick & Pack.
  • Financial reporting.

The paid version which starts at $50/month includes:

  • Additional locations.
  • A larger quantity of items/SKUs.
  • Sales management tools.
  • PO (purchase order tools). 

Odoo – 

odoo inventory management software

Online Odoo is free for up to 2 users but if you download the open source version and host it independently you can add as many users as your heart desires. At its core it is designed as an ERP (which means it’s integrated with the back end of your business ie inventory and accounting)  with tons of add-ons so you can tailor it to your specific needs for example they have a warehouse management system add-on as well as a POS or point-of-sale add-on. The internet based version is great for small or even medium sized businesses while larger operations can get a lot out of their robust features roster with the downloaded version. 


rightcontrol inventory management software

Perfect for small businesses and people who are self-employed, this software’s ‘light’ or free version can provide you with:

  • Inventory management support for up to ten product lines.
  • An invoice generating tool.
  • Automatic reorder reminders. 
  • Barcode integration.
  • Label printing. 

For managing ten products and above and for more advanced features, you can choose from one of their paid options which ranges from $1.50-$30.00/month. 

For larger operations, who are willing to pay for the best software that money can buy you may want to check out Capterra’s list of the best inventory management solutions.

inventory management software solutions

What are the advantages and disadvantages of cloud-based inventory management software?

Put simply, cloud-based inventory management software allows eCommerce business owners to monitor and maintain their levels of inventory by using software which is readily available online as opposed to non cloud-based software which requires a download and installation. 

Advantages of cloud-based inventory management software 

  1. Tracking Inventory in Real-time – What is great about having your inventory management software hooked up to the web is you never miss a beat especially during peak seasons when inventory has a tendency to sell quickly. Additionally, you don’t need to be in the office or at home but can gain access from your smartphone, laptop or tablet wherever you may be. 
  2. Reduced hardware costs – When your inventory management software lives in a cloud it saves business owners additional hardware and IT expenses which come with non cloud-based versions as your provider will handle all maintenance and hosting issues.
  3. Speed of deployment – Cloud-based software requires a quick internet sign up and a choice between a monthly and yearly subscription. This ease of access allows businesses both upwards and downwards mobility without having to take costly, time consuming measures. 
  4. Simple integration – Most cloud-based inventory management softwares are built for multi-channel commerce meaning many of them integrate directly with all of your eCommerce stores and some of them integrate with your bricks & mortar stores as well, so all your inventory across all your channels are synchronized. 
  5. Increased efficiency – The information transmitted is more accurate, changes are instantaneous across the board and are more accessible – all these lead to greater efficiency both in terms of dollars and cents as well as employee performance.
  6. Enhanced coordination – Working together becomes easier as there is no need to contact one another in order to obtain metrics and information. This also impacts, customer service, shipping and packaging and allows you to see what your most inefficient areas are so that you can tackle them early on. 

Disadvantages of cloud-based inventory management software

  1. Security/privacy concerns – When you use a cloud you are essentially exposing yourself to some level and compromising your ‘industry secrets’ and business information which can be breached much easier by a third-party.
  2. Lack of independence – When you use a cloud-based provider you are completely dependent on them. If something goes wrong or their servers are down, it could seriously impact your business. 
  3. Less flexibility – Software updates and upgrades happen on the inventory management provider’s schedule meaning you may be left out on a limb at a crucial juncture in your business. 
  4. More complex integration – Not all marketplaces integrate with the same cloud-based inventory management software and not all softwares integrate with bricks & mortar operations.

What is the importance of inventory management software for businesses which have both an online and offline presence?

Whether you started off with a brick & mortar store and decided to expand into eCommerce or vice-versa. Businesses which first build their brand online and only then develop a physical presence is definitely a growing modern trend. The reasons for making a move in either direction is apparent. The former wants to expand their audience and market and the latter already has a market share but wants to strengthen their brand identity and interaction with their audience vis-a-vis a physical location. In any case, both business types are in the same situation – they have a presence both on and offline and they make sales in both spheres.

But why is inventory management software especially crucial for this multi-channel business model? 

  1. The prime reason is inventory tracking. If you are selling 100 different types of shoes both online and offline and your stock sells out on Amazon, leaving your store completely empty, when the next person walks in and asks for that particular model, and you are out of stock, it will have a negative effect on your reputation and on future sales. 
  2. Location management – This is especially important for those who started off in a store and moved into eCommerce. The reason is, typically these business owners are used to buying from and selling products to a local audience, when they start having a large customer base, say in California, Kansas and N. Dakota, they may very well not know how to properly distribute their merchandise to the relevant warehouses, leading to order cancelations, backlog purchases and an entire slu of domino effect business faux pas. 
  3. Coordination – Many eCommerce businesses have all kinds of people working for them, from manufacturers to online marketers, virtual assistants etc.. When you add physical locations to the mixture, the amount of people you have to work with and liaise with on a regular basis can get out of whack. This is why an inventory management software can come in handy, all of your employees and/or partners will be in the know and have access to pertinent information from all the physical and digital channels at any given moment in time. This can eliminate both costly mistakes as well as unnecessary headaches.

Summing It Up

Choosing the right inventory tracking software for yourself and your business can seem stressful and an insurmountable task at times. But once broken down into key factors, components and especially key features based on your individual business activities (retail/warehouse/manufacturing), the clouds (pun intended) start to clear and rays of sun start to illuminate the path which a moment ago seemed dark and dismal. Use this post as a guide to choosing the right inventory tracking system for you and don’t hesitate to use one of the free software programs I mentioned. Free does not necessarily translate into a lesser quality or less efficient software, sometimes exactly what your business needs is right around the corner, free of charge and glistening with the efficiency and clarity you were seeking out in order to take your business to the next level.

Please comment below and let me know which inventory management software you have chosen for your business and what feature or features are most helpful in the day-to-day operation of your eCommerce business ?!

Thanks for reading and good luck choosing an inventory management software for your business 🙂

BTW, great employee productivity tracking tool can be found here

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