Cyber Monday Sale up to
55% off on all annual plans
Upgrade NOW & save
Cloud-Based Inventory Management

The Importance of Cloud-Based Inventory Management

Rosie Greaves

If you're on the fence about whether cloud-based inventory management is suited for your business, then you're in the right place. 

Here, we’ll be taking a deep dive into the advantages of cloud-based inventory management, features to look out for if you’re considering a cloud-based inventory management platform, tips for implementing such a system, overcoming potential challenges with said system, and lastly, we’ll round things off by answering some frequently asked questions.

But before delving into the nitty-gritty of this blog post, let's ensure we're all on the same page with what inventory management actually is:

In a nutshell, inventory management is a catch-all term for how a business orders, stores, uses, tracks, and sells its inventory. This includes warehousing and processing inventory, e.g., picking, packing, and shipping orders to your customers.  

How businesses manage their inventory has changed immeasurably since the days of manually counting and tallying items, keeping records in filing cabinets, and, more recently, on spreadsheets. 

Today, we’re seeing an increasing shift towards cloud-based inventory management solutions. In fact, the current adoption rate of cloud-based inventory management software is around 40%

Now that we’ve covered the basics, let’s turn our attention to some of the benefits of using cloud-based inventory management:

Advantages of Cloud-Based Inventory Management

There are several advantages to adopting cloud-based inventory management software:

Real-Time Visibility and Accessibility

The right software will provide real-time information about inventory levels so that business owners can view their:

  • Stock numbers
  • Sales numbers
  • Identify trends
  • Anticipate demand for products

This, in turn, supports businesses in making informed decisions that can help them avoid overstocking and, conversely, running out of stock. 

It’s also worth highlighting that inventory management software can automate certain tasks, such as order fulfillment and tracking stock, helping reduce the risk of manual errors. As such, you know the data you’re working with is more accurate, which makes stocking management to plan and meet customer demand much easier.

Person inside Inventory management house

Cost-Efficiency and Scalability

Rather than implementing expensive hardware, cloud-based solutions tend to be more cost-effective and easier to scale as your business grows. 

For example, you don’t suffer the inconvenience and expense of hardware maintenance and development updates. Instead, those concerns fall to your software provider. In addition, such frameworks are typically cost-efficient because they tend to be more accurate than manual systems, reducing the risk of human error - which leads us nicely on to our next point…

Time & Wealth Graph

Enhanced Accuracy and Reduced Human Errors

Cloud-based systems often provide precise real-time information about your stock, including where it is, thereby reducing human error. 

For example, suppose you run an eCommerce dropshipping business with stock from a range of suppliers and use an online store platform like Shopify. In that case, the right software will sync your suppliers’ stock levels in real-time with your online store so that you never accidentally sell out-of-stock items.

Streamlined Collaboration in a Remote Work Environment

If you run your business remotely, cloud-based systems are a lifesaver because they’re accessible from anywhere. You just need an internet connection, making them a practical solution for teams working in different locations. 

Two persons looking into the laptop

Key Features of Cloud-Based Inventory Management Systems

If you’re considering a cloud-based inventory management system for your dropshipping store, here are just a few features to look out for:

  • Automated tracking and alerts: When a customer places an order with your store, it should automatically be forwarded to your dropshipping supplier, who then fulfills the order on your behalf. You should then receive an automated email with tracking details, allowing you to monitor the status and location of your customer’s order.
  • Integration with popular eCommerce platforms: Look for a system that integrates with the platforms you already use. For example, Shopify, WooCommerce, BigCommerce, Wix, or marketplaces such as Amazon and eBay. For the sake of ease of use and seamless synchronization, it’s worth investigating whether the software you're considering integrates with your preferred sales channels. 
  • Data security measures: Your chosen software must have systems in place to prevent data breaches. So, it’s worth combing through any platform’s privacy policy before working with it. 
  • Customizable reporting and analytics: You’ll need reporting and analytics tools that are easy to use, customizable, and readily accessible via your dashboard. These should give you, at a glance, information about sales, inventory levels, and so on. 
Person Looking the laptop

Selecting the Right Cloud-Based Inventory Management System

In addition to the features listed above, it’s also essential to consider the following when choosing a cloud-based inventory management system:

Understand Your Business’s Needs and Requirements

Be clear about your business needs and requirements, but ensure your shortlisted platforms can support your business as it scales.  

Evaluating Vendor Reputation and Support Services

Before committing to a cloud-based inventory management system, checking the vendor’s reliability and customer support options is essential. 

A good starting point is checking review sites such as Trustpilot and G2. You’ll also want to check the type of support offered on your chosen price plan. Is it 24/7? Is it live chat with a human being? What type of online resources do they offer?

In addition, if you’re a dropshipper, you’ll want to work with reliable suppliers who provide quality products and promptly ship them to your customers. In the case of Spocket, you can click on a product via your dashboard and then click on the supplier name to see their star rating (out of five), plus comments about that supplier’s products, customer service, and more. 

Also, depending on your Spocket subscription, you can chat directly with suppliers. This makes managing inventory and planning for any potential hiccups so much easier. 

Implementing Cloud-Based Inventory Management

Once you’ve chosen your cloud-based inventory management system, there are several steps you need to take to avoid a painful setup: 

Plan the Process

If you’re not utilizing the dropshipping fulfillment model and instead purchasing wholesale products to sell or manufacture your own products, or you’re a dropshipping supplier, your warehouses must be ready. 

This includes identifying all of the following:

  • Warehouse locations
  • Shelving within each warehouse
  • Warehouse stations, e.g., a packing area, sorting area, goods receiving area, and so on. 

In addition, warehouse teams need to prepare to put new barcode labels on pallets, racks, and so on.


Train Employees on the New System

Successful adoption of cloud-based inventory management depends on how well you train your employees to use it. One way to do this is to establish training programs and schedule test runs before full adoption. Utilize any tools your chosen platform offers, such as training videos, blogs, podcasts, and access to support. 

Overcoming Cloud-Based Inventory Management Challenges

Cloud-based inventory management software isn’t a magic solution; naturally, businesses may face challenges when using it. 

For example, there may be the aforementioned data security concerns and breaches, such as unauthorized access. So, before committing to a platform, be sure that it’s:

  • Fully GDPR compliant
  • Any sensitive data is encrypted
  • Secure authentication methods are adopted

There may also be integration challenges with legacy/pre-existing systems. These can be overcome if your chosen platform offers seamless integration with the tools you already use. 

Also, there may be connectivity and uptime issues resulting in interrupted operations. A sound cloud inventory management system will maintain a high 99%+ uptime with reliable connectivity. 

Whenever a new system is implemented, you might come across resistance to technological change among your team. Handling this can be difficult. However, you can manage this by communicating with team members. Be sure to stress the benefits of the new technology and clarify your timetable for them to participate in its implementation. 

Frequently Asked Questions (FAQs)

Hopefully, the above information has covered most of what you need to know. However, here are a few answers to commonly asked questions that may also help when considering cloud-based inventory management solutions: 

How does real-time visibility benefit businesses in inventory management?

Real-time visibility over your inventory helps you firefight potential issues before they arise. For example, stockouts and overstocks, but you can also respond to the majority of inventory-related situations faster and answer customer queries about their orders more accurately when you have access to real-time data. 

What security measures are in place to protect sensitive inventory data on the cloud?

This will vary depending on which provider you opt for. Your chosen inventory management software should have robust security measures in place to protect your sensitive data on the cloud and prevent any data breaches. 

With that said, double-check that your chosen platform has the following in place:

  • Compliance with GDPR, PCI DSS, and ISO 27001. Also, don’t forget to look at their terms of service and privacy policies.
  • Stringent access controls, including multi-factor authentication and password protection
  • A system that monitors and updates cloud data regularly and alerts you if any breaches occur. 
  • Encrypted data using protocols such as SSL and HTTPS.

Are there industry-specific considerations when choosing a cloud-based inventory management system?

Potentially. This will vary depending on your industry and the kinds of products you’re selling. 

However, here are a few considerations you may have when choosing an inventory management system:

  • Your budget
  • How fast your inventory sells
  • How much support you might need
  • If you need to track products from sale to delivery, including delivery times
  • If you need to track products and inventory levels in real-time
  • If you need to track inventory across multiple warehouses in multiple locations
  • If you need to generate reports on delivery times, customer satisfaction, and shipping prices

Can small businesses benefit from cloud-based inventory solutions, or are they better suited for larger enterprises?

Yes, small businesses can benefit from cloud-based inventory solutions because they offer scalable, secure, and flexible solutions that can be adapted as the business grows. 

Small businesses can use such solutions without the need for hardware, IT staff, and infrastructure maintenance. In addition, routine tasks such as inventory management are automated, saving time that can otherwise be spent on activities that directly expand the business.  

What trends are expected in the future of cloud-based inventory management?

Future trends to watch out for include the following:

  • AI (artificial intelligence) and machine learning (ML) integration: Such technologies can analyze large volumes of data, make more accurate predictions, and identify inventory-related patterns, for example, when there’s increased product demand. In addition, AI algorithms can help with inventory tracking and management, providing order updates in real time. 
  • Internet of Things (IoT): I.e., the increasing use of the internet in everyday objects, enabling them to send and receive data. Adopting IoT can also provide real-time data on order status and inventory levels to improve decision-making about what you sell and when. 
  • Blockchain technology: This provides complete security and transparency over each transaction in the supply chain.
  • Mobile and omni-channel technology: More and more systems will be mobile-friendly, enabling customers to place orders from their phones and receive real-time updates on their purchases. Also, omnichannel technology allows customers a greater choice about how they receive their product, e.g., ordering online for delivery or picking it up in-store.
  • Predictive analytics: To anticipate market trends based on external factors for more accurate product demand forecasts. 
  • Advanced automation: For example, robotics to improve warehouse efficiency when fulfilling orders. For instance, for picking and packing orders ready for shipping. 

Are You Ready to Adopt Cloud-Based Inventory Management?

Overall, using a cloud-based inventory management system can help you streamline your order fulfillment process and improve its efficiency. Rather than relying on old-school manual methods and spreadsheets, a centralized cloud-based solution accessible from a single dashboard can be easier to use and more cost-effective. 

The right system will empower you to track all your orders in one place, see inventory levels in real-time, and avoid any embarrassing ‘out of stock’ notices on your product pages. 

Technological advancements in inventory control may seem overwhelming. Still, by embracing them and staying up to date with the latest developments, you’ll stay one step ahead of your competitors. 

If you’re considering implementing such a system, always take advantage of any free trials and check the type of in-person and online support you’ll receive and that there’s a well-structured pricing model. That way, you can upgrade as your business grows. 

That’s all from us. Good luck picking and implementing your new cloud-based inventory management system!

Get Spocket for BigCommerce!
Learn how to start and grow your own e-commerce store!
You're in! Look out for our emails to help you get started with your e-commerce store.
Oops! Something went wrong while submitting the form.
Rosie Greaves

Rosie Greaves is a professional content strategist specializing in all things digital marketing, B2B, and lifestyle. In addition to Spocket, you can find her published on Reader's Digest, E-commerce Platforms, and Judicious Inc. Check out her website Blog with Rosie for more information.

Also Read:

Get 14-day instant access to Spocket at no cost.

Congrats! You'll receive in depth guides and interesting blogs straight in your inbox.
Oops! Something went wrong while submitting the form.

Also Read

shopify dropshipping - 3shopify dropshipping - 2 shopify dropshipping - 3shopify dropshipping - 5