More is not Better- Integrating your Online and In-Store Inventory [Part 3 of 4]

Aside from shipping and logistics, the biggest issue for businesses migrating online is integrating inventory systems. Some end up maintaining multiple inventory systems. This was the advice I was given as integration would be super expensive and complex. Many businesses were given the same advice and took it. They are now swamped with another burden of keeping them up to date. As I mentioned in an earlier post, this is a failure by the “consultants” to recognize that you are not building something new but on something existing. DO NOT MAINTAIN MULTIPLE INVENTORY SYSTEMS. You will have issues with inventory control in your physical location and your virtual location. Please avoid this at all costs. I will assume that you are already using a Point of Sale (“POS”) system at your retail location. The first step is to ask your current vendor if they offer integration with any e-commerce platforms as many do and this will make your life a lot easier.

Before simply connecting your store to an online e-commerce platform such as Shopify, I highly recommend mapping out what information can be auto pushed to the platform and how will it be displayed to the customer. Information such as the following is important to map out:

• Inventory levels - Ask how often is it updated, after every sale or every 15 minutes? Is it a manual or automatic update?
• Sale price - Assuming you want to sell the item for the same price online as in-store. If the item is taxable then ensure that this is reflected in the upload.
• Cost price
• Matrix Items/Variants- Does your item come in different sizes, weights, or colours? Think about a particular shirt that may come in different sizes or bottles of sauces that come in different weights.
• Product Descriptions - I had my internal description uploaded which used abbreviations to describe the product, you may need to change the description so it displays accurately for the customer.

In addition, here are some integration tips:

• Ask your vendor if you can create a hold-back quantity for the online store. I recommend an amount of three. If you have ten shirts in-store, then seven will appear on the website. This is assuming that a customer has picked up a shirt and has not checked out yet.
• Prevent overselling on the online store. There is nothing worse than not being able to fulfill an order.
• Remember that you will need to ship these items to the customer, if you’re a grocery store then consider not including extremely heavy or fragile items. It may not be worth the reward as it may significantly increase shipping charges or could break and require an additional out-of-pocket replacement expense. You may already be working on low margins and replacing every broken or melted item will create issues and impact your bottom line.
• Most e-commerce platforms will allow you to enable multi-channel selling. I highly recommend enabling it through your e-commerce platform as opposed to directly from your POS. This way, the images, descriptions, prices and inventory levels for all channels will be all synced to your online store and subsequently synced to your POS system (physical location). The only thing worse than maintaining two inventory systems is maintaining three or four inventory systems. Here is a quick diagram that could help illustrate this point:

Your POS vendor may be using “middleware” to push your inventory to the cloud and then push it to an online marketplace. In other words, it may not go directly to Shopify but to another platform and then be pushed to Shopify or another marketplace. This is not a bad thing; it will allow you to clean your data and only push the items that you want to your online store. Once in Shopify, then enable the additional sales channels. There is no need to start selling on multiple platforms right from the beginning, instead, have a plan with short-term goals to phase in different channels. You will find gaps in your system that will have to be addressed. One gap I found was that the POS system could not process out-of-country billing information for local pick-up. Imagine someone uses a US credit card but wants to do a curbside pickup in Canada, some POS systems may not know how to process this scenario. In this case, I reached out to the POS vendor to find a temporary workaround as they code a fix.  The point is that you need to phase it so you can address the issues as they come up.

Finally, a word of caution for selling on multiple channels. Everything costs money! There may be a per-transaction cost from your POS and e-commerce vendor, a monthly subscription fee from the middleware provider and additional costs for the different sales channels. When dealing with a third-party sales channel, they may take a flat fee per transaction or a percentage. These fees can be very costly as I have seen them go up as high as 30%. This may not be economically feasible for your business, on the flip side, it opens and exposes your store to millions of individuals. You need to the Cost-Benefit analysis and factor in fees, returns, third-party fulfillment costs and your profit.

I hope this helps you think through how to tackle the inventory issue. Integrating your inventory between your physical and virtual locations is essential. Please do not go and just build a stand-alone store and maintain separate inventory systems.

In my final post, I will discuss digital marketing and any other relevant information that I have yet to cover based on your questions. As mentioned before, my goal is to help you transition your small businesses online. Together we can support local and help grow our economy, no small business should go out of business because they cannot pivot to online sales!