When running your online store, Inventory management becomes one of the defining factors of your success. You would like to track it from the day 1. I wanted to learn from you on how you are maintaining your inventory. Is the shopify quantity on hand tracking enough? Since it does not include Cost Price, how are you managing the cost of goods sold?
One of the ways we have learnt is to maintain inventory on QuickBooks Online or any other accounting application. Being a full focussed accounting application, factors like Product cost price, cost of goods sold can be calculated and tracked in such applications.
Looking at similar requests from community of Shopify stores, At ZapStitch, we have just released a two way sync of inventory between QuickBooks Online and Shopify. So one can choose to maintain inventory only in QuickBooks and keep the store inventory (quantity on hand..) in sync with it,
I want to learn from you on how you all are maintaining your inventory costs and sales. If you are selling through multiple channels, does it become challenging to track the inventory? If you are facing any challenges, do share. We would share the questions with accounting experts and get back to you on the best practices.
I advise my clients to use QB for inventory management, however there are a few points to consider.
1. At its very basic, QB tracks purchases as inventory receipts (inventory count plus one) and sales (inventory minus one). This is the basis for any inventory system. But there is a lot to consider after this...
2. From an accounting perspective, when an item is sold, the cost of the item is deducted from inventory, and added to the cost of goods sold (COGS). There are two methods of determining what that cost is. The first one is First In, First Out (FIFO). Say you buy one product for $10, and later buy the same product for $12. When you sell the product, the $10 one goes first and your COGS is $10. When you sell the second item, the COGS is $12. The second method of determining cost is Average Cost. Each item costs $11.
Only QB Enterprise does FIFO. All other versions of QB do Average only. What's the difference? FIFO is more accurate and allows you to track costs more carefully, especially if you are in a high volatile price market. It also gives you more accurate margin detail - and we're all watching margin like a hawk, right?
3. The other aspect to consider is replenishment. When do you buy more inventory? In QB (Enterprise and lower) you enter a re-order point (say 10) and a quantity buy (say 50). That means when you have 10 items left, order another 50. This is the simplest approach possible, but does not consider lead time, bulk purchase discounts, storage costs, payment terms etc. All of this is formulaic and must be handled outside of QB.
4. The last thing to consider is Purchase Orders. In QB (Enterprise and lower) you can create Purchase Orders from your Items List when an inventory flag pops up (buy 50). This is a great feature, because we are all using PO's to buy and receive inventory right ;-) QB Enterprise will create PO's automatically.
If anyone has info on apps to handle these issues, please pass them on.
We’ve just created a tool for Shopify which can help you to solve the inventory management issues — Shop Sync.
It pulls in your all of your product variations from multiple sales channels and allows you to manage them in a single location.
Currently multiple Shopify stores are supported, but in the next coming weeks, we plan to add support for Etsy, Amazon and Ebay as well.
Shop Sync has a built in search function that makes it fast and easy to navigate through all of items by name, quantity, product type and sales channel.
After you’ve made your inventory adjustments — the App syncs all the changes directly to Shopify.
The application is currently free to install, so you can play around with it at no cost.
Click HERE and check out our page on Shopify.