You can make your Shopify store even more useful, flexible and effective by integrating it with Inventory Planner. In this piece, we discuss how to do it.
How to Integrate Inventory Planner and your Shopify store
First, from your Shopify store, go to the app store, and install Inventory Planner. After you’ve connected it to your store, you can log into Inventory Planner just by clicking on its title from the app section of your Shopify store. The first time you sync your data, Inventory Planner will import your sales history and product information. After that, your store data will sync daily with Inventory Planner.
View Replenishment or Ordering Recommendations
Inventory Planner will provide an overview of sales forecasting based on the sales history in your store and recommendations for which products to purchase in order to meet customer demand.
Click on “Replenishment.” There, Inventory Planner will pull from your points of sale or warehouse locations in your Shopify store and list those separately.
How the Forecast is Calculated
Inventory Planner uses your Shopify store’s sales history to compute the sales velocity, which is the number of units sold divided by days in stock. Sales velocity is a more useful measurement than average sales over the past 30 days because it takes into account only the time your inventory is in stock. Omitting days when inventory was out of stock helps avoid underestimating future demand. Sales velocity helps you determine how many units of a product your customers will buy over a given period; when you know that, you can factor lead time and days of stock to determine appropriate amounts to order.
This sales velocity figure is the core of your store’s sales forecasting, which also will take into consideration recent sales trends. If an item is increasing in popularity month over month, the forecast will pick up on this increased popularity and you will see the trend line continue. If demand is fluctuating from month to month, then there is no trend line to factor into the forecast.
With seasonal products, Inventory Planner will forgo looking at recent trends, instead reflecting what happened 12 months ago, obviously a much more useful measure in such cases. For example, if you are looking ahead to November 2019, Inventory Planner will look back to November 2018 and November 2017. It will take into consideration the demand and increase from 2017 to 2018, both in November, and apply this increase to November of 2019, therefore getting a year-over-year increase in this forecast.
How Replenishment Recommendations are Calculated
With forecasted demand figured out, Inventory Planner will take into consideration your current stock level and any outstanding orders and will develop a replenishment recommendation. This replenishment recommendation of which items you need to purchase will be based on your lead time and the assumption you’ll continue selling the items during your lead time, so that when it arrives, the order will cover your full days of stock.
The lead time and days of stock are the most important pieces of information to update when you start your Inventory Planner account. Lead time starts when you place your purchase order with a supplier and it ends when you have received items into inventory. That might be 14 days if you’re ordering from a domestic supplier, or perhaps 90 days if you’re ordering from overseas.
When considering days of stock, think about your ideal stock cover. You want your supply of a product to last until a new shipment of that product arrives at your warehouse. Perhaps that’s 30 days, which also would be reflected in your order frequency. In this case, your every-30-days order frequency is your days of stock.
How to Create a Purchase Order
Once Inventory Planner has created a replenishment recommendation, you can select individual items in order to create your purchase order. At the bottom of the page, you’ll select “create a new purchase order” for these items. In the quantity column, you’ll find your replenishment recommendations from the last page automatically populated. Any cost prices that you've entered in Shopify will automatically sync to Inventory Planner so that you don't need to reenter this information. You can choose your supplier as well as your destination location or warehouse.
Once the purchase order is as you need it, then you'll click save and the purchase order is created. From here, you can email your supplier with several different formats. You can customize the email that your supplier will receive, or you can download this in a variety of formats if you prefer.
Receiving Products on a Purchase Order
Inventory Planner also can be used to receive items into your inventory after they’ve arrived. Type in the number of items you’ve received; you’ll see a date attached so you have a record of exactly when they were received. Then, you can increase your stock in your Shopify store. This should only be done if you use Shopify as your inventory master, meaning it controls all your inventory levels.
(If you use a different system -- for example, an inventory management system or a warehouse management system that handles and coordinates your stock levels -- then you will not want to push stock increases to Shopify.)
After clicking on “increase the stock level in Shopify,” you’ll see how many units you have received and what the new stock level is after those items are added. If you have previously received items on this purchase order, you will be able to see that in the final column. Once you have confirmed this information, you will click on “update the selected items.” When you go over to Shopify, you’ll click on “products,” and you’ll see the updated count of items in the specified location.
In addition to seeing which items need to be purchased, Inventory Planner can help identify which items are overstocked. Those are items that are sitting on your shelves too long, tying up your cash and taking space better used for other, faster-selling products. The calculation for the overstock is based on your forecast-calculation settings set back in the replenishment process -- specifically, the lead time and days of stock that you set up in your planning period.
Inventory Planner can forecast how many units will be on hand as of the end of a specified planning period. Those are items above your anticipated customer demand, so they can be cleared out. You can consider these items by their retail value, which helps you prioritize which items need to be moved out most quickly, or perhaps tell you if you have a small amount of overstock on an item, which may be a lower priority and thus doesn’t need to be moved out as quickly.
There are additional reporting features within an Inventory Planner that can be helpful when looking at what is happening with your suppliers, with your variants and what the performance of these items is in your store. The Inventory KPIs report is very flexible and can be used for a lot of different purposes. You can consider this report for all locations or for specific locations within your store. You can view this report in a number of different dimensions down to the SKU level with variance, on the total level for the entire store, collections tags, which are brought in from Shopify, and other dimensions as well.
You also can specify the time period that the report will cover and compare time periods. A common practice is looking at the last 30 days compared to the prior 30 days. Inventory Planner can define those time periods, showing how many units you’ve sold in the sales column, and then we can see the difference between the two. It’s helpful to start out on a category level so that you get a big-picture look at what is happening in your store. At a glance, you can see increases or decreases in sales in your various product categories, a helpful way to get a quick glance at your store’s performance. If you see a surprising decrease in a category for example, you can drill down further to the SKU level to get a more complete picture of what’s causing that decreased demand.
As with other reports within Inventory Planner, you can also customize which metrics are showing. There are more than 125 metrics available. You can pick and choose these and you can reorder them so that it's customized to your exact needs. Inventory Planner also offers a number of filters so you can configure the report in the way that you need to. You can save filters, and you can save these as presets so that it will show automatically when you come to this report.
Note that in Shopify, the Vendor field on your product page will show as the Brand in Inventory Planner. Shopify vendors are visible on the site and are synced into Inventory Planner brands. Inventory Planner vendors correspond to suppliers and can be created separately. Note that you can add one or more brands (vendors from Shopify) to Inventory Planner vendor which will associate all current and future variants of the brand with the vendor.
Shopify returns and refunds
When a return is created in Shopify, it can be marked returned without doing a refund. Such returns do not show in Inventory Planner and do not contribute to sales metrics (Sales, Returns Units, etc). This is because of limitation in Shopify orders API. Such returns also do not decrease Net Sales metrics in Shopify sales reports.
If a manual refund is created without returning line items, it will not contribute to sales or revenue metrics in Inventory Planner. This is the same in Shopify sales reports - such refunds do not affect sales reports.
If refund amount is different from the original price, Shopify internally creates a refund adjustment for the difference. These adjustments are not applied in Shopify sales reports - the return always uses the original price. Inventory Planner works the same way: even if you refund less, we still use the original price to match Shopify sales reports.
For an exchange, we recommend to explicitly refund amount of 0.0 as a workaround to make sure Inventory Planner sees the return for the original order. However, note that if the price of the replacement order is 0, the total revenue for 2 order and the return will be zero in Inventory Planner and Shopify.
Shopify and Inventory Planner reports
You may observe some differences between Shopify and Inventory Planner reports. Here are some things to keep in mind:
Net sales in Shopify roughly correspond to Revenue in Inventory Planner.
Gross sales in Shopify roughly correspond to Gross Revenue in Inventory Planner.
Discounts in Shopify are computed using coupons. Discounts in Inventory Planner are computed as (regular price - price) * quantity and include coupons and other markdowns.
Archived items in Shopify will still show in Inventory Planner by default. If you would like these removed from your account, please contact Inventory Planner using the chat in the lower right corner of your screen.