What is FIFO?

First in, First out explained

First in, first out — or FIFO — is an inventory management practice where the oldest stock goes to fill orders first. That way, the first stock purchased/received is the first to leave.

Optimizing your inventory is crucial for running a successful eCommerce business. By implementing savvy inventory planning, you can significantly impact your cash flow and profit margins. It's vital to grasp the ins and outs of the FIFO approach, as it plays a pivotal role in accurately calculating your cost of goods sold (COGS). Employing the FIFO method can also lead to lower eCommerce fulfilment expenses.

The FIFO method in warehousing and fulfilment

At your local grocery store, you may have witnessed the FIFO inventory management method in action. This technique involves stocking perishable goods with the newest items at the back and the oldest ones at the front. By doing so, it increases the chances of selling inventory items before they expire, preventing any loss of money or spoiled food.

Similarly, in an eCommerce fulfilment center, the FIFO model is utilized to manage physical inventory. This involves rotating incoming items to the back of the shelves and moving older products to the front. When fulfilling customer orders, pickers select the older inventory items first, ensuring that stock is dispatched from the warehouse in a sequential order that corresponds to its receipt. Batch and expiry dates are another determining factor in FIFO. All this information is uploaded on our WMS once the stock arrives in our warehouse.

ezi-Pac fulfilment helps eCommerce companies keep storage costs low

Inventory management is complex and getting it right is essential to building a thriving eCommerce business. When you choose ezi-Pac as your 3PL, you add experienced professionals to your team. We can help you determine optimal inventory levels, add visibility to your supply chain to improve operations and keep your storage costs as low as possible.