Once you understand the importance of inventory tracking, you’ll recognize the benefits of it which will indeed be fruitful for your business. In big businesses, inventory tracking and management is essential to accurately calculate the cost of good sold and to identify the problems associated with profit margins.

1. Three Reasons Inventory Management Is Important
For Your Online Business
If you manage your own retail business then you already know the importance of
accurately managing your inventory. After all, it’s a soul of your business. Automated
online inventory management system is a must-have for every retail operation as it is
very vital to any business that deals with inventory in the long-run.
Once you understand the importance of inventory tracking, you’ll recognize the benefits
of it which will indeed be fruitful for your business. In big businesses, inventory tracking
and management is essential to accurately calculate the cost of good sold and to
identify the problems associated with profit margins. In small businesses, people often
don’t see the importance of inventory tracking. The loss of inventory or waste of
perishable goods becomes pretty evident when the profit margins are drastically
dropped.
In this article, we will highlight the three major reasons as to why inventory tracking
and management is essential for retail business – may be small or large.
 1 Inventory tracking to accurately calculate the cost of goods sold
Every business must keep a track of total goods sold in order to have an accurate
statement of the profit margin. Inventory tracking will make it easier to calculate the
cost of goods sold without maintaining a physical inventory of your merchandise each
and every month. But if you move a lot of inventory, it is advisable to do a physical
inventory check periodically.
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2. To calculate the cost of good sold, you must take your beginning inventory, add your
inventory purchases and then deduct your ending inventory. The figure you’ll get will
indicate the cost of goods sold. To calculate the gross profit, your gross revenue less
your cost of good sold is your gross profit and when you divide your gross profit by your
gross revenue you’ll get your profit margin. Today most businesses identify an ideal
profit margin of around 40% and if there are fluctuations in your profit margin then
there is a problem with your inventory system which needs to be rectified soon.
 2 Inventory Management for maintaining and managing inventory levels
Inventory management and tracking of your inventory levels will simplify your ordering
process. If you know many of a certain item is available in the stock then you will easily
determine how many more you need to order to replenish the inventory. Inventory
tracking and management can easily be incorporated within your sales system so that
your inventory levels are always up-to-date all the time.
 3 Inventory Management to ensure exceptional customer service
Having a good inventory management system that is well integrated with an automated
sales system will inform you right away whether or not an item they are ordering is in
stock. With such a system, customers will be immediately informed of the latest
inventory status which will add a special touch to your customer service program. Such
kind of service will make your customers feel better when dealing with you impersonally
via Internet.
These are three major reasons why inventory tracking and management is important
for your business. There are number of softwares available in the market that will help
you simplify the process of inventory tracking. You can also avail the advantage of
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3. integrating your inventory system with your sales and order processing system in order
to improve your inventory levels and enhance the experience of your customer.
What’s your opinion on these? Leave your replies in the comment box below…!
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