Mastering multichannel inventory management

In the busy world of modern commerce, businesses often find themselves juggling a multitude of sales channels and inventory data. Read more on how to transform this multichannel complexity into a symphony of success with streamlined multichannel inventory management.

trucks in front of a warehouse
Published: 06.11.2023 14 min read

Whether or not you’re a classical music enthusiast, you can’t deny the vital role of the conductor. Just like combining various instruments into a harmonious melody is a challenge, so is managing a wide range of e-commerce channels.

In the evolving world of commerce, businesses are constantly exploring new ways to expand their reach and tap into diverse customer segments. One of the key strategies that has gained a significant following in recent years is multichannel retailing.

Think of your e-commerce channels as a variety of instruments and multichannel inventory management software as the conductor expertly blending the notes into a harmonious success. By harnessing both your expertise and advanced technology, you can orchestrate a seamless sales symphony.

Multichannel retail involves selling products through various online and offline platforms, including online stores, physical shops, social media, and more. However, as businesses expand across multiple sales channels, the need for efficient multichannel e-commerce inventory management becomes vital.

What is multichannel inventory management?

What is Amazon inventory management? Amazon inventory management system is a software tool that helps businesses of all sizes manage and track their inventory levels on the Amazon marketplace.

Multichannel inventory management is a comprehensive system designed to efficiently control, track, and optimize a company’s stock across all its sales channels and locations.

This practice allows businesses to synchronize their inventory and maintain visibility across all touchpoints, providing a seamless shopping experience for customers and smoother inventory processes for the retailer.

Multichannel inventory management allows businesses to reach a broader audience and achieve operational efficiency, ultimately leading to increased sales and revenue growth. It’s essential to enhancing the customer experience, optimizing inventory operations, and streamlining order fulfillment processes.

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Multichannel sales platforms

Multichannel sales help diversify the reach of a business and expand its target market. It encompasses various channels, both online and offline.

E-commerce platforms

E-commerce platforms like Shopify and WooCommerce offer businesses the opportunity to establish their online presence. Customers can purchase products directly from a company’s website.

Multichannel e-commerce inventory management involves unique practices to handle the complexities of online retail while preventing overselling. For those using dropshipping, coordinating stock levels with suppliers is crucial, often requiring automated systems.

E-commerce retailers frequently sell product bundles or kits, so inventory management must efficiently handle these complex product structures.

Managing returns is another critical aspect, ensuring that stock levels are updated accurately after processing returns.

E-commerce often faces fluctuating demand based on seasons or trends, demanding adaptable inventory management solutions. For businesses dealing with perishable or time-sensitive products like food, coffee, or cosmetics, tracking batch and expiry dates is necessary to avoid selling outdated items.

Online marketplaces

Marketplaces like Amazon, eBay, and Etsy are popular platforms that allow businesses to reach a vast customer base. Companies can list and sell their products alongside other sellers.

These platforms often involve high sales volumes, making real-time inventory updates critical to avoid overselling. Additionally, marketplace sellers may offer products from various suppliers, creating the need to manage multiple sources of stock efficiently.

Several challenges in online marketplaces are similar to those encountered in e-commerce platforms, as online marketplaces often serve as the go-to solution for businesses without their own web stores.

Physical stores

Brick-and-mortar stores are traditional sales channels where customers can make purchases in person. In this setting, maintaining optimal stock levels is essential to meet customer demand and maximize profits.

Store managers need to balance avoiding stockouts, resulting in lost sales and disgruntled customers, and overstocking, which ties up capital and storage space.

Theft and inventory shrinkage are ongoing concerns that demand security measures and effective prevention strategies.

Moreover, many physical stores continue to rely on manual tracking methods, making it challenging to keep inventory records accurate and up-to-date, especially in larger or franchised retail operations.

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Social media

Social media platforms like Facebook, Instagram, and Pinterest provide the option for businesses to sell products directly through posts and advertisements. Social media can also serve as a channel for customer inquiries, helping businesses address questions about product availability and delivery times.

Tracking customer sentiment and feedback on social platforms can provide valuable insights into inventory demand and customer preferences, allowing for more informed purchasing and stocking decisions.

However, social media also presents challenges, such as managing customer expectations in real time and handling inventory discrepancies between online listings and in-store availability.

Mobile apps

Mobile apps are increasingly used by businesses to offer a convenient shopping experience for customers. Mobile commerce, or m-commerce, has gained prominence in recent years with the rise of smart devices.

Inventory management for mobile apps involves ensuring product listings are up to date and synced with physical stock and other sales channels. Mobile apps provide opportunities for targeted promotions and push notifications to boost sales and clear excess inventory.

However, maintaining a smooth user experience and seamless order fulfillment is crucial. Businesses must address potential app crashes and bugs that can disrupt operations, potentially losing sales and customers.

The basics of multichannel inventory management

It’s important to be aware of the essential components that make up the foundation of a synchronized operation. This helps you keep an eye on each element, ensuring every aspect of your inventory is covered efficiently.

Effectively managing inventory across multiple locations is complex and requires a strategic approach as well as the right tools. Whether you operate several brick-and-mortar stores, use third-party logistics providers, or maintain warehouses in different regions, the goal is to ensure that inventory is in the right place at the right time and available for order fulfillment.

Inventory centralization

Inventory centralization is a strategic approach that gathers all inventory data and resources into one unified system or location.

It offers comprehensive visibility and control over inventory, providing real-time insights into stock levels and demand fluctuations. This allows businesses to create better strategies for restocking and order fulfillment, reducing the risk of stockouts and overstocking.

Centralization also leads to significant cost savings by optimizing stock levels, reducing carrying costs, and preventing inventory duplication. It helps streamline the supply chain, improving operational efficiency.

Centralized inventory management simplifies compliance and reporting, as all data is easily accessible. In a rapidly changing business environment, inventory centralization provides businesses with the means to maintain a competitive edge and ensure lean, cost-effective inventory management.

Real-time updates

Real-time updates in inventory management refer to the live tracking and recording of inventory changes as they occur. This means that any addition or deduction of stock, whether due to sales, new purchases, or returns, is immediately reflected in the inventory system.

Real-time updates provide businesses with accurate, up-to-date information about stock levels, allowing for precise multichannel order management. This synchronized data is invaluable in decision-making processes, enabling companies to respond promptly to shifts in demand or supply chain disruptions. It helps prevent stockouts by automatically triggering reorder points and alerts when inventory levels drop below pre-determined thresholds.

Furthermore, real-time updates foster transparency within the organization, as all relevant departments have access to the same inventory data. This ensures seamless collaboration and more efficient workflows across the entire company.

Inventory forecasting

Inventory forecasting is a critical component of multichannel inventory management, enabling businesses to predict demand and optimize stock levels across various sales channels. Use inventory forecasting tools to determine how much stock each location should hold. This prevents overstocking in one place and stockouts in another.

Companies can make informed decisions about stocking products by:

  • Analyzing historical sales data
  • Anticipating seasonality
  • Monitoring trends
  • Assessing market conditions

Accurate forecasting minimizes overstock and understock situations, reducing storage costs and lost sales. Find a multichannel inventory management system with forecasting capabilities to streamline this process.

Order routing

Order routing is a crucial component of efficient inventory management and fulfillment processes. It involves determining the optimal path for customer orders, from order placement to delivery, with the purpose of minimizing lead times and costs while maximizing customer satisfaction.

In an order routing system, several factors come into play, such as:

  • Availability of products in different warehouse locations
  • Proximity of these warehouses to the customer’s delivery address
  • Chosen shipping method

The system ensures that orders are directed to the warehouse that can fulfill them most effectively. This might even include splitting a single order into multiple shipments if it leads to faster and cheaper deliveries.

Effective order routing can significantly impact customer experience, as it helps ensure on-time deliveries and avoid being unable to fulfill orders. It also helps reduce costs by optimizing shipping costs and reducing unnecessary inventory movements.

In essence, order routing is about streamlining the path from order to delivery to enhance customer satisfaction and operational efficiency.

Safety stock

Safety stock serves as a buffer to mitigate the risk of stockouts or delays in fulfilling orders. It acts as an insurance policy against unexpected demand fluctuations or disruptions in the supply chain.

By strategically maintaining safety stock levels, businesses can enhance their ability to meet customer orders promptly, even during unforeseen circumstances.

However, it’s essential to strike the right balance when determining the amount of safety stock to hold. Too much can tie up capital and increase storage costs, while too little can leave a business vulnerable to disruptions.

Data integration

Integrating multiple sales channels, such as e-commerce platforms, brick-and-mortar stores, and online marketplaces, is a fundamental component of multichannel inventory management. Integrations facilitate the seamless flow of data between different systems.

It allows organizations to gather, process, and analyze data from different systems, regardless of format. This practice is crucial for achieving a comprehensive understanding of an organization’s operations.

In today’s data-driven business landscape, data integration is essential for informed decision-making, reporting, and analytics. It minimizes data isolation, provides up-to-date information, and allows creating better business strategies.

Challenges of multichannel inventory management

Multiple workers around a desk putting together a white jigsaw puzzle

While multichannel inventory management offers numerous advantages, it also presents a fair share of challenges. It’s essential to recognize and address these challenges to successfully determine and implement the best strategy.

  • Data synchronization — Ensuring that all data, including product information, stock levels, and pricing, is consistent across all sales channels can be a formidable challenge. Data synchronization issues can lead to customer confusion and a poor shopping experience.
  • Overstocking and understocking — Managing stock levels across multiple locations can lead to overstocking in some places and understocking in others. Balancing inventory to meet demand without accumulating excess stock can be difficult.
  • Order routing complexity — Determining the most efficient location for order fulfillment can be complex, especially when considering factors like shipping costs, inventory availability, and order priorities. Failing to optimize order routing can lead to increased operational costs.
  • Inventory visibility — Maintaining real-time inventory visibility across various locations and sales channels can be challenging. Customers expect to know whether a product is in stock and where it’s available, and failing to provide this information can result in lost sales.
  • Technical integration — Integrating different sales channels, including e-commerce platforms, marketplaces, and physical stores, requires technical expertise. Compatibility issues between systems can lead to inefficiencies and data inaccuracies, potentially resulting in errors and discrepancies in your work.

Benefits of multichannel inventory management

User leaving a rating for a product or a service using a smartphone

Despite the challenges, multichannel inventory management offers many benefits that can have a positive impact on the bottom line of your business and customer satisfaction.

  • Enhanced customer experience — Providing customers with consistent product information, real-time stock availability, and convenient shopping options across multiple channels creates a seamless and satisfying experience. Making stock levels visible to customers allows them to choose the best physical store to pick up their products or opt for online shopping if they have specific delivery requirements.
  • Increased sales — Expanding your presence across various sales channels opens new revenue streams and allows you to reach a broader audience. It’s a sure way to scale your business, gain brand awareness, and get your products out to more people.
  • Inventory optimization — Efficient multichannel inventory management enables you to minimize overstock and understock situations by balancing inventory levels according to demand. This reduces holding costs and increases profitability.
  • Improved operational efficiency — Automation and streamlined processes in multichannel inventory management can significantly enhance operational efficiency. With centralized control, you can reduce manual errors and expedite order processing. It also optimizes work across teams and locations.
  • Better decision-making — Access to real-time data and reporting tools helps businesses make data-driven decisions about inventory levels, pricing, and marketing strategies.

10 tips for multichannel inventory management

What is retail inventory management software? Many different software tools are available to help retailers manage their inventories more effectively and efficiently.

Creating a successful multichannel inventory management strategy requires a comprehensive approach. These tips offer valuable insights for effective retail operations across all your sales channels.

1. Choose the right software

Selecting the right inventory management software is crucial. Look for a solution that integrates with your e-commerce platforms, online marketplaces, and other sales channels. Make sure it offers live inventory updates, centralized control, and demand planning capabilities to streamline daily operations.

2. Optimize your listings

Ensure your product listings are accurate and up-to-date across all channels. Inaccurate product information can lead to confusion in customers and your warehouse. Invest time optimizing product titles, descriptions, and images to improve visibility and conversions.

3. Implement automation

Embrace automation wherever possible. Automated systems can help you synchronize stock levels with suppliers, process returns efficiently, and update inventory in real time. Inventory management automation reduces the risk of manual errors and frees up time for more strategic tasks.

4. Monitor and adjust

Regularly monitor your inventory performance. Analyze sales data, assess stock levels, and track customer feedback. Use this data to make informed decisions about restocking, pricing, and marketing tactics. Be agile and adjust your strategy to adjust to changing market conditions.

5. Training and collaboration

Multichannel inventory management requires everyone on the team to be aligned. Invest in training your staff to ensure they know how to use the inventory management software to its full potential. Collaboration across different departments is vital, as it helps streamline workflows and ensures that all teams are working with the same data.

6. Security measures

In multichannel inventory management, security is crucial. Protect your data, especially when integrating various sales channels. Implement secure access controls, use encryption where necessary, and regularly update your software to guard against security threats.

7. Customer communication

Maintain open lines of communication with customers. Keep them informed about stock availability, expected delivery times, and potential delays. Address customer inquiries promptly to enhance their shopping experience and build trust.

8. Expand gradually

If you’re new to multichannel inventory management, consider expanding gradually. Start by adding a new channel or two and monitor the impact on your operations. As you gain experience and expertise, you can confidently add more channels to your portfolio.

9. Monitor competitors

Keep an eye on what your competitors are doing. Monitor their inventory practices, pricing strategies, and customer engagement methods. Learning from their successes and failures can help you refine your own multichannel strategy.

10. Regular audits

Conduct regular audits of your inventory. Perform stocktakes to ensure that the number of items on the shelves matches your recorded inventory levels, especially in physical stores. These audits help identify discrepancies and prevent inventory shrinkage while also pointing out areas for improvement.

By following these tips, businesses can successfully navigate the complex landscape of multichannel inventory management. All that’s missing now is a reliable software solution.

Multichannel inventory management with Katana

Here are the 7 best inventory management software available on the market in 2021. The selection ranges from software that supports manufacturers to restaurants.

As businesses seek a competitive edge in the multichannel retailing landscape, they turn to specialized software solutions that can streamline their inventory management processes. Katana is one such solution that provides comprehensive multichannel inventory management.

Katana’s cloud-based inventory management software is designed for small and medium-sized businesses. It is particularly well-suited for those who sell products through multiple sales channels, including e-commerce platforms, marketplaces, and physical stores.

Katana offers a wide range of features that make multichannel inventory management more efficient and less complex.

  • Real-time inventory management — Katana provides real-time visibility into stock levels and sales across all commercial channels. This ensures that you always have accurate information to make informed decisions, reduce the risk of stockouts, and efficiently handle your carrying costs.
  • Order routing — The software helps you optimize order fulfillment by routing orders to the most appropriate location, considering factors like inventory availability and shipping costs. In turn, this can significantly contribute to lowering shipping costs and, at the same time, increase customer satisfaction.
  • Centralized control — Katana centralizes your inventory data, making it accessible and consistent across various sales channels, reducing the risk of data discrepancies. Give all teams across your multiple locations access to live data.
  • Inventory forecasting — The software provides forecasting tools to help you predict demand and make informed decisions about stock levels.

Katana also offers other beneficial features that help enhance your business experience beyond multichannel inventory management.


Choose from a wide range of built-in integrations, or take advantage of Katana’s open API and create custom workflows using the software you already use and love. From e-commerce to shipping, accounting to CRM — there’s something for every aspect of your business and plenty more ways to build your own workspace. Check out all the built-in integrations here.

End-to-end traceability

Track your materials and products across the whole supply chain to keep tabs on shipments and goods received and sent out. When you work with perishable goods, there are many industry standards to meet, and tracking expiry dates across batches simplifies complying with all the rules. Whether you wish to mark your products with serial codes or barcodes, traceability software can help you label, identify, and track them across your product lifecycle, making quality assurance and recalls much easier.


If you not only sell but also produce your own goods, try out Katana’s manufacturing features, including:

Don’t worry about having to handle separate software for your inventory management and manufacturing — Katana can do both and more.

Take multitasking to the next level with Katana

When juggling all multichannel inventory management tasks becomes too much, let Katana take over. Start a 14-day trial today, streamline your work, and save time to go to the actual circus.


Multichannel inventory management is an essential aspect of modern retail and commerce. To succeed in a landscape where customers expect seamless shopping experiences across various platforms, businesses need to implement efficient inventory management practices.

While it comes with challenges, the benefits of multichannel inventory management are substantial and can lead to increased sales, better customer experiences, and improved operational efficiency.

Its robust features and user-friendly interface make Katana a valuable tool for businesses looking to master multichannel inventory management. Real-time inventory tracking, order routing capabilities, and integrations with popular sales channels make it a compelling choice for small and medium-sized enterprises.

As the next step, we encourage you to explore Katana and see how it can transform your multichannel e-commerce inventory management. Sign up for a free 14-day trial of Katana today and take the first step toward streamlining your operations and achieving multichannel success.

This is Laura Timberg.

Laura Timberg


Laura is a Copywriter who loves to find the fun and beauty in every topic she writes about.

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