5 min read

What is Minimum Order Quantity (MOQ) & How to Calculate it for Your eCommerce Business?

June 11, 2021 by Srishti Arora - 5 min read

In any eCommerce business, inventory is your biggest asset. You cannot run a business without it and how well you manage your inventory determines your success rate. Therefore, you need to focus on the minor aspects of inventory management to ensure that you do not exhaust your resources by buying, storing, and managing them alone. 

Hence, activities like forecasting demand and auditing your stock become an integral part of your inventory management plan, and you must do them diligently if you want to succeed. One such necessary process is the sourcing or buying of products from suppliers. Most D2C businesses in India rely on sourcing products from third-party suppliers and then sell them under their brand name. Therefore, you must determine the minimum order quantity for every SKU. If not, you will either be buying too little or too much. In both scenarios, you are at a loss. Hence, let’s go through this brief blog to understand the minimum order quantity and calculate it for your business. 

What is Minimum Order Quantity?

Minimum order quantity refers to the lowest number of units required to be purchased at a given time.

For e-commerce businesses, minimum order quantity can refer to the supplier’s number of products or purchases. It can be used in the context of the minimum order a buyer can purchase from your store. Usually, the former is more focused on. 

Let’s look at an example to understand it better. If you sell 10 varieties of socks on your website, you might be sourcing them from somewhere. Minimum order quantity refers to the fewest number of socks you purchase from your supplier for every variety. The MOQ can be different for every type. 

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Why is Minimum Order Quantity Important?

Minimum order quantity is vital for your business as you need to own only a limited amount of inventory at all times. If you own excess inventory, it can lead to an unnecessary accumulation of dead stock for which you might need to pay extra to maintain or sell-off. If you have less inventory, you will face the situation of a stockout where you might not have enough to sell to your customers. 

Both the scenarios are disappointing as they leave you with a lot of stress. They also impacted the overall supply chain negatively as you have to either source products rapidly or make space for already existing ones.

In such cases, a pre-decided or forecasted minimum order quantity helps procure the items so that you do not have to guess or predict the number you buy from your supplier. 

Let’s have a look at how you can calculate the minimum order quantity for your inventory. 

How is Minimum Order Quantity Calculated?

Forecast Demand

The first step in calculating the minimum order quantity is by calculating the demand. Demand forecasting plays a significant role in inventory management. It helps you consider factors like the product type, seasonality, competition, etc., when estimating how many SKUs or units you might sell.

Such rich insights can help you predict the number of SKUs you might need in a month or six months. 

The minimum order quantity that you procure from your buyer should match the number that you sell. 3PL fulfillment providers like Shiprocket Fulfillment provide you with a robust platform that can help you forecast demand efficiently. 

Calculate Break-Even Point

The next step is by calculating the breakeven point for your business. This will help you understand where your industry is heading and how many SKUs you might need to procure from your manufacturer if you want to continue with the product you are selling. 

This number can only be calculated after a few transactions have been done and recover the customer acquisition cost. 

Analyze Holding Costs

Moving forward, you need to understand the holding costs involved. Holding cost refers to the total amount you spent in storing all of your inventory, and it must not be costly. 

Since some products are more expensive than others, it is beneficial to ensure they are not stored in your inventory for long. 

An ABC inventory management technique can help manage varied search types of products. 

Determine MOQ

Lastly, you can decide your MOQ by keeping in mind the factors like holding cost, breakeven point, and the demand forecast. 


Minimum order quantities are a problematic term when it comes to purchasing. However, it is relatively short-term to deal with when you’re selling, as you call the shots. Decide on a suitable MOQ for selling your products based on the previous sales data, and do not go overboard with keeping your MOQ high. An analysis is critical, and you must derive your conclusions from data to prepare well for the incoming demand.

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June 11, 2021 by Srishti Arora

4 min read

Top Tips for Effective Logistics Management

June 3, 2021 by Rashi Sood - 4 min read

A combination of automation of several workflows, efficient workforce, and combination between all functions is requisite for the smooth functioning of the supply chain for any business. A business’s success depends on the effective management of logistics operations and their implementation. But there is always room for improvement – it is a constant process.

Logistics Management Tips

As the business grows and expands, the logistics processes must also be updated and streamlined to improve the output and make the process effective. To help you in this, we have compiled a list of actionable tips for effective logistics management.

Logistics Management Tips

The following are a few tips to help you run your supply chain process smoothly:

Logistics Management Tips

Determine your Logistics Goals

The success of a logistics company majorly depends on the company’s ability to collect and deliver products from one location to another, as per the customer’s expectations. In addition, it also requires building a strong relationship with the clients, increasing efficiency, and generating more revenue.

For all these efforts, you need to first define goals for your logistics business and transportation. As you define goals, it is crucial that you also set targets to keep a tap on your growth. With the set goals and targets, you can examine your progress and plan new strategies to accomplish the tasks.

Contingency Plan

No plan is foolproof. The situations around keep changing and so there is a need for change in the execution plan as well. No one can ever predict what may go wrong and when. Therefore, you may face many unforeseen circumstances in your business operations from time to time. To deal with these circumstances, you must have a contingency plan in hand.

You can play offensively instead of handling the situations as they arise by developing a contingency plan. With the plan in hand, you can address all the problems in real-time if any unforeseen situation arises.

Leveraging Automation

Like all industries, the logistics industry is also making a shift from a manual process to automation. Data collection and its analysis play a critical role in the supply chain and logistics management process. Automation in the process can assist in inventory management and make it an effortless process. You can also know where breakdowns occurred and why. This information is important to offer the best service to the customers. A customer blaming your company for a failed delivery can be harmful to your business’s reputation.

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Regular Employees Communication

Effective communication can break or make your company. It has the potential to strengthen your company’s image among the customers.

Your employees’ behavior affects the quality of your process directly. By improving and strengthening their ability to communicate well and efficiently perform their jobs together, you can improve the logistics management process and customer experience with your company.

Having the conversation in the first place is the key to open and effective communication. Make sure that all the key account managers are talking to their staff members regularly. Meetings can also be held for effective communication. When employees communicate, they share critical information about the process with each other. In turn, this can lead to improvement in the processes and customer service.

Keep your Customers in Loop

Excellent customer service is the most important for effective logistics management as customers are the most valuable asset for a business. They are the source of revenue generation, influencing peers, and also promoting your business through word-of-mouth among family and friends. That is why it is important to offer total transparency during the purchasing process.

When customers know about every step involved in the delivery process, their pre-purchase, purchase, and the post-purchase journey is eased out. Your company has a great opportunity to shine through this process. All you need to have is an effective communication system that comprises confirmation SMS, emails, package tracking numbers, and the company’s contact number to resolve all the customer’s queries.

Data Collection & Analytics

Logistics network management and optimization are incomplete without integrating data and analytics to monitor the ups and downs in your industry. With data analytics, you can get insight into the industry and accordingly make plans.

Service Ideas for the Competitors

One of the best places to gather ideas is from those who offer the same services. Take cues from your competitors about the activities they are performing to approach the customers. Take notes of how the competitors manage their logistics. This information can help you improve your overall process.

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June 3, 2021 by Rashi Sood

5 min read

Why Does Decentralizing Inventory Work for Your eCommerce Store?

June 2, 2021 by Srishti Arora - 5 min read

34 percent of businesses have shipped an order late because they inadvertently sold a product that was not in stock. This indicates that accurate inventory management is a genuine concern for any eCommerce business. A fault in inventory management can lead to a considerable loss or accumulation of unsold inventory. Moreover, if your inventory is not managed correctly, it can lead to slower order processing and, eventually, poor shipping. This means that you must sort out the first step of order fulfillment to run the rest successfully. Decentralizing inventory is an excellent way to organize your inventory systematically and accurately deliver to every household in the country.  Let’s have a look at what inventory decentralization means and how it can improve your business performance.

What Does Decentralizing Inventory Mean?

Decentralizing inventory means distributing your inventory across several locations. You store inventory in multiple warehouses or fulfillment centers and allocate different SKUs in different locations. 

Different marketplaces like Flipkart, Amazon, etc., have different warehouses across the country and they rely on these multichannel centers to process all incoming and outgoing orders. Decentralizing inventory has several advantages like reduced shipping cost and time, faster order processing. These ultimately lead to a delightful customer experience, an increase in repeat purchases, etc. 

Difference Between Centralized and Decentralized Inventory

Centralized Inventory

Centralized inventory refers to the process of storing inventory in one place. If you have a single warehouse from where you process and ship all eCommerce orders, you have a centralized inventory system. It helps with centralization of the process by bringing all SKUs at one place and also simplifies inventory tracking. Also, you can conduct regular inventory audits to assess and streamline inventory flow. 

Decentralized Inventory

Decentralized inventory refers to the inventory that is stored in multiple locations. For example, if your inventory is stored in different addresses across the country, it is decentralized. It is better with regard to centralized inventory as it helps store the products closer to the customer’s delivery location and you can deliver much faster. Also, as the products are stored closer, you will be able to reduce shipping costs by a huge margin. 

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Benefits of Decentralized Inventory

Faster Delivery 

Decentralised inventory gives you the advantage of faster delivery. Since limited SKUs are stored around different locations, you can segregate your target audience and store products closer to their addresses. So if your inventory is stored in Bengaluru and you want to deliver in Tamil Nadu, you can easily deliver in 2 to 3 days whereas if you shipped from your warehouse in Gujarat, it will take you longer. 

Reduced Shipping Costs

The next vital benefit of decentralised inventory is the reduced shipping costs. Storing products nearer to customers can help you ship at lower intracity and intra zone rates. Since all courier companies function on shipping zones, you can strategically place your excuse to reduce your shipping costs and enhance your delivery performance. 

Easier Risk Management

Decentralized inventory also helps you mitigate additional risks associated with inventory and warehouse management. Situations like stock out and accumulation of debt stock can be avoided if your inventory is stored in different locations and processed regularly. The audit is carried out and can also be more comprehensive and you will be able to forecast demand much faster and accurately. 

How to Decentralize Your eCommerce Inventory?

3PL Fulfillment Providers

3PL fulfillment providers like Shiprocket Fulfillment have fulfillment centers located in different parts of the country like Bengaluru, Mumbai, Kolkata, Delhi, and Gurugram. You can easily ship your inventory to these fulfillment centers and leave the fulfillment process to them. This can help you expand your business without additional capital investment and you can also decentralize or eCommerce inventory in order to cover a wide range of pincodes and deliver to your customers. 3PL fulfillment providers are your best bet if you want a seamless fulfillment experience along with improved order accuracy and delivery performance. 

Rent Multiple Warehouses

Another option is to rent multiple warehouses across the nation in different locations and conduct your fulfillment operations from there. You can decentralize your inventory by manually operating these in different ways and fulfill orders as they come in. This is a more cumbersome process as you will have to pay the rent for different locations and also set up the infrastructure for management and fulfillment. 

Sell on Marketplaces

Since marketplaces like Amazon and Flipkart already have their fulfillment centres in place, you can start selling with them in order to avail their services. However, with Amazon and Flipkart your brand name gets restricted to the market places and you cannot run your D2C business as lucratively. 


Decentralising your inventory is an intelligent move if you want to curtail your inventory costs and ensure that the orders are processed ans delivered in the most accurate manner. You can also try this if you are looking to reduce your shipping costs and enhance your delivery performance which will eventually lead to our delightful customer experience. 

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June 2, 2021 by Srishti Arora

5 min read

What is Inventory Visibility and How Can it Improve Supply Chain Performance?

May 11, 2021 by Srishti Arora - 5 min read

Managing inventory across the supply chain can be a difficult task. If you sell on multiple channels like websites, marketplaces, and social media, you need a clear understanding of your inventory management operations. As your business grows, the inventory requirements change, and the levels will also be altered accordingly.

To meet consumer demand and organize your warehouse, you need to track inventory at all times, and this requires transparency and complete visibility of inventory levels.

This is where inventory visibility comes into play. Let’s look at what inventory visibility is and how does it help with improving the supply chain performance. 

What is Inventory Visibility?

Inventory visibility refers to the process of viewing and tracking inventory in real-time. This helps you get an idea of the number of SKUs that are in stock in each location where they are stored.

For example, if you store inventory in multiple warehouses of fulfillment centers, inventory visibility lets you track the available inventory in real-time.

Inventory visibility is essential if you want to avoid unfortunate situations like inventory stock out. It helps you maintain sync between incoming orders in the system with the existing inventory. 

As an eCommerce business, it is crucial to have visibility to inventory level at all times. This will help you gain insights into how you can manage your inventory better and which product you should market to maintain a complete tally of your inventory.

This data will also enable you to study your customer better and learn their interest so disinterest in a more organized fashion. Eventually, this information will help you make more insightful business decisions. You will also be able to work on other aspects like shipping, reducing inventory handling & fulfillment costs, etc. 

How Can Inventory Visibility Help Improve Supply Chain Performance?

Increase Efficiency

Inventory visibility lets you get an oversight of the inventory available across channels. You can leverage this data to match his stories and current data and firm trends that will help you improve internal processes and eventually boost supply chain efficiency.

You can use existing warehouse management systems or segregate inventory apps to manage inventory visibility and enhance productivity.

Maintain Inventory Levels

An essential advantage of inventory visibility is to maintain inventory levels. If you do not maintain inventory levels and purchase without keeping track of orders, you can either accumulate excess dead stock or be left with no store when the customer orders the product.

If you store products in more than one location, you can face this problem frequently and pay a lot extra if you need the products urgently. 

Enhance Customer Experience

Inventory visibility will help you maintain transparency throughout your supply chain. This will enable you to take business decisions quicker, process orders faster, and deliver to the customers sooner. 

With inventory and visibility in place, you can meet customer demands, manage stock across the network in advance, save on logistics costs, and reduce last-mile delivery costs by storing inventory closest to your customer. 

Improve Communication

Within enhanced transparency owing to complete visibility, you can improve communication within the organization and take collaborative decisions faster. As the data is available at your fingertips, you can solve any concerns arising efficiently. 

Uplift Demand Forecasting

Another advantage of inventory visibility is the improvement of demand forecasting. Demand forecasting is essential if you want to assess your customer’s demands in advance. It helps you plan your shipments and gives you an idea of the inventory you should purchase. With data available around existing inventory and past purchase trends, you can make insightful decisions and forecast customer demand in advance. Since this data will be rich and close to the actual value, you will face very few situations like stockouts. 

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Shiprocket Fulfillment – Enhancing Inventory Visibility with 3PL Fulfillment.

If you opt for 3PL fulfillment by Shiprocket Fulfillment, you can enhance your supply chain operations with several techniques. First, you can store inventory closest to your buyers in a network of eCommerce fulfillment centers located in zones across the country. This will help you reduce shipping costs by up to 50%, Seaview fulfillment costs, lower weight discrepancies, and reduce RTO. 

Not just this, with a thoroughly equipped dashboard, you will be able to track your inventory at all times and map it with incoming orders. With marketplace and website integration with multiple channels, you will keep track of your inventory and maintain transparency within the supply chain. 

It is an intelligent choice to choose 3PL fulfillment providers like Shiprocket Fulfillment to handle your eCommerce fulfillment operations efficiently with several benefits.

Final Thoughts

eCommerce fulfillment is a full-time job that requires you to be skilled and attentive at all times. Opting for 3PL fulfillment providers will help you maintain inventory efficiency and visibility to enhance your supply chain operations by many folds. 

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May 11, 2021 by Srishti Arora

6 min read

What is Inventory Accuracy and How to Track It Effectively?

March 23, 2021 by Srishti Arora - 6 min read

According to a report by Mckinsey, 27% of retailers plan to have higher inventory along the supply chain. The post-COVID times have boosted the eCommerce and D2C industry, and sellers like you are now amping up their stock to match the increasing demand and high competition. But, is increasing the inventory enough if you can’t manage it accurately? You need measuring parameters like inventory accuracy to ensure that you don’t miscalculate any inventory. 

Let’s look at inventory accuracy to understand the concept and detail to see how you can maintain and improve it for your eCommerce business. 

What is Inventory Accuracy?

Inventory accuracy refers to any discrepancies between the actual stock quantity or type of inventory you have and what is recorded. In the context of a physical store, this could refer to the difference between the recorded list and the amount displayed on shelves. In contrast, for eCommerce businesses, it could refer to the recorded inventory and the inventory stored in warehouses of my film and centers or fulfillment centers.

For example, if you have recorded 10 units of a particular SKU, and there are only five present in stock, you will not deliver the right product to the customer in time. Not just this, it will have many other implications that you might not realize immediately. It could also disturb the whole supply chain if this inventory is not accurate and the discrepancy is enormous. 

Why is Inventory Accuracy Important? 

Inventory accuracy is crucial because it could lead to incorrect customer orders, accumulation of debt stock, or even business loss. You might have to face the unfortunate inventory stock situations out where your customers order something, and you do not have it in stock while it is displayed on your website. It could also cause substantial accounting issues as it could lead to inventory shrinkage and throw off your inventory valuation at the end of a financial year. 

Incorrect Inventory Accuracy – Why do eCommerce Businesses Struggle?

Inventory accuracy becomes a concern for eCommerce businesses as not all inventory is visible transparently at all times. So there are higher chances of the inventory not being accurate at all times. Many businesses face unfortunate inventory stock situations out, and customers do not agree to bank orders causing a lot of negative experiences and feedback. A few reasons for incorrect inventory accuracy could be –


Suppose you manage your inventory yourself and store it in your own house or warehouse. In that case, the chances of incorrect inventory accuracy are high as you do not deploy the most optimum sources of carrying out the processes manually. As the eCommerce group business grows, the inventory also keeps increasing. Therefore, self-storage is not the wisest option to go with. 

No Inventory Management Software

One of the biggest reasons for improper inventory accuracy is the absence of inventory management software. An inventory management software helps you maintain sync between your inventory and orders. This way, you can easily maintain a record of your SKUs and constantly track your inventory to ensure that no product is out of stock. If you do this process manually, it can take you a lot of time and cause many unnecessary errors. 

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How to Measure Inventory Accuracy?

Inventory Reconciliation – Physical Counting

Inventory reconciliation refers to comparing physical inventory count with the record of the inventory in hand. This basic process helps reduce the stock discrepancies and also lets you understand why these discrepancies are rising. It is a very deep Jale down into the inventor you have and is usually not suitable if you have a large stock count. You can carry out this process regularly if you have a low SKU count and a lower order volume. 

Inventory Valuation

Inventory valuation refers to the method of inventory accounting. It is done by counting the value you have at hand and then dividing it by the value of inventory that you are supposed to have. This method is not the most approximate as it does not compare every item with your physical inventory but gives you a decent idea, and if it is low, you must contact your team to talk about the sales receipts and records. 

How to Improve Inventory Accuracy?

Outsource to 3PL Fulfillment Providers 

The easiest and fastest way to improve your inventory accuracy is to outsource it to 3PL fulfillment providers. 3PL fulfillment providers will take care of the inventory you sent to them and ensure that they are on track with the incoming orders. This will let off some steam from your shoulders. You will focus on other aspects of your business rather than just managing your inventory and removing any discrepancies.

One such fulfillment provider is Shiprocket Fulfillment. Shiprocket Fulfillment helps you manage inventory and incoming orders and stores stock in its thoroughly equipped fulfillment centers. You can store products closest to your buyer’s location in warehouses across India and deliver products 3X faster with 99% order fulfillment accuracy. 

Upgrade Inventory Management System

You can also improve your inventory accuracy by deploying an inventory management software or system so that you can track your inventory regularly, and it is visible at all stages of the supply chain. This will give you a deep insight into the orders and the stock you have, and you will be able to decide which SKU is most in-demand, and you will be able to remove any discrepancies as you will be checking data in real-time. 

Conduct Random Inventory Checks 

The next step to improve inventory accuracy is by conducting random inventory checks using inventory reconciliation. If you do these checks at regular intervals or randomly, they will give you an accurate picture of the inventory you have in hand and what the records suggest. Try to match these two entities so you can maintain high inventory accuracy. 

Final Thoughts

Inventory accuracy is a very important KPI to track since it tells you about the physical stock that you possess. Situations like inventory stockout can lead to a heavy loss and customer experience, and you might even lose out on customers as they would not receive orders on time. Therefore, constantly keep a check on your inventory accuracy and ensure that your inventory is taken care of at all times.

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March 23, 2021 by Srishti Arora

7 min read

What is the Meaning and Process of Inventory Reconciliation?

March 4, 2021 by Srishti Arora - 7 min read

Inventory management is undoubtedly one of the most crucial aspects of any eCommerce order fulfillment process. The entire eCommerce business depends on your inventory management and can often lead to a negative customer experience if not done correctly. Therefore, managing and tracking inventory efficiently is a skill & you need to know all about it to do it effectively. 

Did you know that 70% of shoppers would shop for an item at a competitor’s online store if it were unavailable? Most shoppers are not ready to wait for even a day for bank-ordered inventory. With increasing competition, you need to ensure that you do not get left behind. You need to optimize your inventory management to further optimize all fulfillment operations like order management, storage, and logistics. 

Inventory reconciliation is one such inventory management component that you need to learn to handle inventory and avoid a stock’s unfortunate conditions efficiently.

With this article, we have briefly explained the concept of inventory reconciliation so you can apply it in your eCommerce business. Let’s get started.

What is Inventory Reconciliation?

How much ever track you keep of your inventory, it is possible that the number of SKUs on the shelf does not match the records. Even though this may seem like a negligible number, it can lead to a massive discrepancy in your overall inventory count.

Inventory reconciliation is the process of comparing physical inventory with the records of the inventory on hand. Even though this process is not very significant every day, it is essential to reduce stock discrepancies and analyze where your inventory control is lacking. 

Imagine you are handling thousands of books in a library; you stop them properly on shelves, take a record of the total number, and then compare it with that on your system. If there is a discrepancy in the number, you have to do the whole process again. And if this discrepancy persists, you might be leading your customers to a wrong expectation. 

Let’s quickly look at the inventory reconciliation process you must follow when matching physical inventory with inventory records. 

Inventory Reconciliation Process

Even though inventory reconciliation may look like a small check to maintain balance, it is not as easy as tweaking the numbers on your system to match the records; it is as complicated as matching a balance sheet with a left and right equivalent to each other. Therefore, it is recommended to follow this process to reconcile inventory and maintain a thorough check. 

Step 1 – Count Physical Inventory 

The first step of the process is to count the physical inventory. This should be done before looking into your actual records. If you look at your physical inventory after looking at your existing records, you will subconsciously try to match them, leading to errors. 

You must run this through two or three times to ensure no errors, and nobody is missing out or miscounting the inventory. This is even more essential if you have split inventory across different locations. 

Step 2 – Tally With Inventory Records 

The next step is tallying the numbers with your inventory records. This does not mean telling the overall numbers but matching each physical inventory with the existing inventory records. This is where you will identify where the discrepancies exist. The difference in both values could be due to missing paperwork, human errors, unlisted items, supplier fraud, or scrap items.

Even though this process is slightly time-consuming, you need to examine all possibilities to identify the cause’s root. 

Step 3 – Check Incoming Deliveries Since Last Reconciliation 

The third step is to look back and see if there were any discrepancies found in the previous inventory reconciliation conducted. Furthermore, look into the delivery and sales records to see if there is any number or an SKU missed out. This will help you explain the discrepancy and also confirm how you can be more careful further on. In most cases, if there are no records like a shipment receipt, signed document, etc., to explain the error, it could be a case of theft or fraud. 

Step 4 – Create a Record 

Creating a record of the discrepancies identified is one of the most crucial steps. This will help you stay informed the next time you conduct an inventory reconciliation. You can do this with an inventory management system or on a simple spreadsheet using Excel. 

Step 5 – Repeat Often

If you believe you need to do inventory reconciliation only once, you are mistaken. You will have to reconcile your inventory whenever you see a new stock to thoroughly check and maintain what is on your shelves along with the records that you store. Hence, conduct inventory reconciliation regularly and maintain thorough records of what you find. 

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When Must You Conduct Inventory Reconciliation?

Objectively, you can conduct an infantry reconciliation exercise on any occasion. But we would recommend the following – 

Seasonal Inventory Reconciliation

This means that you conduct the practice of inventory reconciliation every season based on your demand. This means if you sell winter coats, you will run an inventory reconciliation exercise after the end of summer to check if you have ample winter coats for the upcoming winter season. This is most suitable for seasonal products that are not usually sold all around the year. 

ABC Technique

The ABC technique involves segregating the inventory based on the value of the SKUs and the sales volume. You can prioritize the inventory reconciliation practice basis of the revenue and reconcile the inventory based on the category. 


With a random technique, you can reconcile inventory whenever you deem fit. It could be twice a year, once a year, or when you discover a discrepancy. 

Advantages of Inventory Reconciliation

  • Avoid stockouts
  • Be aware of theft or fraud.
  • Stay up to date with your inventory.
  • Accurate demand forecasting

Outsource Inventory Management to 3PL Fulfillment Providers

Efficiently managing inventory can be tedious if you do not do it regularly. Since many DTC businesses are coming up in the country, it can get challenging to manage stocks and also cater to other facets of your business with equal attention. Therefore, it is recommended that you also share inventory management with 3PL fulfillment providers like Shiprocket Fulfillment

With Shiprocket Fulfillment, you can story or inventory in thoroughly equipped 3PL fulfillment centers located across all major zones in the country. After you send your inventory to us, we will take care of all the processes like inventory management, order management, logistics, and return management. We will handle even tiny components like inventory reconciliation. You can thoroughly outsource a significant chunk of your business and sell peacefully online. 

By outsourcing your inventory management and fulfillment operations, you will be able to deliver 3X faster to customers as your store products closer to them. You can reduce fulfillment costs by up to 20% by reducing the warehouse’s distance and the customer’s doorstep. Not just this, you can also reduce your weight discrepancy issues and ship hassle-free with multiple courier partners. 

Final Thoughts

Even though inventory reconciliation might seem like a small aspect of a vast inventory management chain, it is equally essential as it tells you about the minor discrepancies in your system. Do not take it lightly and regularly perform to ensure that you do not miss out on the little details. 

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March 4, 2021 by Srishti Arora

5 min read

Top Warehouse Management KPIs Every eCommerce Business Should Track

February 16, 2021 by Nishtha Chawla - 5 min read

There is a high chance that your business will scale towards success if its inventory is well managed, with a set of pre-defined key performance indicators (KPIs) communicating the most important trends. Using KPIs and inventory metrics for proper warehouse management is crucial to drive business strategies for ultimate advancement. Otherwise, if not for such a pre-defined set of KPIs, how will you calculate the impact of your functions on the business? 

Such KPIs not only help to encourage collaboration among peers but also increase customer satisfaction and reduce operational costs. Here are the 10 most important eCommerce key performance metrics for your business! 

Important eCommerce KPIs for your Business

Inventory Turnover

You must set a turnover expectation out of your stock, to know how many times it has been sold/turned over in a given period of time. For example, if you expect your stock to be sold within the next 10 days, and it still hasn’t, you need to know a reason behind this. Either you have too much inventory on your hands at the moment or your business is not getting enough coverage for sales. The formula to find out your business’ inventory turnover is – 

Cost of Goods Sold ÷ Average Inventory or Sales ÷ Inventory

Average Days to Sell Inventory

One of the most important eCommerce KPI metrics is keeping an eye on average days taken by the inventory to get sold. Every industry has different expectations in this regard. For instance, a real estate company may be selling 2 residential apartments in 30 days’ time and that may be an accomplishment for them. At the same time, a fashion brand may be selling 200 blouses within 30 days’ time and that may not be target accomplishment for them. Here is how you calculate this warehouse management KPI – 

(Inventory/Cost of Sales) x 365

Average Inventory

You need to figure out how much inventory you have on your hands at a certain time period. Why do you need to do this? Well, what if you receive last-minute order spikes? Or what if you witness a last-minute drop in the inventory and there’s no way to fulfill an order timely? You may lose out on a customer, in this case. Therefore, make sure that your business has enabled a constant flow of goods for timely, efficient order fulfillment. Mentioned below is the formula to calculate this warehousing management KPI – 

(Beginning Inventory + Ending Inventory) ÷ 2

Cost of Held Inventory

Do you know what is the cost of unsold inventory in your warehouse? If you don’t, then you must, even the cost of damaged goods, because that is an expense to the business. Know the cost of storage space, labour and insurance, as well. This will help you set reasonable sales expectations and work on generating demand for your products. 

Out of Stock

Another best KPI for eCommerce success is to keep track of every time your product goes out of stock. This one is so instrumental to get hold of because your customers luck out on spending money on your products due to a stock-out situation. And this is exactly why it is important for you to keep your inventory updated at all times. Because you don’t want your customer support and your brand image to have to go through countless stinker emails, frustrating phone calls from the customers, bad reviews on the social media etc. 

Service Level

You need to know how much stock your business must need to ensure that your customers never face disappointment by facing out-of-stock situations. Therefore, this warehouse management KPI is key to calculate the amount of stock needed to avoid an out-of-stock situation. 

Lead Time

This means the amount of time it takes for a business to fulfill orders. Further, this can be segregated into 4 other parts – Entry Date of the Order, Wish Date of Arrival (of the customer), Confirmed Date of the Arrival and Delivery Date. This variety of performance measurement is important to improve upon your company’s services. If your order will reach your customers in a seamless, timely fashion, your business will only grow. 

Rate of Return

This particular eCommerce KPI enables you to find out the number of orders that are being returned, and how much inventory needs to be restocked. Besides this, you also need to figure out the reasons for these return orders – is it because of a defective product, or delayed delivery etc. Without understanding such reasons, it may be difficult for you to extinguish the problem of RTO from your business. Remember that return orders are expenses for your business, and hence, must be tackled at the roots. 

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Accuracy in Warehouse Management

What is present on the shelves of your warehouse must also match what’s mentioned in your books. If this doesn’t happen, you may experience order inaccuracy, untimely deliveries, higher costs and customer dissatisfaction. 

Perfect Order Rate

One of the other key KPIs for eCommerce success is to stay on top of your perfect order rate count. But first, let us know what exactly is the perfect order rate? 

When you tick mark all the delivery boxes to the perfection, like, delivering the product on the promised date, delivering the right product, the right quantity of the product, at the right address etc. – your order rate becomes perfect in this case. This KPI is crucial to keep the customer satisfaction level high. 


To make your business an utter success in the eCommerce industry, you must have complete knowledge of its aspects. From the moment you receive an order from a customer to the instant, it is delivered at their doorstep, all this must be recorded and studied for an optimised, scalable business. The above mentioned KPIs may be intimidating at first, but they will go a long way in ensuring that your business is on top of its eCommerce game. 

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February 16, 2021 by Nishtha Chawla

5 min read

Work in Process (WIP) inventory – Concept and Formula Explained

January 26, 2021 by Srishti Arora - 5 min read

eCommerce inventory management is a complicated task. More often than not, if your inventory is not synced with your incoming orders, it can lead to huge blunders and spoil the customer experience due to delayed deliveries and incorrect orders.

Therefore, it is essential to understand each type of inventory and its significance in your e-commerce business. If you are a manufacturer, who makes their products and runs a D2C brand, it is essential to understand WIP or Work in Process inventory. This will help you know the production supply chain and how you can manage inventory better. 

What is WIP Inventory?

WIP or work in process inventory refers to the total cost of unfinished goods currently still in production. It is a common term used in the production and supply chain management of e-commerce businesses that manufacture their products.

If you have a WIP inventory, it is usually considered an asset. It consists of items that are yet to be finished and sold. It differs from finished goods as they are items that are ready to be sold as-is.

For example, if you run a craft store that sells handmade jewelry like earrings, necklaces, bracelets, etc., the WIP inventory would refer to the products that are still under production or assembled by your production team.

WIP inventory is a universal concept that applies to every business size consisting of large product manufacturing businesses or direct to consumer businesses that run on a small scale. 

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What Does WIP Inventory Include?

Determining the cost of WIP inventory is slightly more complicated than the cost of finally finished goods. As there are many different components involved and many dynamic items, it can get slightly complicated. Here are a few of the terms and calculations you will need to know to determine the WIP inventory.

Beginning WIP Cost

The beginning WIP cost is usually the first step in determining the WIP inventory. It comprises the assets section in the previous accounting period. To determine and calculate the beginning WIP inventory, it is essential to decide on the ending WIP inventory of the last period. The ending WIP inventory is carried forward from the previous period to the new financial period. 

Manufacturing Cost

Manufacturing costs are the total costs associated with the manufacturing of the final finished product. This essentially includes the cost of raw materials, labor, and overhead costs. If other expenditures go into the production process, they will also be included in the manufacturing cost. 

If the WIP inventory is higher in the production process, then the manufacturing costs like raw materials and labor costs will be higher. This will eventually impact the final cost of the manufactured goods. 

The formula for manufacturing costs is as follows – 

Manufacturing Costs = Raw Materials + Direct Labor Costs + Manufacturing Overhead

Cost of Manufactured Goods

The third aspect of determining WIP inventory cost includes the cost of manufactured goods (COGM). COGM refers to the total costs required to manufacture a final product. You can calculate the COGM by summing the total manufacturing cost with the beginning WIP inventory costs. Finally, you will need to subtract the ending WIP inventory, which will give you the final cost of manufactured goods. The formula is as follows – 

COGM = Total Manufacturing Costs + Beginning WIP Inventory – Ending WIP Inventory

How to Calculate WIP Inventory – Formula

Once you have all the data mentioned above with you and have calculated your manufacturing cost and COGM, you can determine how much WIP inventory you have. 

The formula for calculating WIP inventory is as follows – 

Ending WIP Inventory = Beginning WIP Inventory + Manufacturing Costs – COGM

Outsourcing Manufactured Goods & Importance of Calculating WIP Inventory

In today’s day and age, you need to have a superior delivery experience along with expedited delivery options. Therefore, it has become essential to outsource your eCommerce fulfillment operations to 3PL fulfillment centers. 

One such 3PL fulfillment company is Shiprocket Fulfillment. Shiprocket Fulfillment helps you deliver products quickly to customers by storing products in fulfillment centers located in significant cities across India. You not only deliver products 3X faster with Shiprocket Fulfillment, but you also save considerable amounts in the shipping costs. Along with that, you get exceptional fulfillment services and 99% accuracy in all of the operations. 

Suppose you are a seller who takes care of their in-house manufacturing. In that case, it is vital to keep track of your WIP inventory, as you will need to continually stay in touch with the numbers that you are sending to your fulfillment center’s warehouse. In case the numbers are not correct, your entire inventory can be mismatched, and you will have to pay a hefty price in the form of a negative customer experience. 

Hence, track your WIP inventory regularly to stay abreast about your inventory count. This will help you process orders faster.

Final Thoughts

WIP inventory is critical for the manufacturing and production supply chain. Make sure you keep a thorough track of it and maintain it to boost your eCommerce assets. For other fulfillment operations and end-to-end logistics and warehousing solutions, you have Shiprocket Fulfillment. 

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January 26, 2021 by Srishti Arora

4 min read

The Importance of Safety Stock for your eCommerce Business

January 12, 2021 by Nishtha Chawla - 4 min read

Imagine one of the products on your catalog catches the eyes of your customer and shortly after, they realize that it is out of stock. What do you think will happen? It is highly likely that the customer will take the business to another retailer. Therefore, it is important for your online business to deck up on safety stock to avoid such an unpleasant scenario. 

What is Safety Stock – A Glimpse 

Storing an extra quantity of products in the warehouse to avoid an out-of-stock situation is called safety stock (also known as buffer stock) for your business. This particular feature helps to keep you in touch with the fluctuating demand for your products. 

Why is it Important for your Online Operations?

Ease of Order Fulfillment

Wouldn’t it be reassuring to have safety inventory stored in the warehouse? Because then you wouldn’t have to fret over having your customers see that out-of-stock sign on the website/online marketplace. And it can be really disappointing for the customer to see that sign because it entails that they won’t be able to purchase the product that caught their attention. Given the current competitive scenario in the eCommerce space, we are sure that your customer will move on to the next brand providing them with similar products. Clearly, this will be a case of losing out on business. Nevertheless, keeping safety stock can help you mitigate it in the best way possible. 

High Customer Satisfaction 

There’s no doubt that your customers will be happy with your brand if they find their favorite product in stock on the online store. And isn’t that the end goal of your business? By keeping sufficient safety stock inventory in the warehouse, you will ensure that you keep coming back for more. This will result in higher revenue and positive word of mouth among the community. 

Smooth Functioning of Supply Chain

Buffer stock is the level of stock that helps to ensure the smooth operations of your business’ supply chain. When you forecast the demand for the coming days/months and store the products accordingly in the storage hub, you’re automatically making sure that there’s no incompletion in the supply chain circuit. You wouldn’t have to wait to source more products in case there’s a spike in demand (or in case of an out-of-stock situation), and hence, this will lead to efficient eCommerce fulfillment for your business.

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Compensate In Case Of Inaccuracy in Demand Forecast

There could come a time when your business exceeds your expectations. What if your business receives more orders than what you’ve already predicted? If you already have the safety stock in place, rest assured you’ll be able to handle such inaccuracies in the demand forecast with ease. 

Mitigate Price Fluctuations for Increased Cost Efficiency

The market is uncertain. From an increase in the price of raw materials to the sudden introduction of government policies that might affect your business directly, you must ensure that the warehouse has enough safety stock level to keep you from such embittering scenarios. Moreover, it will help you enable cost efficiency in your business, at all times. 

Choose the Fulfillment Partner that Empowers You to Fulfill Last-Minute Order Spikes with Ease!

The vitality of storing safety stock for a successful business has been established. At the same time, it is also instrumental to partner with a third party fulfillment facility that helps you keep your customers happy and maximize your profits. Shiprocket Fulfillment is a warehousing automation and eCommerce fulfillment solution that can help you enable seamless doorstep delivery to keep your customers happy. Get the best of Shiprocket Fulfillment’s services that comprise speedy deliveries by 3X, free storage space for the first 30 days, no minimum lock-in period, the advantage of shipping products across 27,000+ pin codes PAN India, lower weight discrepancies, and more. You can avail all of these amazing benefits at a reduced shipping cost by up to 20%. 

For a successful business, the need of the hour is to forecast any store-related contingences and contain them with the help of sufficient safety stock. Pick the fulfillment partner that helps you do all of that and more so that your online business sees growth for years to come. 

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January 12, 2021 by Nishtha Chawla

5 min read

The Concept of Inventory Forecasting Explained

December 31, 2020 by Srishti Arora - 5 min read

One out of three businesses has missed a shipment deadline because they’ve sold an item that wasn’t in stock. This is the outcome of poor inventory planning and stocking. Such situations are the nightmare of any eCommerce business. That is why it is essential to have the right data to predict the inventory you will require.

This is where inventory forecasting comes into play. With this article, let’s look at what inventory forecasting is and how it is essential for your business. Along with that, we will also look at how you can conduct it for the best results. Let’s dive in and get started. 

What is Inventory Forecasting?

Inventory forecasting refers to the process of calculating the inventory required to fulfill customer orders that are about to pour in in the future. This essentially means that you will predict the sales and stock up inventory accordingly. This calculation accounts for historical sales data, promotions, external forces that need to be accurate as possible to give you a specific prediction. 

Now, let’s have a look at the benefits of inventory forecasting for your business. 

Benefits of Inventory Forecasting

Inventory Estimation

The primary advantage of inventory forecasting is inventory estimation. It tells you the right amount of inventory to purchase. If you do not get a correct estimate of the inventory required, you might store products in bulk in your warehouse, which will eventually lead to debt stock accumulation. This will be too harsh for your inventory carrying cost, and you will have to pay extra for maintaining this inventory or getting rid of it. With inventory estimation due to inventory forecasting, you can help your cash flow and even reallocate resources for other business areas. 

Avoid Stock Outs

The next advantage of inventory forecasting is avoiding stockouts. Once you have a precise prediction about the sales you are going to make, you do not have to go through the trauma of an out of stock order listed on your website. You can optimize your sales of the existing items without dealing with additional stock or lesser stock. You can also delve further into your marketing campaigns and optimize them channel-wise based on the predictions and supplies you have.

Reduces Overhead Expenses

As you have a correct estimate and forecast your sales and the required inventory, you will save up on many overhead expenses required to manage additional inventory. This will also help you save up on labor and warehousing costs because you are better prepared to handle any changes and reduce manual labor. 

Efficient Production and Sourcing

Lastly, with inventory forecasting, you would be able to source inventory better and plan your production more systematically. As you know the production time, receiving times, and the amount of stock you need, you can plan well ahead and stay prepared for the sales.

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How is Inventory Forecasting Carried Out?

To forecast inventory, it is essential to know a few variables. Let’s have a look at what they are. 

Forecast period

The forecast period refers to the length of time that will be considered to determine the exact inventory quantities. The right forecast period will depend upon your manufacturing production cycle, turnover rate, and sell-out period. It is directly proportional to the time in which you exhaust your inventory. 


Trends referred to the change in demand over a fixed period. So you need to analyze your business’s sales trend and identify periods where sales will be high and low. This way, you can locate your peaks and forecast inventory for definite periods. 

Maximum Stock Level

Maximum stock level refers to the amount of inventory you can accommodate for a given SKU. This depends upon the inventory storage space and the funds you have. 

Reorder Point

Reorder point refers to the point at which your stock needs to be replenished. Once you sell your orders, the stock begins depleting. The reorder point is an indicator for you to stock up again.

The reorder point considers the manufacturer’s delivery time, the inventory turnaround time, and the safety stock available.

The reorder point is calculated with the formula that takes into account the reorder quantity for an SKU.

The reorder point formula is – 

Optimal Reorder Quantity for an SKU = Avg. Daily Units Sold x Avg. Lead Time

Best Practices for Inventory Forecasting

The best practices for inventory forecasting help you conduct this exercise efficiently. Here are a few best ways to get you started. 

Track Inventory in Real-Time

Always track inventory in real-time to have the correct number of SKUs in and out of stock. This will help you estimate your inventory better and faster and give you a more realistic number when forecasting inventory for the future. 

Use the Right Software

Using the right inventory management software will help you view the stock levels in real-time and accurately predict future demand. It also gives you several other insights like the most preferred product at which time of the year. Insights like these help you plan better, and you can also optimize your marketing campaigns and forecast inventory! 

Gather Insights

Gather insights from how you have made sales in your past quarters and years. This sales and inventory data can be beneficial in guiding you for your future decisions. With rich insights regarding sales, incoming orders, and order processing times, you can be proactive with your choices rather than reactive.


Inventory forecasting is very relevant for eCommerce businesses today. With the fast-paced nature of eCommerce businesses and the sudden rise in demand for online shopping, your business studies must be equipped with the stock levels. One mistake of an out of stock item being sold and delayed delivery can lead to a negative customer experience that can be quite harmful to your business. 

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December 31, 2020 by Srishti Arora