Understanding the profitability of any Shopify inventory management app comes down to doing a true cost/benefit comparison. The goal here is to provide a framework for this evaluation. Each Shopify store is slightly different so it's important to keep in mind what things are absolutely necessary, what features are nice to have, and which you can do without. That said here are a few things to take into consideration when evaluating a new Shopify inventory management app.
Gains of productivity around the warehouse can add up. Using an inventory system that has methods for addressing pick productivity, average order fulfillment time, inventory turnover, and metrics for inbound order allocation should be a few triggers to look for. Specifically, look for these items on the productivity gains.
Track worker picking productivity (number of picks over a given period of time
Track number of orders shipped over the number of employees shipping for per employee shipping average
Keep tabs on inventory turnover
Keep a moving average inventory value to have a quick measure for how much inventory you are holding
How long does it take for an order to be picked, packed, and shipped
Much of the ROI from a Shopify inventory app comes from efficiencies gained within your warehouse. This can be such things as better location tracking of items so it is easier to find. It could be more efficient layout of the warehouse so pick bins are easier replenished. It could be your fulfillment stations have the packaging material and top 80% of items within an arms reach. Whatever gains you get should be factored into the Shopify inventory management app ROI.
Efficiency in your pick routes
Track efficiencies from the error reduction
ROI from gained visibility into the purchasing
Efficiency from having full pick bins through replenishment tasks
Warehouse layout efficiency
Reorder points and replenishment points efficiency gained
Labor gains from either consolidating or reallocating to higher level tasks
On the other side of the Shopify inventory management app ROI equation is the cost. Inventory apps can range dramatically in cost, setup fees and ongoing fees. This inventory management app ROI calculator will help you take all costs into considersation. Here are a few to be on the lookout for.
Compare features and workflows to your current setup and determine if this is something that will work first and foremost
Identify current costs incurred to solve the same problem
Determine the setup cost (if any) or if you will do the setup yourself (SaaS)
Determine license fees
Understand the pricing structure (user accounts, per location, order volume etc.)
Account for current pricing and forecast with expected growth costs (incremental accounts, orders. etc. that factor into the ongoing costs)
Understand the hosting structure and associated costs (on-premise, hybrid, cloud)
Account for any new hardware needed (printers and phones or scanners)
Current software costs for the same problem
Switching costs (time & materials)
Labor costs to use the system (compared with past labor costs)
Support costs for ongoing software usage
To use this calculator, open the sheet and make a copy of it so that you can edit and input the information relevant to your business.SHOPIFY INVENTORY APP ROI CALCULATOR