Author: Matt Rickerby Mar 23, 2021 10 Min READ

Guide to Excel Inventory Management [+Better Alternatives]

10 Min READ
Guide to Excel Inventory Management [+Better Alternatives]


Like a lot of ecommerce businesses, your operations might’ve started small enough that they didn’t warrant using advanced software. Maybe you had the time and flexibility necessary to track inventory using Excel spreadsheets, and those seemed to work alright for a little while. But eventually (if you haven’t already), you’ll likely outgrow what Excel inventory management has to offer, and find yourself looking for a more comprehensive approach.

If you want to experience long-term growth, your company really needs a way to automate its supply chain, automatically track its sales channel inventory, and update its inventory counts in real-time. The sooner you incorporate these automations into your business model, the sooner you’ll start reaping the rewards. And one of the most essential tools for automating your inventory is a well-rounded inventory management software.

It's important to understand how Excel can help, and when tedious spreadsheets can hold your business back. In fact, the return on investment in technology might surprise you when it comes to the ripple effects of manual shortcomings. Brands looking to take the next step with their business can keep customers and save money simply through better visibility. 

Manage your inventory with Extensiv

Read on to discover more about the limitations related to managing inventory with Excel, as well as the vast benefits of adopting a modern inventory management system like Extensiv.   

What is Excel inventory management?

Inventory management using Excel spreadsheets to record and organize the sourcing, storing, and selling of inventory. This is done to create organized and accessible documentation that inventory managers and employees can use and update throughout the business and supply chain. By doing this, businesses can get a better idea of product performance and where they can improve the inventory management process. 

How to Create An Excel Inventory Management System

Excel inventory management can be a good fit for small business owners who are just starting out, and who need a space to log their inventory information. But to use Excel spreadsheets, you’ll first have to familiarize yourself with the program and get accustomed with how to organize your inventory using category columns and manual product entry.

1. Create a spreadsheet

To manage your inventory in Microsoft Excel, begin by creating a new spreadsheet. Open Excel, go to Menu and select New. Click on the Blank workbook to start with a fresh Excel sheet, or press Ctrl + N. Then, go to the spreadsheet work area to input your specific information.

2. Add any necessary product categories as columns

Once your new spreadsheet is ready, you can add a tab with a Products header where you’ll display your entire inventory list. With the Products tab open, you can then create a table to host your product categories as columns. Designating these individual columns will help you track product performance and profitability on a category-by-category basis.

3. Add each product that you carry to the spreadsheet

Next, you can add each product you carry into the appropriate category column. How detailed you want to get is up to you, but it’s definitely helpful to include the product name, description, list price, average selling price, and serial number or SKU. Other good info for your products are things like inventory quantity, inventory value, stock location, and relevant reorder points.

4. Adjust the quantities as you make sales

Even though you may be finished entering all the necessary product details, you’ll still have to maintain your spreadsheet on an ongoing basis. Since Excel is a static system (i.e. it lacks automations and integrations), you’ll need to reference your worksheet rather frequently and adjust your various inventory quantities as you make sales and move products. 

Staying on top of your inventory counts is paramount, as failing to modify these quantities can result in delays in your supply chain and any number of inventory inaccuracies. 

Inventory Excel Spreadsheet Drawbacks

Analyst Using Spreadsheet Report

We’re certainly not here to disparage Excel spreadsheets; we understand they’re a useful tool for helping companies — especially those in startup mode or with access to fewer resources — complete simple management or financial tasks. But as you scale your operations and expand to the next level, the complexities of your inventory management will likewise increase. 

When your ecommerce business is booming, it’s that much more difficult to find hours in the day to update your spreadsheets, perform manual inventory tracking, or keep an eye on your distribution network. In other words, if you try managing your growing brand using Excel spreadsheets, it’ll prove to be extremely limiting. 

Let’s explore why that is, by looking at three of the shortcomings associated with Excel inventory management.

1. Time-consuming process

There’s no way around the fact that updating your inventory spreadsheets is a time-consuming process. More specifically, it requires considerable time to input data >> update data >> export, import, and merge sheets >> review data >> reconcile data >> and the list goes on. And if you’re hoping to unload any of those responsibilities onto someone else’s plate, you’ll have to train them in each function of the Excel inventory template to be able to manage your data.

While spreadsheets might be handy for working with a singular set of numbers, as soon as you add new SKUs to your inventory list, the demands on your time — and your team’s time — will escalate significantly. Unfortunately, it’s not a wise investment to have several people spend the entire day plugging data into a spreadsheet; ideally, the team’s efforts and energy would be focused on profit-driving activities that bring added value to your business.

2. Lack of automation and real-time reporting

When you want to ‘automate’ tasks and calculations within your Excel inventory management template, most people turn to Excel formulas, pivot tables, and conditional formatting. However, those features prove pretty useless if you need to update inventory counts across multiple sales channels, check on reorder levels as stocks are depleted or shift distribution points to better fulfill orders. In any of these scenarios, inventory spreadsheets are not going to cut it.  

That’s because basic spreadsheets lack the sophistication to track this info without manual input or data uploads — and they certainly can’t report on what’s happening with your inventory as it’s happening. This lack of automation and real-time reporting will ultimately inhibit your company from making timely decisions and capitalizing on changes in the marketplace; all the inventory data you enter into a spreadsheet is in the past tense, meaning you’ll always be a step behind your competitors and at the mercy of countless inefficiencies. 

3. Greater chance for errors

On average, manual data entry will result in one error for every 300 characters entered. Now, read that statistic again, and consider the effect it can have over an entire fiscal year — pretty staggering, right? Each and every human error impacts your bottom line, and even the most seasoned, well-trained data entry professional is bound to make mistakes on occasion. But this is the nature of manually entering thousands of lines of data into an inventory spreadsheet. 

So the real question is, can your company afford to make these errors? When you want your ecommerce business to reach greater heights, the pitfalls of manual data entry can really weigh you down. This sentiment is even more applicable if you have a multichannel structure since trying to corral data from multiple channels into scattered spreadsheets is a no-win situation.

Supercharge your ecommerce growth in 2024 – click here to learn how Nomad Goods  streamlined their inventory management with Extensiv!Between supplier deliveries, order routing, and inventory tracking, there are countless critical touch points within your fulfillment and supply chain management that need to be protected from unnecessary errors as much as possible.

Inventory Management Software vs. Excel Inventory Management

Professional Female Worker Uses Digital Tablet

As your business grows, you need smart inventory management solutions that’ll evolve right along with you (something Excel worksheets can’t do). Inventory management software like Extensiv Order Management can elevate your company beyond arduous spreadsheets, to instead connect all aspects of your ecommerce operations — sales channels, inventory levels, warehousing, and reordering — and turn them into a cohesive and comprehensive management strategy. 

There are five key advantages of using inventory management software over Excel inventory spreadsheets, as detailed below.

1. Automation and time savings

Although spreadsheets sometimes make sense for small businesses, there's little question they become more laborious as your footprint grows. Inventory management software eliminates tedious and time-consuming manual entry by way of barcode scanners and similar inventory tracking procedures. In fact, management software allows you to track incoming stock and outgoing orders in mere seconds. Can you imagine the time savings you could experience and what it would mean to the business if you spent your time on bigger priorities?

In addition, automation can really improve your scalability, by enabling you to process both purchase orders and customer orders in a shorter amount of time (and requiring fewer employees to do it). Advanced inventory management systems also automate the inventory replenishment process, calculating how many units you need to order to keep sales flowing.

Automations contribute to greater functionality *and* more productive team members, seeing as they'll have ample time to spend on front-end growth rather than back-end logistics.


2. Multichannel coordination

An essential part of business growth is successfully navigating economies of scale. Whether you have multiple sales channels — online stores, affiliate sites, marketplaces — or a distribution network with multiple warehouses and international fulfillment, inventory management software equips your company to coordinate information across all segments.

This cross-communication is courtesy of savvy software integrations that connect to your existing management solutions. Regardless of where orders are purchased or where their fulfillment originates, the system provides up-to-date tracking on purchases and pricing and immediately deducts sold goods from your current stock levels. This is vital to your customer experience and eliminating overselling, which can significantly damage your brand reputation and customer retention without proper inventory control protocols. 

3. Greater inventory visibility 

At their best, Excel spreadsheets have a limited window into the movement of your inventory items. And even then, they only offer cursory data that has to be entered and tracked manually.

Inventory management software, on the other hand, has the capacity to monitor the comings and goings between your sales channels and warehouses with ease. This collection of real-time data points affords unmatched visibility into exactly what your business is doing.

Greater visibility is critical for understanding what's being purchased, by whom, and in which geographic locations. This awareness helps you build strategies around your production, marketing, warehouse management, and so much more. 

Plus, having all this data in one place (instead of spread across multiple tracking templates) allows you to instantly generate holistic reports on your business. Simply put, the stronger your data and the quicker you can access it, the more refined your business intelligence will be.

4. Improved cost efficiency

From ample automations to more accurate data, inventory management software gives your business a boost in some big ways — and it also supports improved cost efficiency. Automated software dials in your inventory to avoid having too much (or too little) stock on hand, both of which can be a huge detriment to your cashflow. 

Since management software contributes to greater accuracy, in turn, it minimizes the time spent addressing or auditing errors to ensure manual data points are precise. So on top of reducing the time your team spends on data oversight, inventory software guarantees a lower overhead, as well. Thanks to these developments, you can opt to reassign your team to more vital tasks and worry less about the potential for errors to pop up. 

5. Better customer service

Inventory management software isn't confined to just giving you a closer look into your business — it’s capable of delivering extensive service and insights to your customers and support team, too. Management platforms streamline the order process for customers, by providing them with correct item availability, updates on their order location, and a seamless return system should things not work out with the product.

This dynamic customer engagement inevitably reduces the time your team spends addressing questions or resolving concerns. With that said, if and when a customer needs to speak with a representative, inventory management software will also simplify that step. Management solutions give instant access to the customer’s order status, so your team can provide the best possible service to encourage customer satisfaction.

Meeting the Demand: Next-Level Fulfillment with Extensiv

While traditional spreadsheets fall short, Extensiv rises to meet the modern merchant's challenge. In a landscape where next or second-day delivery has become the norm, the agility to manage inventory with precision is not just a convenience—it's a necessity for staying competitive.

Extensiv's inventory management solutions sidestep the pitfalls of Excel by harnessing automation and real-time data for unparalleled efficiency. This shift is not merely about keeping up—it's about leveraging technology to set the pace in a rapidly evolving commercial environment.

For those feeling the squeeze of rising costs and complex supply chain dynamics, Extensiv offers a streamlined, adaptable approach to inventory management. The technology is not just a tool but a strategic partner, empowering brands to navigate market fluctuations with confidence and clarity.

By integrating with over 2000 warehouses, Extensiv not only promises but delivers fulfillment flexibility and efficiency. With Extensiv, transition your inventory management from reactive to proactive and from adequate to exceptional.

Inventory Management Software for 3PLs

These key advantages are also relevant for 3PLs looking to adopt inventory management software for its warehouse. By streamlining inventory management processes, Extensiv 3PL Warehouse Manager can help 3PL owners enhance their operations, reduce the risk of errors, and strengthen their relationships with clients. This platform is specifically designed to address the unique needs of 3PLs, offering features like real-time data visibility, advanced reporting, and automated billing.

3 Companies That Scaled by Moving Away From Excel Inventory Management

Perhaps the greatest way to appreciate all the benefits of an inventory management system is to learn how it helped other companies flourish. The following are three examples of mid-level startups who were facing hurdles in scaling their business — that is, until they leveraged the Extensiv inventory management platform and exceeded their goals in no time at all.

Moonglow Jewelry


Moonglow crafts unique jewelry pieces that align the phases of the moon with the most important dates in their customers’ lives. Although they had an interesting product, Moonglow also had a huge selection of styles and SKUs (nearly 700 individual components and approximately 175 different styles). Their potential for sellable combinations was approaching 5,500, and they were accounting for all of this via a rudimentary spreadsheet.

An inventory audit revealed Moonglow was overselling on certain products, and had little visibility into the sales of others. It became almost impossible to manually keep tabs on their products, which left them unable to calculate sales or forecast for the future. Still, they wanted their business to grow, so Moonglow made a deliberate switch to Shopify and partnered with Extensiv to secure real-time inventory insights around their incredibly diverse offerings.

Extensiv responded by introducing them to the low-cost concepts of bundling and kitting. By bundling their products, Moonglow was able to account for all component SKUs, and accurately deduct them from their stock when a piece was sold. The year before integrating with Extensiv, the brand closed its Q4 with less than a million dollars in sales — the following year (*after* onboarding with Extensiv), they ended Q4 with over $2.5 million in sales. 

Death Wish Coffee

Death Wish Coffee-2

Death Wish Coffee has curated a repetition for producing robust, well-crafted coffee. The company had already built a loyal following among coffee enthusiasts, but then in 2015, their level of exposure skyrocketed. That year, Death Wish won a small business contest that awarded them with a 30-second commercial aired during the Super Bowl. What followed was an avalanche of attention and a massive wave of overselling across their two sales channels.

Their suppliers were seeking additional reorders, their customers were questioning product delays, and their logistics team was working around the clock to try and keep up. It was an uphill battle Death Wish was quickly losing until they did a search for ‘Shopify inventory management’ and came across Extensiv. After an enlightening conversation and a few convincing screenshots, Death Wish officially teamed up with Extensiv.

Since then, Death Wish has gained tremendous insight into their inventory, and can now cite exact numbers and metrics. This accuracy has helped them to forecast better, and to gain greater control over the orders coming in and the products going out. Their company has completely stopped overselling and has expanded their fulfillment across eight active channels. With the help of Extensiv, Death Wish went back to doing what it does best: making great coffee and growing its brand, which is now available on store shelves across the country.

Nomad Goods

nomad goods airpods-1

Nomad Goods has catered to fellow travelers and adventure seekers by creating a small, thoughtful charging device that’s easy to use on the go. After a successful Kickstarter project, Nomad Goods had the funding to develop a slim, credit card-shaped USB cable charger that fits into almost any wallet. This initial device gave their company incredible notoriety and helped them grow their product line to include over 30 different items in just a few years' time.

But the same growth that landed Nomad products in Best Buy, Urban Outfitters, and Staples, also caused some serious strife. As the business scaled, they were unable to effectively manage their various product listings, warehousing network, and multiple sales channels. Moreover, Nomad Goods lacked a foundational understanding of their inventory numbers, and the spreadsheets they were relying on weren’t doing them any favors.

Nomad Goods was exhausted by these inefficiencies and ready to maximize its multichannel selling, which is why they called on Extensiv to help organize their fulfillment. With Extensiv’s systems, Nomad Goods could finally track their inventory across every fulfillment point, expand to Amazon (like they’d always wanted), and effectively increase their sales across all channels. On their own Shopify site, Nomad’s orders are rising at a rate of 15% every month. And on Amazon, their order volume has grown 125% each month, with no signs of slowing down.



Excel Inventory Management FAQs

What are the basic capabilities of Excel for inventory management?

The basic capabilities of Excel for inventory management include the ability to track inventory levels, monitor stock movements, calculate inventory total values, create customized reports, and automate inventory management tasks.

What are the limitations of using Excel for inventory management?

The limitations of using Excel for inventory control include the risk of errors due to manual data entry, limited scalability for large stock inventories, and the need for technical skills to create advanced functions and macros.

Is Excel suitable for all types of businesses for inventory management?

Excel is suitable for small to medium-sized businesses with simple inventory management spreadsheet needs. However, larger businesses with complex inventories may require more advanced inventory management software.

Written By:
Matt Rickerby

Matthew Rickerby is the Director of Digital Marketing at Extensiv, the leading solution for multichannel, multi-warehouse D2C brands. For the past ten years, he’s covered ecommerce topics ranging from conversion rate optimization to supply chain management.

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