
Online retailers haven't grown up with these disciplines, and often don’t appreciate the incremental profit impact of inventory. E-tailers who drop-ship orders from vendors to customers don't have these concerns, but for those who buy and warehouse inventory, both the lost gross margin from stock-outs and the daily incremental cost of owning unproductive inventory harm profits more than is realized. After you've spent all the time and money necessary to source products, recruit customers and build operational capacity, those last few incremental sales are extremely profitable.
To leverage inventory and increase both sales and profits, online retailers should embrace the following strategies:
- forecast weekly SKU demand;
- optimize inventory deliveries by aligning inventory flow with demand;
- identify and liquidate problem inventory as quickly as possible; and
- measure SKU productivity relative to inventory ownership.

Joe is Vice President of Product Solutions at Software Paradigms International (SPI), an award-winning provider of technology solutions, including merchandise planning applications, mobile applications, eCommerce development and hosting and integration services, to retailers for more than 20 years.
Joe is a 34-year veteran of the retail industry with hands-on experience in marketing, merchandising, inventory management and business development at multichannel retail companies including Lands’ End, LifeSketch.com, Nordstrom.com and Duluth Trading Company. At SPI, Joe uses his experience to help customers and prospects understand how to improve sales and profits through applying industry best practices in merchandise planning and inventory management systems and processes.