Inventory Management in Online Store—Strategy Overview

This chapter explores the strategies and challenges of inventory management in online retail shops. It analyses the distinctive logistics features of e-commerce, such as the two-stage sales process, virtual product presentation, and the use of search engines, which together distinguish online shops from traditional retail models. The chapter also discusses various logistics solutions, including 3PL and dropshipping. A discussion of a company's choice of a model with or without a warehouse is also included. In addition, the use of large generative models (LLMs) in optimising stock levels and demand forecasting is analysed using three examples. Three approaches for using the generative model are presented. The first requiring no expert knowledge, the second with the determination of more precise replenishment model information in prompt, and the third using more advanced optimisation techniques.