Omnichannel inventory management: steps for the retailers to get started

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  • May 10, 2022
  • 8 min read
Cover: Omnichannel inventory management: steps for the retailers to get started

We live in a world where the omnichannel business model operates. Online customers who don't want to wait for a package can pick up their order from the store. Zoomers target the brand's social media presence and prefer Instagram shopping. Others like to touch the blanket in the store before buying it online.

As consumer behavior changes, so do retailers. Although it remains the case that the focus is always on the products, or rather, on the importance of reliable retailer inventory management.

What is omnichannel inventory management?

Omnichannel inventory management is the management of all inventory across all channels that you use to sell products. 

BigCommerce’s definition is, “Omnichannel strategy is stories that help to sell both online and offline, and most often across multiple online channels at the same time (e.g. Amazon, eBay, Facebook, and B2B).”

Multi-channel retail is based on the fact that the company sells its products through several online channels(for example, in an online store, on marketplaces, on social networks). The omnichannel strategy is used by the retailers with representative offices both online and offline. This strategy is a modern approach to sales. Its goal is to provide for the customer’s unifying user experience at every stage of the customer journey.

It seems simple to provide a product wherever your customers are, but most of the work is done behind the scenes. If you are considering implementing an omnichannel strategy, here are some points to think about:

  • Do you have the proper software to work with a sufficient number of sales channels?
  • Do you clearly see your customer profiling: what, where and how much do they want?
  • Do you have the reporting or forecasts to order the right amount of products for each distribution channel with no risk of running out of inventory?
  • Does your business grow enough to move to this next stage?

Let's take a look at the obstacles to omnichannel inventory management and how to overcome them.

Here are some widespread obstacles you may encounter

  1. Circular supply chain.

Most retailers start selling their products through one channel. Perhaps you started your business with a small store. You could probably design a beautiful Instagram page to promote your services. Or you started selling your items on eBay. It is as any brand adds new channels that difficulties can arise.

Quite a lot of companies don't understand the importance of combining channels. This applies not only to inventory management but also to other processes. If you don't connect your systems, you'll end up with disparate supply chains. This is when the order and inventory data for one channel is completely separate from the data for the others.

In turn, this can cause several problems:

  • You won't know the exact inventory balance for your entire organization.
  • Your purchase orders may double.
  • You will have to cancel orders since some customers will not be notified when the item is out of stock.
  1. Lack of inventory visibility.

As the business expands across all channels, maintaining inventory visibility becomes more difficult. If you have one store, one warehouse, and one checkout, keeping track of orders and inventory levels is easy. If you have more POS or warehouses, keeping track of orders and inventory balance becomes more of a challenge.

The visibility of inventory is perhaps the biggest obstacle to proper stock management in an omnichannel environment. Lacking it, you won't be able to access data to generate accurate reports or promise customers that items will be back in stock across all platforms.

  1. Demand and inventory balance planning.

Effective omnichannel order management is about more than just keeping track of current circumstances. It also helps businesses forecast future consumer demand. Only by knowing what you are selling across all channels can you fully understand the needs and desires of your customers.

Incorrect determination of the stock balance in any of these cases is costly. However, the likelihood of such errors increases as new channels are introduced.

  1. High inventory storage costs.

Before creating an omnichannel strategy, you should develop a plan that takes into account large warehouse space and its costs.

Without proper demand planning, you will be left with potential dead stock that will take up space and money for other areas of the business. If you plan ahead, you can prepare for peaks and troughs in traffic by eliminating the need for flash sales to rush through inventory that will cost you more than it's worth.

These possibilities are multiplying as warehouses or distribution centers are added. Inventory data across all your locations can be shared and viewed in the omnichannel inventory management system.

  1. Technologies and systems.

The real foundation of the omnichannel approach is inventory or warehouse system management.

Without the right software, omnichannel inventory management is next to impossible. Try tracking orders, deliveries, and more with a set of spreadsheets and you'll see what we mean.

With inventory management software, users can not only take advantage of the solution itself but also integrate it with other areas of your business. Imagine inventory data, shipping labels, and distribution channel information all in one place with complete visibility.

Related: Building an Effective Inventory Management Team

Actions taken to address the omnichannel inventory management issues

  1. Integrated supply chain.

Omnichannel inventory management software connects different parts of your supply chain. The software you choose should be able to integrate with software solutions such as accounting, management channels, and delivery.

  1. Maintaining true visibility.

To provide true visibility, you have to store stock data across all sales channels in your inventory management system. The number of products is updated between channels online, so you know exactly what is being sold and where. And more importantly, this feature mitigates the risk of lack or running out of inventory.

All data should be stored in the software to create an accurate free flow of information between channels and allow for subsequent reporting for even greater optimization.

  1. Improving the return policy.

The best way to get started in this area is to treat returns with the respect they deserve. Don't think of them as an annoying symptom of Internet sales. Establish a fair and transparent return policy. Then communicate this policy to your customers.

Your goal is to make product returns as easy and organized as possible.

Simplification of such a procedure is beneficial for both buyers and retailers. Globally, an average of 15% of consumers abandon a brand after a bad return experience. Improve your reverse logistics and you will also improve customer retention.

  1. Customer satisfaction and experience come first.

In an effort to improve inventory management, you should always think about your customers. Using digital marketing techniques can help in attracting customers. However, a customer-oriented approach is what contributes to customer retention. The same goes for omnichannel inventory management. Improving the methods and systems will help to reverse the trend. If all improvements correlate to the goal of improving the customer experience, this will take your brand to a new level.

All our previous advice should be directed towards this last idea implementation. You should design your system integrations to make life easier for your customers. You should develop your return policy to keep your customers satisfied. Customize and improve your multi-channel inventory management for the sake of your customers. Then you can reap the benefits.

How to develop your own omnichannel strategy

Implementing the concept of omnichannel is more difficult than it seems at first glance. First of all, you have to synchronize the IT systems responsible for each channel. Otherwise, there will be no connection between communication channels. You can avoid these difficulties by implementing an automation platform with omnichannel support. This will solve problems with product content management and order processing on different sites.

Leafio Inventory Optimization management system will be an excellent solution for managing an omnichannel business model. With this cloud solution, you can take your business to the next level of stock managing, which, in turn:

  • supply chain-related automation of business processes at each stage;
  • unleash human resources for better work with stock;
  • use of the analytical module for a comprehensive understanding of the business and building a development strategy.

By now, you should understand the importance of omnichannel inventory management. But how and where can you start optimization?

Here are a few easy steps to assist you:

  • Make your inventory count. Before you start improving any system, you’d better understand where you are. Take a step back and analyze your current inventory management. Think about how your supply chains work and what you do to track inventory.
  • Allocate resources and use appropriate technologies. Evaluate omnichannel business software options. You should now have an idea of where the greatest improvement is possible. Based on this, evaluate the various inventory management solutions on the market. Find the one to bring the most value to your company.
  • Make a quality shopping and user experience your top priority. When you implement a new solution, make sure you don't do it just for the sake of change. Each of your changes should be for improving the customer experience. 

Meet your demand every time


Nowadays, no one makes purchases in only one way. People of all generations buy online, offline, and on marketplaces, from well-known manufacturers and independent local brands. A simple conclusion can be drawn from this: returns are generated from different sources and different devices.

An inventory management strategy is very important for many reasons. It prevents problems with overstock or understock, maintains customer satisfaction, increases brand awareness and of course, brings you more profit than ever before. And most importantly, it saves you many headaches.

To stay ahead in a highly competitive world of retail, no matter what channel you sell on, you have to manage inventory. In fact, poor inventory management can cause your financial decline and ruin your business, if not immediately, then sometime later.

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