Top 6 Features of an Ecommerce Inventory Management System

An inventory management system supports the activities of purchasing product, reading sales results and on-hand inventory and liquidation of product for ecommerce, retail and omnichannel companies.

If you’re looking to replace your current inventory management system, there are many choices. If you do a search, literally hundreds of commercially available systems will pop up. This will include many specialized ones that may not fit your business, including for manufacturing and work-in-process inventory.

So, understanding the system’s history of development and installed base of users is key to selecting the right one for your business. Does it handle manufacturing, wholesale and distribution, retail, ecommerce or direct marketing? The application design and strengths are very different for each. With ecommerce growth, inventory control moves from being a back-office to a customer-facing application providing SKU availability by location and delivery dates to DCs and retail stores to fill customer orders.

Understanding the system’s history should bring to mind key features you need in your ecommerce business. Does this system have these functions? Should it be on your shortlist for  RFPs?

With all the options available today, which solution will work best for your ecommerce business? And what features should you be looking for?

Top 6 Features to Look For

Based on our 34 years of ecommerce fulfillment and inventory management consulting work, here are the top 6 features that you should be looking for in an inventory management system:

Improved Inventory Control and Forecasting

How will this new system assist in managing and controlling inventory? Here are a few key questions to get you thinking about major features and functions:

  • How robust is the SKU item master file? What data is available by SKU, product cost methods and characteristics?
  • Does the system forecast demand at the SKU level over a time horizon and calculate when it will be out of stock based on selling plans or projected demand from vendor lead times? Is the history by item multi-year?
  • If your business is multichannel, will the system provide a channel view of shipped sales and customer demand? Can inventory be held by channel?
  • How streamlined is the analysis and purchasing functions for placing purchase orders?

At a high level, start by outlining your key system’s needs. These types of basic inventory management requirements should give direction to your RFP. It should then detail the functionality at a lower level, such as by lot number control and omnichannel functions like store, fill and ship, and store pickup and stock locations.

Barcode and Scanning

Barcode functions may be provided by the WMS software but the inventory app needs to support the use in the system.

Improved, Actionable Inventory Analysis

There are literally hundreds to thousands of data elements in an inventory management system. What out-of-the-box analyses does it provide, and do they fit your inventory management methods? Are there key metrics that management can use to measure inventory? Examples include inventory turnover by product/SKU and gross margin return on investment (GMROI).

How actionable is the data? Given the sheer number of products and SKUs many companies have, merchandising and purchasing departments often do not have enough time to stay on top of required actions. If there are data dashboards, how actionable are they? Does the system point the purchasing agent or inventory manager to which products to take action on (i.e. potential stock outs, calculating recommended purchase orders and candidates for liquidation)? Or will you have to develop these management tools?


This allows systems to be successfully implemented across industries and merchandise without customization. An example is in product setup of a style with different colors and sizes. It might allow for configuration to display style and color/size sales and stock on hand. Investigate this thoroughly to understand the system’s flexibility.

Integration and Interfaces

If your project can’t get all the functionality from a single source, such as an ERP or WMS, what key integrations and interfaces are required? Will add-on systems be needed? What implementation expense will be required? These include:

  • Master/slave data relationship between the inventory management system and the WMS when two different inventory systems are used.
  • Support for customer-facing or selling applications such as retail POS or website integrations.
  • An interface to corporate accounting systems, including the aggregated value of inventory and the cost value of inventory in a general ledger system; methods include retail, average cost and layered first in, first out (FIFO).
  • Other interfaces such as merchandise planning systems, data analytics, dimensional weight systems and product barcodes.
On-Premise vs. Software as a Service/Cloud

For many companies, cloud-based subscription services have made full-function information systems such as inventory management more affordable than installed software because they are based on usage. Our past blog will give you more information about this option.

Developing Your Inventory Strategy

Implementing the right inventory management system is one of the most critical elements of an inventory strategy that can help you increase sales and improve the customer experience without being overstocked. You can read about our five-step process to improve inventory management here.

There isn’t a single right system for all businesses; take the time to identify the functions you need. Optimizing inventory management should be a strategic objective for all companies.

Brian Barry is President of F. Curtis Barry & Company

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