Inventory management app: off-the-shelf or custom-built?

Wrong stock costs you twice: you sell what you don't have and the customer leaves unhappy, or you hold what doesn't sell and the cash sits on a shelf. Most small businesses start with a spreadsheet, move to software, and some end up with an app of their own. Here's how to choose, and what any inventory system has to do.

Signs the spreadsheet isn't enough

• several people edit the same file and nobody knows who changed what;
• you sell in a shop and online, and the website's stock isn't the real stock;
• counts show differences you can't explain;
• you don't know which products have sat on the shelf for months;
• your accountant asks for stock at a past date and you can't rebuild it.

If two of these sound familiar, it's time for software.

The four options

As a price reference, Sortly has a free plan for up to 100 items and one user, and paid plans listed at $49, $149 and $299 a month for 500, 2,000 and 5,000 items, with first-year discounts. Point-of-sale and e-commerce platforms often include basic inventory, and accounting tools such as QuickBooks offer it on higher plans.

What every inventory system must do

Whatever you choose, check for these features:

1. Product records: SKU, barcode, unit, cost and sale price, tax category.
2. Receiving: goods booked in against the supplier's invoice or purchase order.
3. Automatic deduction: every sale, from the POS, online store or invoice, reduces stock without anyone touching it.
4. Multiple locations: warehouse, shop, a technician's van, with transfers between them.
5. Batches and expiry dates, if you sell food, cosmetics or medicines; serial numbers for electronics.
6. Counts from a phone, with barcode scanning and differences calculated automatically.
7. Low-stock alerts before you run out.
8. History: who changed what, and when.
9. Reports: stock value, turnover, products with no movement.
10. Export for your accountant.

Counts and your accountant

Inventory isn't only operational. At year-end, your accountant needs the value of what you hold to work out cost of goods sold, and the IRS small business guide explains that businesses carrying inventory generally have to account for it. Rules differ by country and by business size, so ask your accountant which method applies to you.

In practice, that means:

• a full physical count at least once a year, at year-end;
• cycle counts during the year, a few product groups each week, so the annual count has no surprises;
• write-offs for damaged or expired stock recorded when they happen, not reconstructed in December.

With software that knows book stock, a count means scanning and counting; the software works out the differences.

When a custom app is worth it

Off-the-shelf software covers ordinary trade well: buy, store, sell. A custom app pays off when:

• you manufacture: raw materials become products by recipe, and ingredient stock must drop with every batch;
• you rent equipment that goes out and comes back, with its condition and its schedule;
• you sell on several channels that must see the same stock in real time: your shop, your website, Amazon or another marketplace, field sales;
• you have complex bundles and variants: kits built from other products, sizes and colours with their own SKUs;
• your field team works from phones, with flows no product offers: loading a van, deliveries, returns.

A custom web app runs in the browser on desktop and phone, reads barcodes with the camera, and connects to your accounting, online store and shipping. How to compare its cost with a subscription over three years, and who owns the code and data, is in custom software vs off-the-shelf. Price ranges for web apps are in how much a web app costs.

Questions before you choose

1. How many products do you have, and how many stock movements a day?
2. How many locations hold stock, and how many people change it?
3. Which channels do you sell on, and which of them need live stock?
4. Do you have batches, expiry dates or serial numbers?
5. Which accounting software does your accountant use, and how will data reach it?
6. What has to work from a phone?

With the answers written down, you can compare two or three tools during their trials or ask for a quote for an app. Store platforms and their built-in inventory are compared in Shopify vs WooCommerce.

We build inventory web apps for workflows standard software doesn't cover, with phone scanning and links to your accounting and online store, and the code and data stay yours. Details are on our web development page.