Virtual Inventory 101

4 min read
April 6, 2023

Let’s say your friend recommends a new retail brand’s e-commerce site, but she has a slightly different style than you. You trust her judgment, however, and go on the site, only to be pleasantly surprised at the amount of variety available.  Not only can she find something for her wardrobe, but the assortment of options will also satisfy your needs, too. 

According to Explorer research’s study on consumer behavior, “seeking out variety is an expression of our sense of freedom and personal control. It feels good to exercise our freedom,” when shopping. But how can a retailer or brand manage those customer expectations for variety when there’s limited warehouse space? Or, if a retailer is hoping to add a new brand to their repertoire, how can they feel comfortable taking the risk without knowing whether the new brand will land well with customers?

Virtual inventory is the answer. 

What is Virtual Inventory?

Virtual inventory is a digital collection of all a retailer’s obtainable inventory for any items they carry. This inventory includes any products in warehouses or distribution centers, brick-and-mortar stores, and SKUs held by other businesses that the retailer partners with. 

The great asset of virtual inventory is that it makes items available to consumers, regardless of where that item is located. This kind of reach not only builds customer loyalty but also helps any sized brand or retailer stay competitive in an ever-evolving shopping landscape. 

Moreover, having a virtual collection, which allows for flexible geographic location, enables retailers to provide more delivery options to their customers, such as same-day delivery, overnight shipping, or Buy Online and Pick-Up In Store (BOPIS). Essentially, retailers can have the opportunity to satiate consumer demands without increasing their physical warehouse or retail space.

How Can it be Helpful to Brands and Retailers? 

With customer preferences always shifting regarding where and how they shop, retailers and brands must always keep abreast of consumer needs. Extending beyond the physical restrictions of a warehouse or a store and growing item offerings can help a brand or retailer thrive in a myriad of ways. 

Ensure Availability

Stockouts can be a disaster for brands and retailers hoping to retain customer loyalty. As customers, we’ve all experienced the disappointment of seeing a product we want on an e-commerce site, only to get notified that it’s out of stock. This problem usually occurs due to poor inventory management and forecasting (which can be alleviated with a robust order management system), but can also occur because of global supply chain disruptions. 

A virtual inventory ensures that a retailer or brand isn’t letting down shoppers. Instead, a retailer is able to save the sale and access offsite solutions to get that product into customers’ hands. Similarly, if a shopper is in a brick-and-mortar store and an item isn’t available, retail associates can preserve the sale by providing the customer with the same product online, available to ship directly to their home. 

More Ordering Flexibility

Retailers and brands sometimes over-buy or under-buy products, leading to overstock and stock-outs. However, virtual inventory can allow for more flexibility around buying items, since a brand or retailer won’t have to worry about fitting products into a warehouse space, or conversely, paying for under-used warehouse space. Another great asset is that there is more flexibility in adding new brands to a store; if a retailer isn’t worried about finding space, then they can easily onboard new businesses. 

More Assortment

Virtual inventory means more freedom, for both the retailer and the consumer. Without the constraints of selling only what can be stored, there’s the opportunity for businesses to add a wider product range: popular or trendy items that have made a splash on social media, newer and growing brands that haven’t made a large impact yet, or even more expensive goods. 

This assortment is key for a retailer who always wants to be on the cultural pulse, offering exactly what a customer is looking for. Similarly, brands who want to offer a variety of SKUs can utilize a virtual inventory in a similar way, by increasing the number of products they’re able to sell and thus encouraging new customers to their site and store. 

How Can You Implement Virtual Inventory?

As we approach a more omnichannel retail landscape, implementing a virtual inventory collection will become mandatory. But what are the easiest ways to offer this kind of assortment to consumers without breaking the bank or spending time adding new SKUs to your catalog? The latter can specifically be damaging, because by the time a retailer or brand adds those novel products, they may be out of season or the market may have moved on. Here are a couple of ways to expedite implementation:


Retailers and brands might benefit by setting up a dropship program. Dropshipping works like this: customers place an order through a store or e-commerce site, brands and retailers process the order and provide that information to a third-party vendor, that vendor obtains the order, fulfills it, and then sends it to the customer. Finally, the customer gets their order. 

Dropshipping is a good solution for offering an assortment to customers, without worrying about space. A robust dropshipping program will aid in onboarding, sourcing, and merchandising, while also helping to increase a retailer or brand’s bottom line. 

Integration Management

Robust integration management is also a great way to implement a virtual inventory collection. Integration managers allow brands and retailers to integrate with platforms such as Shopify and WooCommerce, along with big box retailers like e-Bay and Amazon. Moreover, a good integration manager will reduce onboarding new channels to mere hours versus weeks or months, and give users a centralized view of all the places on which they sell goods. It will include real-time inventory updates, automated back-ups, seamless catalog management, and much more to support virtual inventory. 

Osa predicts that virtual inventory will be a big trend in 2023, considering the innumerable ways customers are choosing to shop today. If you want to remain competitive as a brand or retailer, we recommend optimizing virtual inventory today to streamline supply chain management. What are you waiting for?

Osa Commerce 2023 Supply Chain Predictions 


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