What is inventory shrinkage? This term refers to your retail business’s inventory stock decreasing or “shrinking” for reasons other than customer purchases. These reasons can be any of the following: vendor fraud, employee theft, shoplifting, or mistakes made in inventory keeping or product order. When your retail business has a high inventory shrinkage rate, it will have a detrimental effect on your profit margins. In the long term, it can also affect your business’ ability to stay afloat.
With that said, there are tried-and-tested ways to better manage inventory shrinkage and minimize its negative effects on your business. The following is a list of ways to do just that.
Enlist the help of a reliable and trustworthy order fulfillment service
Order fulfillment is an important aspect of any retail business, especially those in the eCommerce sector. Unfortunately, it can also be a cause of inventory shrinkage. For instance, an employee may make an error when writing the customer’s address on a mailing form for their order, which then results in the order being sent to the wrong location.
Another hypothetical scenario may involve an employee stealing an item from the customer’s order as they are consolidating it from the warehouse. Since the product is already paid for, the theft likely won’t be suspected at first when inventory-keeping takes the order into account. It’s only when the customer complains about the missing item in their order that the incident will become apparent, and by then it will have been too late.
Companies can prevent these and other similar scenarios that may lead to inventory shrinkage by hiring order fulfillment services USA residents trust. Doing so ensures that the inventory is secured, protected, and monitored with the latest technological solutions available. Their well-trained and highly experienced staff will also make sure that orders are accurately picked and sent to their correct destination. What’s more, high-quality fulfillment services are so confident in their quality of service that they guarantee to cover the wholesale cost of any items that go missing from your inventory after they receive it. They’ll also reimburse you for any logistical error that may affect your customers, such as orders being shipped with the wrong items or in the wrong quantity.
Increase the security of your warehouse or store
Another effective way of minimizing inventory shrinkage is to tighten up the security in your store or warehouse. Some effective examples include installing CCTV or closed-circuit television security cameras where your stock is located, as well as in employee and customer areas. You may also enforce a system of only permitting higher-level staff to access expensive stocks. These measures can help deter employee theft as well as identify culprits should it take place.
Have your staff undergo security training to prevent shoplifting and customer theft
Shoplifting is a major cause of inventory shrinkage. As such, ensure that all your employees are trained and knowledgeable on how to prevent it from occurring in your store or retail outlet. One example of shoplifting prevention includes being able to recognize the tell-tale signs of a shoplifter, such as a customer who enters the store premises while wearing a backpack or wearing large, baggy clothes. Another is keeping a close watch on individuals who loiter in the corners of the store, as well as those who seem to be constantly observing the staff or CCTV cameras. Prompt and effective handling by an aware and well-trained staff can help make your business an undesirable target for shoplifting and other illicit behavior.
Besides this, your staff should also be aware of what to do and to whom they should report when they come upon an instance of shoplifting, such as security personnel or loss prevention agents. This will further minimize the chances of a shoplifter trying their luck at your place of business.
Fix your store’s layout
Observe your store’s layout. Does it provide your CCTV cameras an unobstructed view of all the areas within your store or does it create blind spots? Is the shelving too high that it could conceal someone from the view of your employees? By asking these questions and making the relevant changes, you can make your store less conducive to shoplifting. The same goes for your stock room and warehouse. If they have areas that are hidden from surveillance cameras, it may explain why your inventory seems to be shrinking, even if you don’t have a customer area.
Protect your revenue by managing inventory shrinkage
Inventory shrinkage may seem like a small problem at first, but it can have a clear and tangible effect on your business’s profitability in the long run. What’s more, allowing it to continue unaddressed, especially if employee theft or shoplifting is concerned, will only embolden the culprits to steal more expensive merchandise. This will impact your bottom line even more. Follow the tips listed above and minimize the effect that inventory shrinkage has on your business.