As an eCommerce retailer or wholesaler, inventory is one of your biggest, most important assets. Apart from the simple cost of buying the inventory from your wholesaler, manufacturer, or distributor, other factors affect your total inventory cost. Read on for details on what this important sum usually includes and tips on how to minimize overall costs.
Off the top of your head, you would say your inventory costs...a lot. But how much is that exactly, and why is that important to know? If you know exactly how much money is going into maintaining this super-important asset, you can make smarter business decisions. Not only will you be able to smartly analyze where to cut costs, but also make your overall inventory management more effective.
From an accounting perspective, this cost can help you determine how much profit this inventory can bring you, along with how much of your businesses’ capital will be tied up in the inventory and for how long. To get the right values for all this analysis, you need to know your Total Inventory Cost.