Chapter 7

How to Manage Inventory on Shopify

Resources / How to Manage Inventory on Shopify

Shopify Inventory Management

If you’re in the retail business, you already know the vital importance of effective inventory management. You might have a great system for handling your own websites and physical stores but are now wondering how to manage inventory on Shopify.

Like most e-commerce platforms and inventory management systems, Shopify has the ability to track inventory levels on a per SKU basis and for individual variants. You can also group products by category, type, season and sale and quickly scan products using barcodes.

This is a great first step to maintaining accurate inventory levels and limiting overselling, regardless of whether you only sell on Shopify or have a mixture of websites, pop-up shops and dropshippers.

Shopify Multi-Location Inventory Management

In September 2018, Shopify launched ‘Locations’, which means that you can now track inventory across different warehouses, stores and dropshipping companies.

This eliminates the need to track inventory in a spreadsheet, thus ensuring you have more accurate and up-to-date data. Not to mention your ability to expand is now no longer limited by your choice of e-commerce platform!

But Shopify multi-location inventory management does have its limits as your pricing plan will dictate how many locations you’re allowed to have, and if you use third-party apps that physically stock inventory for you, then each of these will also be treated as separate locations.

At present, the pricing plan limits are as follows:

Shopify Lite – up to 3 locations

Basic Shopify – up to 4 locations

Shopify – up to 5 locations

Advanced Shopify – up to 8 locations

Shopify Plus – up to 20* locations

*Contact Plus Support if you need more than 20 locations

Shopify multi-location inventory management is also supported by dedicated back office and ERP solutions that have strong inventory management functionality. These solutions facilitate multiple pools of inventory to generate a product’s combined availability, which is then pushed to Shopify in real time. When orders are placed, the solution can then takeover once again and route the fulfillment requests to the right team and inventory location.

7 Must-Have Features of Shopify Inventory Management Software

Listed below are seven must-have features of Shopify inventory management software so you can be sure the systems backing up your website are reliable, scalable and future-proof.

Multichannel inventory management

Inventory tracking across channels is critical to the success of your e-commerce business as you need to ensure you have the right products listed on the right channels to meet demand.

Your chosen solution should give you multi-channel inventory management for Shopify and all your other e-commerce stores and online marketplaces (think Amazon, eBay, Etsy, etc.), as well as your brick-and-mortar stores. It should instantly update inventory levels and product availability in real-time, no matter how many places you sell your wares

Your systems should take into account inventory updates for not just sales, but transfers, returns and restocks as well. This ensures you’re providing the best possible experience to your customers, while reducing the risk of “out of stock” scenarios once something has been purchased.

Multi-location inventory management and integrated WMS

If you’re managing multiple warehouse locations or inventory across a selection of different channels like pop-up shops, online marketplaces and brick and mortar stores, then you need to know exactly what inventory you have, how much of it is ready to sell and where it is.

These are just some of the reasons why multi-location inventory management is so powerful and why you should ensure that your software enables Shopify inventory management for multiple locations.

In order to achieve this, your systems need to obviously be able to support multiple warehouse locations, but this, combined with an integrated warehouse management system will make things miles more streamlined and efficient.

An advanced WMS will provide your warehouse staff with powerful functionality like segmented inventory counts, barcode scanning, partial fulfillment, dropshipping and automatic warehouse routing.

The latter is perhaps the most powerful of them all as it enables you to specify which warehouses to fulfill from however you choose to slice and dice your data. Common examples include automatically fulfilling from locations based on delivery address and where inventory is actually in stock.

Bundle and variant support

Although Shopify doesn’t directly support bundles, your inventory management system can support them by having the capability to connect a bundle to an individual Shopify product.

This way, you can sell the bundle item as normal on your website, while tracking inventory for the separate components in your back office.

Likewise, you’ll probably want to track inventory for individual product variants like sizes and colors too. So your Shopify inventory management system should also be able to easily group your products together and manage combinations in any way you choose.

Inventory demand planning

A powerful demand planning tool, which is either native to your Shopify inventory management software or 100% integrated, will enable you to understand exactly how your inventory is performing across your Shopify stores and on other channels too.

You’ll gain access to data and insights related to things like seasonality, out of stock periods, average sales, trends and product lead times, meaning you can take the guesswork out of what needs to be reordered and when to satisfy customer demand.

Integrated accounting and landed cost functionality

Integrated accounting is crucial for you to report on the success of your Shopify webstore and other channels in real time, so you can make important business decisions quickly and efficiently.

But you also need to ensure your accounting systems can report on your products’ landed costs as well.

Your landed costs include the additional fees you need to pay in order to get your goods from the warehouse to your customers. Things like freight, insurance and taxes are all things that need to be accounted for, so you can sell your products for the right price and remain profitable.

Robust API for peak trading days

In the event of flash sale events and peak trading days, you need to be sure of the systems keeping your sales and inventory in check.

When adopting any Shopify inventory management platform, you should find out how many orders the system can download and process in a timeframe that makes the most sense to you.

For instance, at Brightpearl, we support the download and update of up to 25,000 Shopify orders per hour, which we’ve found to be more than sufficient for our customers during their busiest trading periods.

Hassle-free returns management

With a whopping 89% of customers saying they’ll shop again at an online store after a positive returns process, it literally pays to offer efficient and hassle-free returns.

In order to do that, the systems that support your Shopify sales should be able to automatically link sales credits to online returns from both an accounting point of view and when it comes to inventory availability.

This ensures your processes are slick, smooth and streamlined, hopefully prompting your customers to shop with you again.

How to Choose the Best Shopify Inventory Management Software

There are a number of Shopify inventory management solutions on the market, but how do you pick the right one for your business? Here are a few aspects to consider:


This is probably the most critical factor in choosing software. If you’re sticking to a strict budget, your choices will obviously be narrower. The good news is that there are affordable options out there. Remember, too, that a highly efficient solution will actually save you money in the long run.

Most modern software is cloud-based and charged on a monthly subscription basis, so you don’t have to fork out for on-premises hardware or a big upfront fee. Do your research and ensure your solution represents value for money, whatever that means to your individual business.

Necessary features

There are certain essential features for effective inventory management on Shopify and beyond, and then there are nice-to-haves. It’s up to you to decide what your business needs for success and whether or not you can get by with the basics.

To recap on what we said earlier, you at least need multichannel and multi-location tracking, demand forecasting, and support for variants and bundles. If your solution includes additional features besides these for Shopify inventory management—think built-in accounting or CRM—even better.

Apart from the features themselves, consider the level of customer support available and whether you have to pay extra for premium service. You’ll also want to know that your software has top-notch security and compliance like Brightpearl does.

Size of the business

The size of your organization will have an impact on the inventory management tool you choose. For example, how many employees will be using the new system? Will you have to pay per user, or can you add as many as you like for no extra charge? (Brightpearl allows you to do the latter).

A larger business will have more complex inventory needs, while those selling on multiple sales channels will require a system built to handle this. Some software packages (especially the lower-priced or freemium ones) also place limits on the number of inventory items, locations, and sales orders you can have.

If your company is growing, it makes more sense to pick a scalable solution that factors in the pace of your growth, rather than forcing you to upgrade for additional features. Not to mention one that lets you automate repetitive tasks in areas such as order fulfillment, order management, inventory forecasting, and overall inventory control. The kind of tasks that become ever more time-consuming the more you grow.

Required integrations

Obviously, your software solution has to integrate seamlessly with Shopify, syncing your data in real-time and updating stock levels whenever there’s a sale, transfer, or return. That way, you’ll never accidentally sell an item on another channel when it’s already been sold via Shopify.

Most inventory management software offers integrations with other key apps that help you run your business, such as shipping providers, accounting systems, 3PL companies, warehouse management systems, and POS (Point of Sale). Again, this means all your relevant data will be in one central place.

Apart from its Shopify partnership, Brightpearl integrates with a ton of other tools and also enables custom integrations through APIs.

Challenges it needs to face

There are plenty of challenges posed by inventory management, including the vagaries of the supply chain, seasonal demand, and changing consumer trends. Your business will also have its unique operational challenges, so you need a solution that’s guaranteed to help you face them.

It’s helpful to make a list of challenges and goals—maybe you want to reduce carrying costs, streamline warehouse operations, or create more accurate forecasts—then look for a solution that offers things like automation, improved visibility, and business intelligence.

Does Shopify Have Inventory Management?

Yes, Shopify does have some built-in tools for managing inventory in your stores. These include tracking, purchase order creation, bulk editing, and the option to add tags to products. You can filter your inventory based on product type, availability, vendor, tags, and quantity, adjust inventory counts, and view your adjustments history for variants and products.

For small businesses with a simple inventory flow, there’s probably enough basic functionality to get you started. However, inventory management in Shopify has its limitations for larger companies. For example, you can only view 90 days’ worth of inventory history, which makes it harder to look back at previous sales to forecast future demand.

Shopify does offer multi-location tracking, but the number of locations you’re permitted will depend on your pricing plan. It also has a long list of prohibited and restricted items, so if you want to sell those on other channels, you’d have to manage them separately from Shopify—which kind of defeats the object of centralized inventory management.

If we can give you one tip for how to manage inventory on Shopify, it’s to use dedicated, advanced inventory management software that integrates with this, as well as your other channels and locations. In short, you’re better off with Brightpearl, a Retail Operating System which ensures real-time visibility across operations and is designed to grow with your business and ensure you maintain maximum profitability.

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