Multichannel Inventory Management: What It Is and How to Do It

Multichannel Inventory Management: What It Is and How to Do It
Multichannel inventory management is an invaluable tool for today’s retailer. Here's what to know and how to get started.
by Stephanie Vozza Jan 26, 2024 — 5 min read
Multichannel Inventory Management: What It Is and How to Do It

Inventory is at the center of your retail business and keeping track of it is a critical job. You can’t sell products you don’t have in stock, and you don’t want to take up valuable warehouse and shelf space with items that are slow sellers. Yet, surprisingly, 43% of businesses use manual methods or don’t track inventory at all. 

But if you sell across various platforms or through multiple locations, relying on paper logs or spreadsheets and periodic physical counts opens the door to disappointed customers or wasteful resource allocation. Using a multichannel inventory management system that keeps up with your business in real time is essential for tracking and managing your inventory and can yield benefits that help your bottom line. 

What is multichannel inventory management?

Multichannel inventory management is the process of tracking inventory that is sold and stored across multiple sources. Using cloud-based software, the system syncs all stock levels for an accurate and single source of truth. 

Multichannel inventory management is an invaluable tool for today’s retailer, who likely sells across many channels, such as in-store, online, and on social media. Cloud-based systems also manage inventory across locations, which is important if you have multiple stores, hold pop-up or mobile sales, or sell wholesale to other retailers.

What are the benefits of multichannel inventory management?

Since manually managing inventory across platforms and channels can be challenging and time-consuming for retailers, multichannel inventory systems offer a variety of benefits.

Real-time visibility

Imagine a customer comes into your store and purchases the last lavender candle you have in stock. A few minutes later, an eCommerce shopper buys the exact same item before you had a chance to update your inventory. Multichannel inventory management helps you avoid this predicament by automatically syncing levels across all platforms, hiding out-of-stock items on your site. 

Having real-time visibility across your business is also key for maximizing profits during peak seasons. You can easily determine which products need to be reordered to avoid lost sales and automate the process for greater time savings. Visibility also helps you avoid overstocking items that are stale or can be redistributed to other locations.

Improved customer service

Not being able to fulfill that lavender candle order might lead to an upset shopper — one who may turn to your competitor now or in the future. By maintaining accurate inventory levels, you reduce the risk that your customer will shop somewhere else. 

Multichannel inventory management also enhances customer satisfaction by improving delivery options. For example, real-time stock levels can help you maximize buy online, pick up in-store (BOPIS) by directing customers to the location where the item is in stock. You can also offer to ship or deliver an item to a customer’s home from the warehouse or store that is closest to their address, reducing shipping times and cost. 

Valuable insights

Multichannel inventory management also provides key insights that can help with business decisions. For example, you can analyze past sales data to get a clear understanding of products that are in high demand. Data can inform new product selections by identifying categories that are most popular with your customers. 

Insights can also help you forecast the optimization of inventory levels to ramp up during busy cycles and scale down during off seasons. Data helps pinpoint slow-moving products that can be discounted with a flash sale and removed from automatic reorders.

Cost savings

If you sell an item that is out of stock, you’ll need to refund your customer’s money unless they’re willing to wait until the item is replenished. In today’s world of overnight or two-day shipping, consumer patience isn’t required. Canceled sales can be costly and impact your bottom line. 

Keeping inventory at optimized levels helps you save money that might otherwise be locked up with deadstock inventory that is taking shelf or warehouse space and may later need to be liquidated. Multichannel inventory management can also help save money by allowing you to ship an item from a location closest to the customer, reducing transportation costs, which is key for retailers who offer free shipping.

Business growth

In 2023, Square Future of Commerce data found that retailers were selling across an average of four sales channels, with 81% of retailers planning to expand the number of digital channels where they sell in an effort to keep up with customer preferences. In 2024, retailers are still focused on growing, but are finding new ways to manage their inventory as they do: 37% are using tools to automate their inventory management processes.

Multichannel inventory systems can help you scale your business by making it easier to sell across more channels. By leveraging tools that automatically sync sales and inventory across channels, retailers have more room to expand to new platforms and reach new customers with an omnichannel commerce strategy.

How to manage inventory across multiple channels

Multichannel inventory management starts with a cloud-based inventory system that integrates with your retail point of sale. The system should offer real-time analytics to ensure your stock levels are automatically tracked and adjusted every time you make a sale, receive a return, or get a new shipment.

Your retail POS system should sync with other platforms and channels you’re using to sell — whether that means connecting to your online store, social channels, or to POS systems at your other brick and mortar or warehouse locations. When you make a sale or log new stock into your POS, your inventory count across all sales channels and locations automatically syncs to reflect the change.

Choosing the best multichannel inventory management software

As you look for a multichannel inventory management software, it’s important to choose a system that simplifies the inventory management process and has features that can help you grow your business. Here are some things to consider:


Overall, your inventory management software should allow you to easily create a centralized hub from which to operate your business for greater visibility and control. As your business grows, your multichannel inventory management software should scale with you, offering efficient methods to sell across platforms and channels.

Multichannel inventory management case study: The Market at Grelen 

With seasonal products, multiple locations, and over 100 vendors, The Market at Grelen relies on multichannel inventory management tools to organize their complex inventory. See how they use Square to manage vendors, count inventory, send purchase orders, and reward customers.

Learn more about how Square for Retail can help you manage inventory across channels to reach more customers, save time, and scale your business.

Stephanie Vozza
Stephanie Vozza is an experienced writer who specializes in small business and retail. She has been a regular columnist for for five years, and her byline has appeared in Inc., Entrepreneur, and Parade.


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