How To Choose Inventory Management Software: Factors, Features & Top Picks
Ever feel like your inventory is a runaway train, and you're sprinting to catch up? You're far from alone.
From stockouts to overselling, the struggle is real—and it's costing you time, money, and probably a few gray hairs.
An inventory management system (IMS) is your ticket to getting that train back on track. But here's the catch: with countless options out there, choosing the wrong one can derail your business faster than you can say “out of stock.”
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Knowing how to choose inventory management software isn't as easy as it sounds. There are lots of ins and outs to consider.
Don't worry, I’ve got your back.
This guide cuts through the noise, giving you the lowdown on key factors to consider, must-have features to look for, and provides a curated shortlist of top inventory management solutions.
Why Does Your Choice of Inventory Management System Matter?
Picking just any inventory management system and hoping for the best isn't a smart strategy. Choosing inventory management software (IMS) is more complex than that.
Here's why: Every brand is unique. Your product mix, sales channels, growth rate, and operational processes are specific to your business.
An IMS that works wonders for one company might be a poor fit for yours.
Let's look at some real-world scenarios:
- Apparel vs beauty: An apparel brand might need robust size or color or style matrix capabilities, while a beauty company requires batch tracking and expiration date management. An IMS perfect for tracking t-shirts could leave a skincare brand scrambling to manage product shelf life.
- Large vs small catalog: A niche brand with 50 SKUs (stock-keeping units) might find an enterprise-level IMS overwhelming and costly. Conversely, a retailer with thousands of products would quickly outgrow a basic system designed for small catalogs.
- Multichannel vs single channel: A brand selling on their website, Amazon, and in physical stores needs seamless channel integration. A single-channel e-commerce store might find these features unnecessary and confusing.
- Made-to-order vs ready-to-ship: A custom furniture maker requires an IMS with strong production tracking and bill of materials functionality. A dropshipper, on the other hand, needs real-time supplier inventory integration.
- High volume vs low volume: A fast-fashion brand processing thousands of orders daily needs lightning-fast performance and advanced automation. A boutique selling artisanal products might find such a system overkill and prefer simpler tools.
What does an inventory management system do?
An inventory management system serves as the backbone of your operational infrastructure, enabling you to manage and optimize your inventory with precision.
The right one should:
- Streamline operations. Automate routine tasks like order processing, restock alerts, and purchase order creation.
- Reduce human errors. Implement barcode scanning and real-time updates for accuracy.
- Provide insights. Offer robust analytics and reporting, including sales trends, inventory turnover rates, and demand forecasting, for data-driven decision-making.
- Enhance customer satisfaction. Prevent stockouts and overselling across channels.
- Optimize cash flow. Maintain ideal stock levels to balance capital and demand.
The wrong one? It could hold you back, causing operational inefficiencies, financial losses, customer dissatisfaction, and damaged reputation.
You can also get ahead of the competition. It's been reported that a full 43% of small businesses don't even track their inventory, which no doubt hurts them on storage costs, stockouts, and overall efficiency.
Switching systems is a hassle. Once you've implemented an IMS, changing to a new one can be time-consuming and costly. It's worth getting it right the first time.
Maintaining an inventory of specialized food items was challenging with manual spreadsheets.
After thorough research, we chose Zoho Inventory for its user-friendly interface, affordability, and features tailored to our needs. It allows us to assign dietary labels and set reorder points for each item.
As a result, stock accuracy has vastly improved, slashing the probability of stock-outs or over-stocking, improving customer satisfaction and minimizing waste.
What you should look for in your inventory management software
Every business has its own unique inventory challenges based on factors like product type, sales channels, and growth stage.
However, there are some core features that any robust IMS should offer. When choosing inventory management software, keep an eye out for these essential capabilities:
- Real-time inventory tracking. Keep tabs on stock levels across all channels at any moment to ensure accuracy and readiness.
- Forecasting capabilities. Utilize historical inventory data to anticipate future demand, enabling smarter inventory planning.
- Cycle counting. Perform regular verifications of inventory to maintain accuracy and accountability without disrupting daily operations.
- Inventory barcoding. Simplify inventory management with quick scanning capabilities that reduce errors and save time.
- Returns processing. Streamline the handling and reintroduction of returned items into your inventory with effective processes.
- Automations and customizable workflows. Enhance efficiency by automating repetitive tasks and tailoring workflows to your business needs.
- Multichannel management. Manage your inventory cohesively across various selling platforms to avoid discrepancies and optimize sales.
- Reporting and analytics. Gain valuable insights into inventory performance, sales trends, and operational metrics to guide your decisions.
- Automated reordering. Ensure you never run low on essential items with automated stock reordering points.
- Warehouse management. Oversee all aspects of warehouse operations, from stock storage to order fulfillment, with tools designed for efficiency.
- Cloud-based system. Accessibility from anywhere, ensuring flexibility and resilience.
- Integrations. Seamless connections with other systems like ERP, CRM, and ecommerce platforms.
- Supplier management. Efficient management of supplier data and interactions.
- Batch and expiry tracking. Track products by batches and manage expiry dates to optimize stock freshness.
- Customer support. Reliable support to resolve issues quickly and maintain operational continuity.
- Mobile accessibility. Manage your inventory on the go with a mobile-friendly interface.
- User permissions and roles. Control access to sensitive data and functions based on user roles.
- Stock notification. Alerts for low stock levels, helping prevent stockouts.
Factors to Consider When Selecting Inventory Management Software
Here are some factors you should consider when deciding for an IMS.
1. Pricing and budget
Inventory management software can range from a few bucks a month to thousands, so it's crucial to find a solution that fits your wallet without skimping on essential features.
As you're choosing inventory management software, price must be top of mind, though it can't be the only factor.
Pricing models to consider:
- Monthly or annual subscriptions. These are the most common and typically include support and updates.
- Tiered plans. Based on features, order volume, or number of users, allowing you to scale as your business grows.
Watch out for hidden costs like setup fees, training and onboarding charges, add-ons for essential features, and data migration costs.
Don't just look at the sticker price. Consider the potential ROI and value for money.
A system that might seem pricier upfront could save you significantly in the long run by preventing costly errors and reducing inventory waste with features like advanced forecasting and real-time analytics.
If you're just starting out, a basic system might do the trick. But if you're processing hundreds of orders a day across multiple channels, you'll want to invest in a more robust solution.
To get a sense of the starting price for our favorite inventory management software, check out this pricing comparison table:
| Tools | Price | |
|---|---|---|
| Cin7 Core | From $349/month | Website |
| MRPeasy | From $49/user/month | Website |
| SkuVault | From $359/month | Website |
| Settle | From $149/month | Website |
| Linnworks | From $449/month (volume-based pricing) | Website |
| Helcim | From 0.50% + $0.25 per transaction | Website |
| KORONA POS | From $59/month | Website |
| Zoho Inventory | From $29/user/month | Website |
| Acumatica | Pricing upon request | Website |
| Sage X3 | Pricing upon request | Website |
Compare Software Specs Side by Side
Use our comparison chart to review and evaluate software specs side-by-side.
Compare Software 2. Your business needs
Choosing inventory management software isn't about getting the fanciest tool on the market. It's about finding the right fit for your unique business. Here's how to nail it:
Start with a self-audit
Reflect on your business needs to start getting a picture of what you want from an inventory management system, such as:
- Product mix and SKUs. Identify the types of products you manage, whether they are perishables, customizable items, or bundles, and the total number of SKUs.
- Sales channels. Assess which channels you are currently utilizing, such as your own website, Amazon, or physical stores.
- Warehouses and fulfillment centers. Determine if you have multiple locations and how they are managed.
- Order volume. Understand your average order volume and how this might scale in the future.
- Regulatory compliance. Ensure any system you consider can handle the specific regulations relevant to your industry.
Consider your pain points
You also need to look at what issues you most want to solve for, asking questions like:
- Are stockouts killing your customer satisfaction?
- Drowning in manual data entry?
- Struggling to forecast demand accurately?
- Having trouble syncing inventory across channels?
The right IMS should directly address your biggest challenges.
If you're a small business processing fewer than 100 orders a month, you might not need all the bells and whistles of an enterprise-level system.
A simpler solution could serve you well until you scale up.
I like to start at the end and work towards the beginning.
In other words, what’s the end result you’re after and what will it take to get you there. Does the system you are reviewing meet those needs?
Does the system fall short or worse, is it overly complex for your needs that will end up forcing you to do workarounds that lead to other issues.
3. Integration capabilities
In today's interconnected ecommerce world, your inventory management system can't exist in a vacuum. It needs to play nice with your other tools, like:
- Ecommerce platforms (Shopify, WooCommerce, Magento)
- Marketplaces (Amazon, eBay, Walmart)
- Accounting software (QuickBooks, Xero)
- Shipping carriers (UPS, FedEx, USPS)
- CRM systems
- ERP solutions
- POS systems for brick-and-mortar stores
Types of integrations to consider:
- Native integrations. Built-in, often one-click setups
- Third-party connectors. Like Zapier or PieSync
- API access. For custom integrations
4. Scalability
When choosing an inventory management system, you're not just solving for today—you're investing in your future.
Here's why scalability matters and how to ensure your IMS can grow with you:
- Prevents the need for costly system migrations as you grow
- Allows you to add new features and capabilities over time
- Ensures your software can handle increased order volumes and SKUs
- Supports expansion into new sales channels or markets
Key scalability factors to consider:
- Order volume capacity
- Number of SKUs supported
- User account limits
- Warehouse/location management
- Multi-currency and multi-language support
Scalability in action:
- Modular features: Start with basics, add advanced tools as needed
- Flexible pricing tiers: Costs that grow proportionally with your business
- API access: Allows for custom integrations as your needs evolve
- Cloud-based infrastructure: Easily scales server resources during peak times
5. Sales channels and warehouses
In today's omnichannel world, your inventory management system needs to be a master juggler. Here are the key features to look for:
- Real-time inventory syncing across all channels
- Channel-specific pricing and stock allocation
- Automated order routing to the optimal warehouse
- Centralized order management for all sales channels
Supported sales channels:
- Your own website(s)
- Marketplaces (Amazon, eBay, Walmart, Etsy)
- Social media shops (Facebook, Instagram)
- Brick-and-mortar stores
- B2B portals
- Wholesale channels
Warehouse management capabilities:
- Multi-location inventory tracking
- Transfer orders between warehouses
- Dropshipping and 3PL integration
- Pick, pack, and ship optimization
- Barcode scanning and mobile app support
If you're selling on more than two channels or fulfilling from multiple locations, basic inventory tracking won't cut it.
You need a system that can handle complex order routing and keep everything in sync.
Questions to ask about multichannel capabilities:
- How often does inventory sync across channels?
- Can we easily add new sales channels in the future?
- How does the system handle variations in product data between channels?
- Can we set different reorder points for each sales channel and warehouse?
6. Customer support
Even the most user-friendly inventory management system can throw you a curveball. That's why top-notch customer support isn't just a nice-to-have—it's essential.
Here's what to look for:
You’ll want a range of support options, including live chat, phone support, and email ticketing.
A comprehensive knowledge base, video tutorials, and an active community forum can also be invaluable resources for self-help.
Support availability:
- 24/7 support vs business hours only
- Response time guarantees
- Support team location (in-house or outsourced?)
Onboarding and training are frequently overlooked but can make or break your IMS implementation.
A guided setup process, personalized onboarding calls, and regular training sessions can significantly smooth your transition to a new system. Larger teams might benefit from custom training packages.
Be on the lookout for support red flags:
🚩 Long wait times during trial period
🚩 Vague answers to specific questions
🚩 No clear escalation path for urgent issues
🚩 Lack of product-specific expertise among support staff
7. Reviews and reputation
The reputation of an inventory management software and its provider can tell you a lot about what to expect in terms of reliability and service quality.
Here's where to dig into reviews and reputation to make an informed choice:
- Software review sites (G2, Capterra, TrustRadius)
- Industry forums and communities
- Social media (LinkedIn, Twitter)
- Case studies on the provider's website
- Google reviews
Expert Tip:
What to look for in reviews:
- Ease of use and learning curve
- Reliability and uptime
- Accuracy of inventory tracking
- Quality of customer support
- Frequency and quality of updates
- ROI and time-saving benefits
Red flags in reviews:
🚩 Recurring mentions of the same technical issues
🚩 Complaints about hidden fees or unexpected charges
🚩 Reports of poor data migration experiences
🚩 Frustrations with unresponsive customer support
Beyond reviews: Assessing reputation
Reviews are great, but let's dig a little deeper. Here's how to get the full picture of an IMS provider's standing in the industry:
- Check for industry awards or recognitions
- Look for mentions in reputable industry publications
- Assess the company's financial stability and longevity
- Examine their client list for notable brands in your space
Questions to Ask Yourself When Choosing Inventory Management Software
To ensure you're making the best choice for your business, it's important to ask the right questions—both about your own needs and the capabilities of potential IMS providers.
Let's break these questions down into categories to help you systematically evaluate your options.
Needs assessment:
- What are our current inventory management pain points?
- How many SKUs do we need to manage?
- How many warehouses or locations do we operate?
- What sales channels do we use (e.g., e-commerce, retail, wholesale)?
- Do we need real-time inventory tracking?
Growth and scalability:
- What is our growth projection for the next 3-5 years?
- Can the IMS handle a significant increase in order volume?
- How easily can we add new sales channels or warehouse locations?
Integration and compatibility:
- Do we need integrations with our existing software (e.g., ERP, CRM, POS)?
- What e-commerce platforms do we need to integrate with?
- Do we require EDI (electronic data interchange) capabilities for B2B transactions?
Features and functionality:
- Do we need advanced features like demand forecasting or supplier management?
- How important are automation features for our operations?
- Do we need barcode scanning or RFID technology?
- What kind of reporting and analytics capabilities do we require?
- Do we need multi-currency or multi-language support?
User experience and accessibility:
- How user-friendly does the software need to be for our team?
- Do we need mobile accessibility for the IMS?
- What level of customization do we require in the user interface?
Support and training:
- How important is customer support and training from the IMS provider?
- What support channels do we prefer (phone, email, chat)?
- Do we need 24/7 support or is business hours sufficient?
Security and compliance:
- What are our security and data privacy requirements?
- Does the IMS comply with industry-specific regulations (e.g., FDA for food, HIPAA for healthcare)?
- How does the IMS handle data backups and disaster recovery?
Budget and ROI:
- What is our budget for the IMS?
- Are there any hidden costs we should be aware of (e.g., implementation, training)?
- How does the provider's pricing model align with our growth projections?
If you prefer a fancy printable checklist for this, here ya go:
What is the Best Inventory Management System For Your Brand?
Choosing the “best” inventory management system isn't about finding a one-size-fits-all solution.
It's about finding the perfect fit for your unique business needs. That said, we've done the legwork to narrow down some top contenders for different types of businesses.
Before we dive into our shortlist, remember:
- Your specific needs may differ from the “average” business
- Always take advantage of free trials before committing
- Consider future growth when making your decision
Now, let's take a peek at our top picks for inventory management software, with what each excels at:
Your next steps:
- Identify your must-have features based on our earlier sections
- Check out our detailed reviews of the shortlisted options
- Sign up for free trials of your top 2–3 choices
- Involve your team in testing to get diverse perspectives
- Make your decision based on real-world performance, not just promises
Make Your Operations More Efficient With the Right IMS
Choosing inventory management software is not just a technology decision—it's a business decision.
From understanding your pricing and budget constraints to evaluating user experience and ensuring robust security compliance, each factor plays a pivotal role in how well the IMS will perform for your brand.
Take the time to evaluate your options thoroughly, involve key stakeholders in the process, and think long-term.
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