In 2022, US businesses faced the highest-ever increase in logistics costs, a whopping 19.6% jump. Carrying costs, a natural challenge of inventory management, accounted for more than half (52%) of these extra costs.
If you’re still using basic inventory tracking, you’re probably managing fine…for now. But as your business grows, you’ll likely need something more robust to keep up with demand and stay competitive.
That’s where real-time inventory management comes in. It helps you see what’s selling at the moment, fulfill orders faster, and keep customers happy no matter which channels they shop on.
Ahead, learn to track inventory in real-time and choose the best inventory management tools for your business.
What is real-time inventory management?
A real-time inventory management system instantly tracks and updates stock levels across your entire business. It automatically records all inventory changes, from customer purchases and supplier deliveries to stock transfers and returns, giving you immediate visibility from warehouse to point of sale.
It works best through a unified operating system that connects all the data from your retail operations. Shopify natively routes data from your point-of-sale (POS), ecommerce, marketplaces, and partner apps into one place. This means all your order, product, and customer data flow from one source and create real-time visibility whether you’re doing D2C, retail, or B2B sales.
French footwear brand Odaje struggled with disconnected data across 16 physical stores and its online shop, which created inventory accuracy and customer service challenges. After implementing Shopify, Odaje connected inventory data across all locations, achieved a 6% boost in conversion rates, and increased international sales by 25%.
How real-time inventory management helps businesses
Improve supply chain resilience
The BCI Supply Chain Resilience Report 2024 found that 80% of organizations faced between one and ten supply chain disruptions over the past 12 months, with each disruption potentially eroding annual revenue by 6-10%.
A unified inventory management system protects against disruptions by providing:
- Real-time inventory visibility across all locations
- A clear view of supplier delay impacts
- Simplified inventory transfers between locations
- Accurate safety stock management
- Quick access to alternative suppliers
The main benefit is having a single, accurate view of your inventory through a unified system, which helps remove two major operational challenges:
- The integration complexity of connecting multiple separate systems
- The coordination failures between different parts of your business
Improve supply chain efficiency
Real-time inventory management through Shopify saves businesses an average of 10+ hours monthly on tasks by eliminating manual data entry and reducing physical counts. It optimizes stock levels and reduces carrying costs through better supply chain coordination.
Australian brand Bared Footwear struggled with separate online and POS systems that couldn’t sync inventory fast enough, forcing it to close retail stores during online promotions. After switching to Shopify Plus and Shopify POS, it solved these challenges and maintained accurate inventory across all locations while keeping stores open during big sales.
Improve customer satisfaction
When inventory data syncs across all sales channels, businesses can provide accurate stock information to customers shopping online or in-store. This creates a better shopping experience overall. Retailers using Shopify report up to 40% higher in-store conversion rates through accurate stock information and flexible fulfillment options like buy-online-pickup-in-store (BOPIS).
Take the example of Italian bed linen and homeware company LisolaStore, which increased its AOV by 15% and witnessed the lowest inventory shrink rate by moving to Shopify POS.
Shopify’s complete commerce platform has everything we need to bring our omnichannel customer journey to life.
How to track inventory in real-time
1. Centralize your inventory system
While basic POS systems can manage store inventory, they often struggle with multi-channel operations across physical stores, online stores, and warehouses. This forces many businesses to do daily manual counts to keep online inventory accurate.
The solution is a POS system that integrates seamlessly with your ecommerce platform and centralizes all inventory into one system.
To implement this:
- Migrate existing inventory data to a centralized platform.
- Make sure your ecommerce and POS systems share the same platform.
- Configure inventory rules for each store or warehouse.
- Set up clear stock movement guidelines.
- Set up automatic updates across all sales channels.
Danish tea storeTeSelskabet needed a sophisticated inventory management system to track the different ingredients in its tea blends, create categories, and manage the product catalog of its online and physical stores.
With the help of Shopify POS, Shopify Payments, and Shopify-certified apps, the brand could share its product categories, tags, and bundles bi-directionally between its POS system and ecommerce platform. This helped with automatic inventory updates and prevented overselling, leading to a 25% sales increase.
2. Utilize real-time data syncing
With your centralized inventory system in place, make sure seamless data synchronization is happening across all channels:
- Enable instant updates for new stock.
- Set up auto-adjustments for sales/returns.
- Schedule regular automatic checks to verify everything is syncing correctly.
Shopify synchronizes key metrics in real-time, including sales transactions across channels, product returns and exchanges, inventory restocks, shipments, stock transfers between locations, and inventory adjustments.
When products are sold online or in-store, inventory quantities update automatically across your Shopify POS system and ecommerce platform, so store staff and online shoppers always see accurate availability.
While physical inventory counts are essential for preventing shrinkage and maintaining reliable inventory reports, Shopify helps minimize their frequency. The system supports full and cycle counts, allows you to reconcile inventory levels when discrepancies arise, and maintains a history of quantity adjustments for audit purposes.
3. Integrate scanning and tracking technology
The difference between profitable operations and cost inefficiencies comes down to how accurately and quickly you can track inventory movement. The following technology can help you manage stock across multiple locations.
Barcodes
Barcodes help you quickly identify and track products in your stores and warehouses. They’re simple patterns of black lines and white spaces that contain product details like SKUs, prices, and descriptions. When scanned with a barcode scanner, they instantly show you the product information you need.
Scanning barcodes updates inventory instantly when receiving new items or during sales. This automation removes counting errors and keeps physical and digital stock levels synchronized.
Barcodes prevent stockouts through low-stock alerts and reorder notifications while providing data to analyze product performance over time.
💡 Use Shopify’s barcode generator to create your barcodes.
RFID tags
Radio-frequency identification (RFID) systems use tags and readers to wirelessly track inventory. While barcodes remain more common in retail for pricing and tracking, RFID offers unique advantages:
- Simultaneous scanning of multiple items without line of sight
- Better durability in harsh conditions
- Encrypted data for better security
- Faster inventory counts
QR codes
QR codes are two-dimensional barcodes that can store more data than traditional barcodes and can be scanned by smartphones. In inventory management, they:
- Update centralized inventory databases in real-time
- Provide secure transactions without storing sensitive data
- Are cheaper than POS systems
💡 Create your own QR codes using Shopify’s QR code generator.
Sensors
Internet of Things (IoT) sensors are electronic devices that track inventory conditions and movement. These small but powerful devices can measure temperature, humidity, motion, and weight to provide continuous visibility into inventory status.
For example, smart shelves with weight sensors detect low stock and trigger reorder alerts, while temperature sensors monitor storage conditions for perishables and send alerts when needed.
4. Enable inventory alters and automation
Manually tracking inventory across channels is risky and time-consuming. Smart alerts and automation help prevent stockouts and reduce errors while your team can focus on business operations and customer service.
Shopify Flow lets you create custom workflows that trigger specific actions based on inventory conditions. For example, you could create a workflow that automatically:
- Monitors inventory levels across locations
- Sends Slack notifications when stock drops below your specified threshold
- Creates a purchase order draft
- Emails your supplier with the order details
Say you run a clothing store and want to maintain optimal stock levels for your bestselling t-shirts. You could set up a Flow that triggers when any t-shirt variant drops below 20 units. The workflow would notify your purchasing team via Slack, generate a draft purchase order for 100 units, and email your supplier with the specific SKUs needed.
Shopify POS Pro subscribers get additional features through the Stocky app, including demand forecasting and automated purchasing recommendations.
5. Analyze trends and forecasting
Effective real-time inventory management isn’t just about tracking current stock levels, it’s about using data to make informed decisions about future inventory needs. Through a unified system, you can leverage historical data and real-time analytics to optimize inventory planning.
Shopify POS simplifies this process with built-in demand forecasting reports that suggest products for your next purchase order based on gross sales, turnover ratio, and seasonality. The platform also automatically identifies which products to discount based on inventory quantities, sell-through rates, profit margins, and seasonality, removing the need for manual analysis.
Steps to take:
- Set up regular reporting cycles for key metrics like sell-through rates, channel performance, and stock turnover.
- Configure analytics dashboard to monitor patterns across sales channels.
- Create automated alerts for significant trends or deviations.
- Use Shopify’s analytics tools to analyze both online and in-store sales data.
6. Train your staff on the system
Even the best inventory systems need well-trained staff to maintain accuracy.
- Train employees on essential functions like POS operations, inventory updates, and troubleshooting.
- Create clear procedures for daily tasks like receiving inventory, processing online orders, and end-of-day reconciliation.
- Support ongoing training and learning with practical reference materials (guides, FAQs, quick reference cards).
Shopify POS’s intuitive design makes training straightforward. As Founder of Sweet E’s Bake Shop, Erica Tucker, explains, “My favorite thing about using Shopify POS is that it’s simple and easy to use. I can easily train all my staff to use Shopify. I can manage products, run reports, and keep a pulse on my business myself.”
How to choose inventory management tools
Type, size, and value of inventory
The nature of your inventory directly impacts which management tools will work best for your business.
When selecting an inventory management system, consider your:
- Product characteristics (perishable vs. durable goods)
- Storage requirements (temperature-controlled, special handling)
- Inventory value (high-value items may need additional tracking features)
- Stock complexity (number of SKUs, variants, locations)
- Order volume and frequency
Think about how your products must be tracked and stored and match your tool selection to your operational needs. For example, perishable goods require lot tracking and expiration date management, while valuable items need detailed audit trails and advanced security features.
Compatibility
Rather than piecing together multiple systems that require constant maintenance, look for a unified solution that handles both online and in-store operations with features like:
- Native integration between ecommerce and POS systems
- Automatic data synchronization across all sales channels
- Unified product, order, and customer data management
- Seamless integration with existing business tools
When Bared Footwear moved its five retail stores to Shopify POS, it eliminated the headache of reconciling multiple systems.“Having all our tooling and commerce data unified in a single platform was a real driving factor,” says Alexandra McNab, COO of Bared Footwear. “All our sales channels display the same stock availability, and we can run a promotion online and in-store concurrently without worrying about overselling.”
Scalability
Your inventory management tool should adapt as your business grows. Look for platforms that let you start with essential features and add capabilities without disrupting your operations.
Key scalability features to look for in an inventory management system:
- New store location integration
- Product line and sales channel expansion support
- Flexible capacity scaling
- Platform updates
- Multi-location inventory support
- Modular feature adoption
Shopify’s modular commerce operating system helps you expand through regular platform updates that introduce over 200 new features annually. Plus, it lets you scale in a flexible way without needing a whole system overhaul.
Kenny Flowers experienced massive growth after integrating its existing commerce stack with Shopify POS. “Shopify has evolved with us…When we expanded into physical retail, everything worked together as one unified system—from inventory to loyalty rewards to customer data. That’s what makes it special. We can focus on serving our customers, not managing separate systems,” says Kenny Haisfield, Founder of Kenny Flowers.
Security
Your inventory management system must have strong security measures that protect sensitive data without slowing down daily operations.
Features to consider include:
- Role-based access controls
- Detailed audit trails
- Data encryption
- Regular automated backups
- Industry compliance standards
- Security updates and patches
Trends in real-time inventory management
Modular platforms
Modular commerce operating systems let retailers add features and sales channels as needed without disrupting existing operations. This flexibility helps you scale efficiently and customize your tech stack based on specific needs. Compared to traditional all-in-one solutions, modular platforms significantly reduce both costs and implementation time.
Shopify's modular commerce platform lets you use our complete solution or mix and match the parts you need. You can build exactly what you require, whether that's a fully integrated Shopify system or a hybrid solution that connects with your current tools.
Predictive analytics
AI and machine learning improve inventory management through advanced predictive capabilities, such as:
- Demand forecasting using historical data and market trends
- Automated stock-level optimization
- Early detection of potential stockouts
- Customer behavior insights for better stocking decisions
- Risk mitigation through disruption prediction
Integrating AI-powered analytics helps you move from reactive to proactive inventory management, reducing costs while improving service levels.
Blockchain
Blockchain technology strengthens your inventory management by creating an unalterable digital record of every product's journey from manufacturer to end-user.
This technology offers several advantages by providing:
- A permanent, tamper-proof record of all inventory movements
- Real-time tracking of product location and authenticity
- Smart contracts that automate inventory tasks like reordering
- Reduced costs by getting away with paperwork and manual reconciliation
- Improved supply chain resilience through decentralized record-keeping
Make real-time inventory management work for you
The future of retail belongs to merchants who use inventory data to make smarter business decisions, optimize operations, and deliver the seamless shopping experiences today's customers demand.
While others struggle with disconnected systems and manual processes, you now have the blueprint for seamless real-time inventory management across all channels. Shopify can be your competitive advantage in an increasingly complex market.
Real-time inventory FAQ
What is a real-time inventory management system?
A real-time inventory management system automatically updates your stock levels the instant any change occurs, whether that’s a sale, return, or new delivery.
What are the 4 types of inventory management?
The four main types of inventory management are:
- Just-in-time management (JIT)
- Materials requirement planning (MRP)
- Economic order quantity (EOQ)
- Days sales of inventory (DSI)
What’s a real-time inventory management example?
A smart warehouse uses RFID-enabled robots that continuously scan shelves, automatically triggering reorders and shifting stock between zones when inventory levels change, all without human intervention.
