Inventory Management Software: What Small Businesses Actually Need

You sell physical products. You’ve been tracking inventory in spreadsheets. It’s getting messy.

Do you need inventory management software? If so, what kind?

Let me help you think through this.

Signs You’ve Outgrown Spreadsheets

Spreadsheets work fine until they don’t. Warning signs:

  • Manual counting takes forever. Reconciling physical inventory to your spreadsheet is a day-long project.
  • Stock-outs surprise you. You find out something’s gone when a customer wants it.
  • Multi-location confusion. Product is somewhere, but which warehouse?
  • Order fulfillment errors. Wrong items shipped because of inventory visibility issues.
  • Reorder timing is guesswork. No data-driven reorder points.

One or two of these: you can optimize your spreadsheet.

Three or more: time for proper software.

The Categories of Inventory Software

Level 1: Inventory Add-ons to Accounting

Your accounting software (Xero, QuickBooks) has inventory features.

What you get:

  • Basic stock tracking
  • Cost of goods sold calculations
  • Simple reporting
  • Integration with your existing accounting

Limitations:

  • Limited multi-location support
  • Basic or no order management
  • Simple reporting only
  • No advanced features (serial numbers, batches, etc.)

Good for: Businesses with simple inventory needs. Few SKUs, one location, straightforward in/out.

Cost: Usually included in mid-tier accounting plans or small add-on fee.

Level 2: Dedicated Inventory Management

Standalone inventory software that integrates with accounting and e-commerce.

Examples: inFlow, Cin7 Orderhero, DEAR Inventory (now part of Cin7), Sortly

What you get:

  • Multi-location tracking
  • Order management
  • Reorder point automation
  • Better reporting
  • Barcode scanning
  • E-commerce integration

Limitations:

  • Separate from accounting (requires sync)
  • May not have advanced manufacturing
  • Can get complex for simple needs

Good for: Growing product businesses. Multiple locations. E-commerce plus retail. Needs beyond basic tracking.

Cost: $50-300/month depending on features and volume.

Level 3: ERP / Full Operations Suites

Enterprise-grade systems that handle inventory as part of broader operations.

Examples: NetSuite, SAP Business One, Odoo, MYOB Advanced

What you get:

  • Everything above
  • Manufacturing support
  • Advanced supply chain
  • Deep financial integration
  • Customisation options

Limitations:

  • Expensive
  • Complex implementation
  • Overkill for many SMBs

Good for: Larger businesses, manufacturers, complex operations.

Cost: $500/month to unlimited.

Matching Software to Business Complexity

Simple Inventory (Use Level 1)

  • Fewer than 100 SKUs
  • Single location
  • No manufacturing
  • Simple buy/sell model
  • Low transaction volume

Recommendation: Use your accounting software’s inventory features or a simple tool like Sortly.

Moderate Inventory (Use Level 2)

  • 100-1000+ SKUs
  • Multiple locations or channels
  • E-commerce integration needed
  • Reorder automation desired
  • Growing complexity

Recommendation: Dedicated inventory software. inFlow or Cin7 Orderhero are good mid-market options.

Complex Inventory (Use Level 2 or 3)

  • Manufacturing or assembly
  • Multiple warehouses
  • Complex supply chain
  • High transaction volume
  • Compliance requirements

Recommendation: Upper-tier dedicated tools or ERP evaluation.

Key Features to Consider

Multi-Channel Integration

If you sell on Shopify, Amazon, and in-store, you need inventory synced across all.

Most Level 2 tools handle this. Verify specific integrations before buying.

Barcode/Scanning

If you handle significant volume, manual data entry is error-prone.

Look for mobile app support for scanning. Many tools include this.

Reorder Point Automation

Software that alerts you when to reorder (or even generates purchase orders) prevents stock-outs.

Reporting

What reports do you actually need?

  • Current stock levels
  • Stock movement history
  • Valuation (for accounting)
  • Inventory turnover
  • Low stock alerts

Make sure your tool provides what matters.

Mobile Access

Can warehouse staff access and update from phones or tablets?

Essential for physical inventory work.

Australian Considerations

Look for:

  • GST handling that matches Australian requirements
  • Integration with Australian accounting software (Xero, MYOB)
  • Local support or at least timezone-reasonable support
  • AUD pricing transparency

Some US-centric tools work fine. Some don’t integrate well with Australian accounting.

Implementation Realities

Inventory software implementation includes:

Data migration: Your current stock levels need to go in. Clean your data first.

Process change: How you receive, store, and ship inventory will change. Document new processes.

Training: Warehouse staff need to use the system correctly. Bad data input creates bad data.

Reconciliation: Physical inventory must match system inventory. Plan for initial audit.

Integration setup: Connecting to e-commerce, accounting, etc.

Budget time accordingly. A proper implementation takes weeks, not days.

Cost Comparison Example

For a business with 500 SKUs, 2 locations, Shopify integration:

Spreadsheet (current):

  • Software: Free
  • Staff time for management: 10 hours/month at $30/hour = $300
  • Error cost (stock-outs, overstock): Hard to quantify, but real
  • Total: $300+/month hidden cost

Level 2 inventory software:

  • Software: $150/month
  • Staff time reduced: 4 hours/month = $120
  • Error cost reduced significantly
  • Total: $270/month visible cost, better outcomes

The software often pays for itself in time savings and error reduction.

Questions to Ask Vendors

  1. How does this integrate with [your e-commerce platform]?
  2. How does this integrate with [your accounting software]?
  3. What’s included at my pricing tier vs add-ons?
  4. Can you show me the reorder point features?
  5. What mobile capabilities exist for warehouse staff?
  6. What does implementation support include?
  7. What does onboarding look like?

Get demos. Try trials with real data if possible.

My Recommendations

Just starting product business: Use accounting software inventory or a simple tool. Don’t overcomplicate.

Growing e-commerce: Cin7 Orderhero or inFlow. Good balance of capability and complexity.

Multi-channel retail + e-commerce: Cin7 or DEAR. Handle channel integration well.

Manufacturing component: TradeGecko (now QuickBooks Commerce) or consider ERP evaluation.

The Bottom Line

If spreadsheets are causing pain, software helps. Match the software level to your actual complexity.

Don’t buy ERP for 200 SKUs. Don’t try to force accounting inventory when you need multi-channel sync.

Start at the appropriate level. Upgrade when you genuinely outgrow it.