3 Big Inventory Management Mistakes You Could Be Making (and How to Fix Them)

If there’s one thing that you absolutely need to get right when running a retail business, it’s inventory management. Poor stock control can lead to lousy customer experiences, reduced sales, and tied up capital.

In other words, if you fail to manage your inventory properly, you’ll likely see problems in other aspects of your business, particularly finance and customer experience.

To help ensure that doesn’t happen, we’ve put together some of the common inventory mistakes retailers make. Go through the list and see if you’re committing any of these blunders in your business. (And if you are, don’t worry — we’ve included some recommendations on how to correct them.)

1. Still managing your inventory manually

You can’t keep your inventory in check if you’re still using pen and paper. Manual stock control can lead to human error, inventory discrepancies, and wasted time.

What should you do instead? For starters, you need to digitize your inventory processes, particularly when it comes to data entry and reporting. Rather than handwriting your product information and quantities, get yourself an inventory management system that lets you enter your products electronically or scan items into the system.

Modern inventory management systems can also adjust levels automatically when you process sales or returns, which means you won’t have to manually update your records.

You should also invest in an inventory solution with reporting capabilities so you can gain deeper insights into your stock. Having the right reports means you can quickly figure out what your top sellers are and how your products are performing, and thus make smarter stock control decisions.

Case in point: Mom and Popcorn, a popcorn and candy shop in Texas. Mom and Popcorn used to manage their inventory by hand but finally switched to a modern POS and inventory management system.

According to Dave Wilson, owner at Mom and Popcorn, this move helped them save tremendous time and allowed them to streamline their store operations.

“Previously, we had to go to the front of the store to get a physical count of inventory by site, record it by hand, and then look at a paper catalog to order via the phone from the supplier. By adding this technology, we’re able to save so much time and money,” he said.

“For example, now we know there is some inventory that takes 12 months to move and we shouldn’t ever re-order it because it doesn’t move quickly enough. The technology helps us provide products that people actually want. We’ve gotten rid of around 8-10% of our inventory that wasn’t selling, and that has allowed us to bring on another 100 items that are selling better.”

2. Not counting your physical inventory frequently enough

The key to successfully addressing issues like shrinkage and inventory discrepancies is to catch them early. You won’t be able to do that if you don’t count your inventory frequently. Remember, having a solid stock take process in retail is essential. 

Think about it: if you only conduct stock counts once a year, then your inventory report will have a year’s worth of discrepancies, and it will be difficult for you to pinpoint root causes of your inventory issues.

That’s why a lot of experts recommend cycle counting — the process of partially counting merchandise on a continuous basis. This method entails counting just certain portions of inventory on a daily or weekly basis, so you won’t have to do a full inventory count anymore.

What’s the best way to cycle count? Jordan Lewis, Vend’s resident inventory expert, recommends factoring in things like sell-through and size when determining what merchandise to count and how often to do it.

“My advice is to focus on the items that you sell more of or that are smaller or easier to misplace. For low volume items, you could afford to count them less frequently,” he says.

“You should also ensure that your online inventory is counted and synced with your offline stock levels,” added Jordan. “This is essential for customer satisfaction and online order fulfillment.”

How many times should you count your inventory? According to Jordan, you should ensure “that everything is counted at least once a month.” At the very least, he says retailers should aim to cycle through all their products every quarter.


Want to make inventory counts easier for yourself and your staff? Check out Scanner by Vend, a nifty mobile app that lets you conduct physical inventory counts using your iPhone, iPad or iPod Touch.

Just scan an item’s barcode using your phone’s camera and Scanner will automatically record the SKU for you. Scanner also syncs completed counts with your Vend account, so once you’re done counting, you can easily update your stock levels. 

Not a Vend user? Scanner will create a CSV file that you can easily email to you and your staff. 

3. Having a disorganized stockroom

A messy stockroom is a no-no in retail. Having products all over the place (even if they’re hidden in the back) can diminish store efficiency and lead to inventory problems.

Here are a few tips to help keep your stockroom organized:

Be strategic with how you position merchandise – Have a think about how you should organize and position your products in your stockroom. The key is to make things as easy as possible to locate.

Depending on how you run your store, this could mean placing your fastest-moving items at the front, so they’re more accessible. In some cases, it may make more sense to group all similar items together or arrange merchandise by department. Whatever the case, find what works best for your business and go from there.

Label your bins and storage spaces – Labels can be a godsend when it comes to stockroom management, so take the time to create detailed, easy-to-understand labeling for your storage spaces and containers.

In her post about managing retail stockrooms, retail expert Nicole Leinbach Reyhle emphasizes the importance of using bins and labels.

Using bins to identify various things is a clean, organized way of keeping your stockroom from getting cluttered. By identifying these bins with labels, you help control the chaos of inventory just piling up without a place to go. For example, you could have a bin labeled “returns” for items that need to be re-stocked or put back onto the floor. Other bin suggestions include “damaged items”, “return to vendor”, “store decor”, “promotional giveaways” and “hangers”. The list is endless based on your store’s unique needs.

Use high shelving – High shelves enable you to fully utilize the vertical space in your stock room, thus making you more efficient with your use of space.

As a bonus, these shelves can also save time and energy. As Will Ambroson of Homespice Decor told GiftShopMag, “vertical shelving will also keep you from stacking too many boxes on top of one another. You’ll save time and energy by not having to take down and then restack each box when you need the one on the very bottom.”

Make room for “admin” work – Storing products isn’t the only thing you’ll be doing in your stockroom. You and your employees will likely spend a considerable amount of time doing things like taking notes, checking inventory levels, updating stock counts, or managing suppliers. See to it that your stockroom has a designated space for such tasks.

Your turn

Can you name other inventory management mistakes retailers are making? Share them in the comments.

About Francesca Nicasio

Francesca Nicasio is Vend's Retail Expert and Content Strategist. She writes about trends, tips, and other cool things that enable retailers to increase sales, serve customers better, and be more awesome overall. She's also the author of Retail Survival of the Fittest, a free eBook to help retailers future-proof their stores. Connect with her on LinkedIn, Twitter, or Google+.

4 Comments - Add Comment