Supply and Demand: 5 Techniques to Manage Overstock and Understock in Your Shopify Store

Elijah Adebayo - Writer for Egnition
By Elijah Adebayo
Head and shoulders photo of Michelle Meyer
Edited by Michelle Meyer

Updated July 4, 2023.

Female Inventory Manager Shows Digital Tablet Information to a Worker Holding Cardboard Box

Supply and demand is a fundamental concept of e-commerce. It's like the yin and yang of online shopping. You can't have one without the other. But what happens when you have too much of one and not enough of the other?

That's where overstock and understock come in. Overstocking can lead to increased storage costs and the risk of products becoming obsolete, while understocking can lead to stockouts and lost sales. Below, we explore different ways and expert tips to help you manage your stock.

5 Techniques to Manage Overstock and Understock in Your Shopify Store

  1. Analyze sales data
  2. Use sales promotions and discounts
  3. Use an app for inventory management
  4. Offer bundles and product kits
  5. Implement dropshipping

1. Analyze Sales Data

Sales data reveals much about your customers' preferences, patterns, and future demands—factors critical for making informed decisions about stocking up or scaling back product offerings. By gathering insights into how shoppers interact with your store, you can estimate the upcoming demand and plan inventory levels accordingly.

Expert tips:

1. Track your sales performance over time and examine it for variations in the seasons, spikes, and dips. This can help you decide when you need to stock up or clear away certain products.

2. Sort your sales data into segments such as product, category, channel, location, and customer type. This can aid you in figuring out if products are more popular, profitable, or in demand among different groups of customers.

» Use your sales data to conduct easy Shopify inventory forecasting

2. Use Sales Promotions and Discounts

Sales promotions and discounts are­ marketing tactics that help you provide temporary price­ reductions or incentives to your custome­rs, including buy one get one­ free, free­ shipping, or a percentage off. This has a dual advantage: move inventory quickly and generate more revenue while also re­warding customer loyalty.

Expert tips:

1. Use urgency and scarcity to create a sense of FOMO (fear of missing out). For example, set a time limit or stock limit for your offer and display a countdown timer or a stock indicator on your product page.

2. Segment your customers and target them with personalized offers based on their behavior, preferences, or loyalty. For example, send an email campaign to loyal customers with an exclusive discount code or offer a free gift to first-time buyers.

» Find out whether customer loyalty discounts really work

3. Use an App for Inventory Management

Inventory manage­ment can be quite daunting for Shopify store­ owners, so incorporating an inve­ntory management app can streamline the whole process significantly.

Bestsellers Resort by Egnition is an all-in-one app that provides an extensive set of rules to automatically sort and organize your products into collections. Each collection has customizable sorting rules based on product type, sales, revenue, publish date, tags, and other features. You can also manually add featured products to the top of collections.

The app can help you to:

  • Optimize your online merchandising strategies
  • Organize your products in unique ways that best suit your store
  • Increase ROI and drive growth

Bestsellers reSort

4.8/5(73 reviews)

4. Offer Bundles and Product Kits

Offering bundles and product kits not only helps you move more goods but also raises the perceived worth of your products and encourages customers to purchase multiple items.

Think of it like getting a two-for-one deal at your favorite store—except instead of getting two of the same things, you get two things that go together, like peanut butter and jelly.

Expert tips:

1. Make sure the products in your bundle or kit are complementary. For example, if you're selling a camera, you could bundle it with a tripod or a camera bag.

2. Offer a discount or special price for purchasing the bundle or kit to encourage customers to buy more products.

» Discover how to combine discounts in Shopify to incentivize customers to buy more

5. Implement Dropshipping

Dropshipping is a strategy where you collaborate with a supplier who sends the products customers have bought in your store straight to them. This eliminates the need for you to store inventory or distribute things yourself. Plus, it can help you increase your product variety and offer more options to your customers.

Expert tips:

1. Look for suppliers who have a good reputation and positive reviews. Check out websites like AliExpress, CJ Dropshipping, or Spocket to find suppliers.

2. Make sure the supplier has a good return policy and customer service. This will help you avoid any issues with customers down the line.

3. Integrate your dropshipping supplier with Shopify by using an app like Spocket or CJ Dropshipping. These apps allow you to easily import products from your supplier and fulfill orders automatically.

Give and Take: Master Your Inventory Management

Effective inventory management is crucial for the success of any Shopify store. By implementing the techniques discussed in this post, you can manage your inventory levels more effectively and avoid issues like overstocking and understocking. Not only can these techniques help you increase your sales and improve customer satisfaction, but they can also help you reduce waste and save money.

Additionally, inventory management apps like Bestsellers reSort are designed to help you track your inventory levels, identify your best-selling products, and make informed decisions about your inventory management strategy.

Discover more ways Bestsellers reSort can help you optimize online merchandising and inventory management:

Bestsellers reSort

4.8/5(73 reviews)

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