Purchase management is crucial for e-commerce merchants, not only to ensure a smooth customer experience but also to maximize sales and profitability. Here’s why it is essential for an e-commerce merchant to optimize their purchase management and how to do it effectively.
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Optimizing purchase management streamlines processes, reducing the time spent on inventory management. This leaves more time to focus on strategic activities such as marketing and product innovation.
Nothing is more frustrating for a customer than finding out that a product is out of stock. Effective purchase management ensures adequate stock levels, reducing the risks of stockouts and cart abandonment due to product unavailability.
Incorporating techniques like cross-docking and dropshipping can significantly improve inventory management efficiency. These methods help reduce storage and shipping costs while ensuring optimal product availability.
To determine which products to buy, it is essential to compare past sales with current stock levels. Purchasing advice should consider the following dimensions:
Minimum and maximum stock levels are standard in replenishment management:
To calculate these values, your system should integrate:
Lead Time: Anticipate lead times, especially for distant suppliers. For example, if your supplier is in China and the lead time is one month, you must anticipate this to avoid stockouts.
Sales History: Analyze past sales, considering seasonality and growth trends. For a seasonal business, compare last year’s sales with a growth index to forecast future sales. For a linear business, focus on past weeks/months. Calculating averages and weighting will yield a sales figure for the upcoming period.
Stock Coverage Period: Determine the duration for which you want to cover sales. Short coverage saves cash but increases the risk of stockouts, while long coverage reduces this risk and optimizes purchase costs. This period can be set per supplier (to manage lead time) or per product range, even per product in the case of bestsellers.
A good replenishment tool should offer a summary table of products to buy, with filters for:
Purchase Urgency: Rank products by purchase urgency (products sold out, products reaching minimum stock, etc.).
Mandatory purchases: Products you must buy because they have been sold without stock, making it urgent to order to fulfill your sales promise.
Recommended purchases: Products out of stock for which the minimum stock level has been reached. It is important to buy these to avoid losing sales.
Other purchases: Products not yet out of stock but have reached the minimum stock level, risking a stockout and sales loss.
Supplier Summary: Filter by supplier to optimize purchase costs and free shipping thresholds. The matrix should be filterable by supplier to check if free shipping thresholds or minimum order quantities are met. If not, the buyer may choose to delay the purchase to reach the free shipping threshold.
Order Drafts: Generate order drafts to adjust quantities and meet purchase goals. From this draft, the buyer can complete the order to reach free shipping thresholds or add products.
Boostmyshop myFulfillment is a Warehouse Management System solution dedicated to e-commerce that helps optimize your purchase management:
By optimizing purchase management, you ensure customer satisfaction, reduce costs, and improve profitability. Use tools like Boostmyshop myFulfillment to automate and perfect your supply process.
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