New Report: 98% of Shopify Merchants Have Difficulty Aligning Inventory and Production with Changing Consumer Demand

Katana Cloud Inventory, an inventory software solution for small and medium-sized businesses (SMBs), unveiled its 2024 Ecommerce Performance Report on Shopify merchants. The survey of more than 100 SMB e-commerce leaders in the U.S. and Canada revealed that a staggering 98% of respondents have difficulty aligning inventory and production with changing consumer demand and of those, 60% reported significant difficulty.

The challenging SMB e-commerce landscape

According to the U.S. Small Business Administration, small businesses account for 99.9% of US businesses as of 2023. Yet, in today’s difficult economic climate, SMBs have a slim margin of error, and those that aren’t well-managed may not survive. This changing landscape includes many challenges, including supply chain disruptions, shifting consumer habits, and a significant rise in materials cost. To offset these costs, 80% of SMBs have had to increase prices and 53% have looked for lower-cost materials. The report revealed that 26% of Shopify merchants were forced to reduce their staff in a last-ditch effort to counteract inflation.

But this could be bad news for customers and brand perception. Both strategies could lead to lower quality end products at a higher price point, just as McKinsey & Company reports that nearly half of consumers still cite inflation as a major concern in 2024. Yet, to overcome current challenges, 73% of SMBs are leveraging technology to mitigate cost pressures and increase efficiency – a strategy that can have a significant impact on operations.

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Scaling growth in 2024

The good news for SMBs is that 77% expect their e-commerce sales to increase this year and of those, 14% expect growth to be significant. However, respondents are struggling to understand how much product to make and where to store it. The report confirms that 66% of SMBs stated that producing and storing inventory is their largest expense. Additionally, 83% of merchants reported significant operational challenges and difficulties keeping inventory, manufacturing, and accounting data synchronized. Managing outdated business systems (64%) and aligning inventory with demand (60%) were also stated as major challenges.

Kristjan Vilosius, CEO and founder of Katana Cloud Inventory, explains: “Scaling an SMB is extremely challenging, especially in today’s rocky economic climate. Our survey found that companies are up against significant challenges in balancing their inventory with their demand and managing it with outdated systems – but there are solutions available to fill these gaps, and companies should look to technology to help them along their growth path.”

Connecting the dots with technology

When asked about focus areas for 2024, the most common responses were e-commerce transformation (32%) and inventory management (32%), followed closely by technology adoption (30%). A staggering 94% of SMBs intend to increase their spend on SaaS technology and 97% plan to incorporate artificial intelligence (AI) into their business operations this year. SMBs view technology as crucial to enhancing their business and are ready to make the necessary investment.

Shopify merchants can integrate Katana’s cloud inventory software to gain full insight into demand, sales, products, production, and purchasing for total visibility into the order fulfillment process.