Introduction to managing inventory in an online store

To create a highly effective web based business, storekeepers must pay considerable attention to dealing with inventories. The number of material things that any online store prepares for sale must be constantly accounted for. There are no exemptions to this, regardless of the software platform used, even if it is Magento 2.

A brief glance at the task of inventory management

Improved stock administration empowers business managers to oversee stock across one or more deals channels easily. This is done simultaneously as improving ordering security and shipment matching calculations. Tracking available stock amounts for numerous areas with all item types and offering clients the best transporting options is made possible with modern solutions.

Arrange the settings of global inventory management and use them to develop the business, gain support for single stockrooms, create complex transportation networks, and utilize the stores, product transporters with maximum business value.

Available management highlights for stock:

  • Various arrangements for shippers using an inventory system from a solitary source and different stock warehouses;
  • Getting information on accessible stock amounts from allocated product sources;
  • Simultaneous checkout security;
  • Shipment matching calculations.

Specific words used to define stock management

  • Sources – this word refers to places where all items intended for sale are stored. These areas can incorporate stockrooms, physical stores, product managing centers, and shipping centers. The source for a virtual item can be any of the areas above.

  • Stock is a channel for sales. It is currently restricted to online sites. Stock can lead to different deals channels; however, a business channel can be assigned to just one stock.

  • The Aggregate Salable Quantity is the total stock amount that can be sold through a business channel. The amount is determined across all sources, doled out to the stock.

  • Reservations – used to track purchased items from the quantities available for sale as clients purchase items. The moment a customer's request is fulfilled, the reservation is reset, and the reserved amount is deducted from the total source stock inventory.

Stocks and Sources

Deal with stock without paying attention to where the distribution center is on the map. Don’t bother with what items or deals channels are in the stock. Instead, satisfy customer purchase requests and send items from various stockrooms, physical stores, and distribution channels. Focus on adjusting stock levels, delivery expenses, etc.

What Sources stand for

Sources can be regarded as the actual places in the physical world where item stock is controlled and transported to deliver customer's purchase requests. Some of the mentioned areas can incorporate stockrooms, physical stores. Drop-off centers can also be a part of such a place. Naturally, businesses oversee the stock amounts for items and orders via software automation. Single source stores are considered in Single Source mode; otherwise, they are considered in Multi Source mode.

The source may receive some priority treatment in the distribution center, but not in all stockrooms, as the source can be re-utilized in various stocks.

Stocks and sources used in a store can be in quantities that increase the difficulty of choosing the best stockroom or store to fulfill a customer's order. For example, a store may have a predetermined number of items available at your physical retail location and a much larger number in remote stockrooms with not so convenient access.

What Stocks stand for

Stocks address a virtual list of items that accumulate in a specific place and are ready to be sold through the merchant's business channels. Each stock directs business channels with sources for easy access to the inventory. Depending on the store's site setup, the stock may be appointed to at least one sales channel and source.

What Sales Channel stands for

Sales Channels address the elements used in the process of stock selling. These include online sites and store views, B2B, etc. Several channels must be related to one stock.

Each business channel can be exclusively allocated to a single stock. At the same time, a single stock can be distributed to several online sites. The stock can be used to alter the priority of sources utilized for orders by the Source Selection Algorithm.

The stock store manager starts by looking at a Default Stock, relegated with the Default Source and the store. This configuration is best suited for dealers who work with a solitary source. Relegation to this stock is only available for the Default Source. Those dealers who utilize the Multi Source approach ought to use custom stocks for their sources and sites, depending on their particular situation.

What Product quantities stand for

The product quantity parameter measures the number of items that are accessible for sale. Adding items to a checkout cart does not affect this number. Depending on the quantity of sources, the store manager can work with:

  • Quantity. For traders with a Single Source, the accessible stock is measured with the Quantity section.

  • Quantity per Source. For traders with several sources, the Quantity per Source section tracks the stock accessible by the physical stockroom. This parameter replaces Quantity for such merchants.

  • Reservations. Used to track requests for items throughout the purchase process. This allows items to be reserved and deducted from the total amount of stock. Reservations are converted into quantity deductions when the purchase is complete.

  • Salable Quantity. Ascertains the stock accessibility, considering limits, reserved and sold products. Calculates the total quantity for each of the sources, and getting this number, the system deducts reservations and the Quantity Below limit.

  • Inventory. Each item incorporates different configuration options. For a full rundown, read the Configuring Inventory Management section. The important basics are Out-of-Stock Threshold and Backorders. The first is the number to be subtracted from Salable Quantity unless the Backorders are enabled. Backorders determine whether the product can be sold before its stock is full.

Source Selection Algorithm

Tracks every item in stockrooms and stores while running behind the scenes. The Source Selection Algorithm and Reservations keep the inventory numbers out of collisions.

Source Selection Algorithm

The Source Selection Algorithm (SSA) seeks the best source and delivery for the item. When the order is shipped, it offers a rundown of sources, quantity, etc.

Knowing the actual accessible stock and suggesting a perfect shipment can be problematic on a global scale. SSA does this work for the store manager.

Utilizing stocks and sources, SSA checks the order and makes a decision:

  • Calculates the accumulated inventory for sale across all sources. Adds up the Out-of-Stock Threshold

  • Secures against overselling by including the Out-of-Stock Threshold in the calculations

  • Saves stock amounts when an order is placed, deducting from stock when an order is processed and shipped

  • Blocks the stock amounts when a purchase request is received

  • Upholds Backorders at negative thresholds

Manage Shipments

The calculation helps with processing your purchase request. Get suggestions on the best sources and delivery. The store manager can supersede the configurations to:

  • Halfway order shipments. Send a couple of items and complete a full order request sometime in the future
  • Deliver a complete purchase request from a single source
  • Break the shipments across various sources to balance the load on distribution centers and stores

SSA can be enhanced with external augmentations and algorithms. The processing of Virtual and Downloadable items is another story. The framework runs calculations when the invoice document is created and sticks to the results. The outcomes for Virtual and Downloadable items cannot be altered.

Source Priority Algorithm

A relegated rundown of custom stocks can be included to sell on the storefront. In addition, the Source Priority Algorithm utilizes the source list to suggest item number subtraction per source when invoicing or delivering.

The algorithm does the following:

  • Deals with the list of sources based on the stock priority level
  • Prescribes the number of items and their source based on the purchase request
  • Proceeds down the purchase request until the order is filled for shipment
  • Unavailable sources are skipped in the process

Distance Priority Algorithm

The algorithm that considers a distance as a priority first considers the geographic location for the delivery and source to select the nearest place. The choice can be dictated by actual distance or transportation time. A Google Maps data set can be used.

The algorithm provides two choices for working out the distance and time:

  • Google Map data is used to determine the distance and time required to connect the delivery and source. This choice uses a Google API key, Geocoding API, Distance Matrix API, and the subscription plan with Google.
  • The offline Calculation can calculate the distance utilizing imported geographical datasets. This choice is based on the national codes and may require the help of a software designer to arrange it in the store.


Reservations hold stock numbers until the order is delivered. This framework is fully operational in the backend and updates the available inventory quantities.

Order reservations

Reservations block the subtraction of the stock numbers from the marketable amount while a purchase is generated or canceled. SSA proposals can be utilized when delivering the purchase. At the time the purchase is sent, the reservations are deducted from the total stock, and the marketable amount is recalculated.

Order Status and Reservations

Stock Management upholds partial and full invoicing, installment billing and delivery of each purchase. The framework automates the modification of reservation numbers and tracks the stock amounts for each of the specified sources. No manual data input is required. Numbers are calculated at each step the order goes through.

Product Types

Stock Management upholds working with all types of items in both Adobe Commerce and Magento Open Source. They are simple, configurable, virtual, downloadable, bundle, and grouped. Choice and prerequisites may differ for each type of item.

Traders utilizing Single Source can update settings and quantity of items without additional updates. All imported items naturally relegate to the Default Source and Default Stock.

Dealers using Multi Source must assign sources and appropriate quantities when creating an item. All recently imported items are naturally enrolled in the Default Source, which requires manual reconfiguration for each source and configuration of amounts.

Dealers using Multi Source must assign sources and appropriate quantities when creating an item. All recently imported items are naturally enrolled in the Default Source, which requires manual reconfiguration for each source and configuration of amounts.