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Zoho Inventory – The Complete Breakdown of Features and Plans

Zoho Inventory is a cloud-based application that helps with managing the inventory of your organization more efficiently. It is a platform with both web and mobile variants.

You can also try out the features of Zoho Inventory during the 14-day Free Trial period. During this period, you can test out the capabilities of this application and see if it suits the needs of your business. The Free Trial has all the features of the Professional plan.

If you decide that you want to implement Inventory in your organization, you can choose from Basic, Standard, and Professional plans.

If you are reading this, you are probably curious about what Zoho Inventory has to offer for your business. Let’s break down the main features and functionalities of this application and see why it is the inventory management software of choice for many businesses around the globe.


Multi-Warehouse Management

Zoho Inventory offers you to efficiently manage multiple warehouses. Its multi-warehouse system allows you to track and manage your inventory, regardless of your location.

When you enable multiple warehouse management for your organization, Zoho Inventory allows you to perform various warehouse-based operations. You can store and track your items and composite items over multiple locations. This module also allows you to see an overview of stock levels for particular items present at different locations. Zoho Inventory provides you with an option to select a preferred warehouse for purchase orders, bills, sales orders, and invoices.

Transfer orders is a functionality that allows you to transfer stock between warehouses. This functionality of a multi-warehouse management module will greatly reduce the hassle that occurs when you update the stock levels manually. 


Serial Number Tracking

With the serial number tracking, you can track individual item units from the moment of their creation to their sale. Every unit has a unique ID that greatly helps you to detect which unit was sold to whom.

This feature of the Zoho Inventory highly benefits any company which wants to track items for repair and warranty purposes. For example, the IMEI number of mobile phones can greatly help individual electronics service centers. They can keep track of all the provided services after the sale and all the replacements made for a specific mobile device.

You can store these serial numbers in Zoho Inventory during and after you create purchase bills received from your vendors. This feature offers you a transparent outlook over the transacted items as you can define and handpick the serial numbers of them.


Batch Tracking

This system allows you to monitor and group stock sets of similar properties. With batch tracking, you can track the expiration of items and detect defective items back to the belonging batch.

Batch tracking can offer many benefits for businesses dealing in items with limited shelf life. For example, this feature may greatly benefit a pharmaceutical drug store. Let’s say a specific store of this type has a smooth business until one day there comes a customer complaint. The main subject of the complaint is that the item given to him has expired a long time ago. 

Well, the vendors would have big trouble determining which box in the storeroom contained this pharmaceutical drug. Batch tracking could prevent such mistakes as it provides complete control of disposable item stocks.

Zoho Inventory allows you to record the received items as batches, coupled with manufacture date and expiry date information. When you are looking to sell some items, you can safely choose items from the batches that comply with usage period requirements.


Dropshipping

This is a supply chain management technique in which retailers don’t store goods in their stock. They rather transfer customer orders and shipment details to manufacturers or wholesalers, who will ship the goods directly to customers. Zoho Inventory completely supports dropshipping.

Why is there such a high need for drop shipments these days? Let’s say we have three participants in the sales funnel: a distributor, a supplier, and a customer. 

The distributor directly communicates with customers and stores the merchandise that he orders from his suppliers. When the distributor runs low on stock of items, and can not fulfill the order requirements from a specific customer, he/she will contact the supplier. The distributor will then find out if the supplier has these items available and agree on their rate. Then, the items can be delivered to a specific customer. 

Now, the distributor can open Zoho Inventory, create a sales order and send it to the customer. Then, he marks it for drop shipment, which will create a purchase order with the customer details (customer address set as a delivery location) to the supplier.

The distributor raises a drop shipment invoice and gets payment from his customer. At the same time, the supplier will make the delivery to the customer and send an invoice to the distributor at the agreed rate. The distributor makes a payment to the supplier, raises a bill and records this payment in Zoho Inventory. This will fulfill the drop-shipped sales. 

So, dropshipping is beneficial to the supply chain, as the sale of goods processes are greatly simplified thanks to the split of actions between the participants. Also, with Zoho Inventory, the distributors will retain their customers and strengthen relations with their suppliers.


Backorders

Sometimes, when your customers place an order for a specific item, you may not have this item in warehouse stock or the available item stock may be committed to your other transactions. In such a case, you can raise a backorder.

What is a backorder? It is a purchase order that you raise from a sales order at any time the items are out of stock or committed to your other transactions. So, the percentage of back-ordered items and the number of backorder days are important to measure the quality of your company’s customer service and its effectiveness when it comes to inventory management.


Packages

This Zoho Inventory functionality enables you to create packages and assign their slip numbers to the items contained in your sales orders. You can also keep track of your consignments when the packages are shipped.

There are 3 states of packages in Zoho Inventory: 

  • Not Shipped – A created package that awaits shipment
  • Shipped – When a shipment order is created for a package, the package changes its status to shipped
  • Delivered – The package gains delivered status when it reaches your customer. You can also manually mark the package as delivered.

Package Geometry

This is a very handy tool that enables visual simulation of the best possible alignment of goods inside the boxes before the packaging process. Zia (Zoho’s in-house AI system) enables package geometry.

The benefits you can get from this tool for your business are numerous. It can help you with the decision of what items go into which boxes and in what alignment. The package geometry tool picks the right boxes for more compact alignment of items.

This, in turn, minimizes the space wasted inside the boxes. Also, this tool can generate package slips for each box you use.


Contacts

In Zoho Inventory, contact is an organization or a person with whom you do business. This module allows you to save all the important details of your customers and vendors.

If you are a business or a freelancer, you will enjoy the benefits of this Zoho Inventory module. First of all, you will have a lot of customers that will either want to buy your products or services. Of course, customers are an essential driving force for any kind of business, so it is reasonable that you will want to save their contact information. That way, you will create transactions with more swiftness and do business more effectively in the long term period. 

Zoho Inventory allows you to save important customer details such as their name, email, phone number, billing and shipping address, website info and more. Besides saving customer details, you can also send them emails, view their statements, and even create sales transactions. 

All of the above details are saved in the contact page. On this page, you can also create contact persons. The contact person has to meet the following criteria: he/she must be someone who has some association with the primary contact and can be reached in case of queries related to business. You can also see the recent activities for a specific contact in a timeline format.

The contacts module offers extensive management options. You can filter your contacts by groups, which comes in handy when you have difficulties differentiating customers from vendors. If you want to store additional addresses for your contacts, you can do so in this module. The contact module also enables you to change contact types, deactivate contacts, export contacts, merge them, attach files to them, and more.

You can import contacts from existing .csv or .tsv files (limit of 1MB), from Zoho Books and Zoho CRM (which we will detail in the appropriate section), from Office365, and G Suite.


Items

Items are an essential component of the Zoho Inventory. These are all the products or services you sell to various clients, that can be purchased from different vendors in the business. The items module allows you to analyze, operate, and view all the items in your inventory.

You can stack up many different items in your organization, to the point when it becomes hard to manage them. Don’t worry, as Zoho Inventory enables you to apply filters to items to narrow down your search. The available item filters in Inventory are active items, inactive Items, sales, purchases, low stock items, ungrouped items, and Zoho CRM. You can access your items from Item Groups or directly.

All the primary details, sales and purchase details of your items are available at the items overview page. On this page, you can also track stocks (accounting stocks and physical stocks) and see sales channel information. 

Of course, you can edit and export all the items in your Zoho Inventory account with relative ease. 

One additional feature of this Zoho Inventory module is the ability to set reorder levels for your items. The reorder level is the inventory level at which the company will make a new order or start manufacturing run to prevent shortages and avoid overstocking.


Item Groups

Zoho Inventory allows you to group all the items. As with individual items, you can also analyze, operate, and view all the item groups in your inventory. Of course, you can access all your items from item groups. You can also add up to 3 attributes to classify your items in groups.

For example, if you are selling shirts with different colors (for example, red, green, blue), different sizes (for example, S, M, L, XL and XXL) and for different customer groups (for example, male, female, kids) then those 3 attributes can be defined during item group creation. Zoho Inventory will automatically create all possible variations based on those 3 attributes and the variations you have entered.


Item Categories

Understandably, you will have more items in your stock as your business grows. The item management may become a hassle at that point. To solve that problem, Zoho Inventory enables you to classify your items under numerous categories. That will greatly help your business with the organization of your stock and accessing them with more ease. All of this results in better inventory management.


Composite Items

In Inventory, a composite item is a single commodity composed of two or more items and/or services. Composite items allow you to create kits and sell them at customized rates and create finished goods by performing assemblies.

Let’s say that you are a business that sells home appliance products. At a specific period, you want to provide a discount for a microwave oven and mixer when someone buys them together, with one bonus service in the offer.

The composite items module featured in the Zoho Inventory will allow you to combine all the specified items and services to create a kit. Then, you can sell this kit at discounted rates. 

There is also a bundle function available, with which you can include additional merchandise or gift coupons in the created kit. All of that will depend on the preference of your customers.


Sales Channel Items

These are all the items on the online sales channel listed by you. If you want to sync your items from a sales channel with Zoho Inventory, you will need a live Inventory account and an account or a store on an online sales channel. You can only import sales channel items into Zoho Inventory, and not the other way around.


Sales Orders

A sales order is a financial document that confirms impending sales. In this document, you can see the exact price, quantity, and delivery details of the products or services being sold.

You can create a sales order directly from the dashboard or your contacts. Sales orders can also be imported from other sources. They will be automatically generated for every sale from an online marketplace or a shopping cart integrated with Zoho Inventory.

Sales orders have different states, and the Inventory acknowledges that in its system. Here are the states that sales orders can have:

  • Draft – the sales order has been created successfully, but still needs to be sent to the customer
  • Confirmed –the created sales order has been sent to your customer
  • Closed – if you raise an invoice or when a shipment becomes fulfilled (or both, depending on your preferences)
  • Void – when you decide to nullify the sales order
  • On Hold – when there is an unbilled purchase order raised for the sales order

Invoices

This is a document sent to your clients indicating the products or services sold by you. It also contains all the payment information that your client has to make.

You can create invoices directly or from a sales order. Invoices can be raised for multiple sales orders, in case the sales orders are associated with the same customer. Also, you can raise them for batch tracked items. Of course, you can also import and export invoices as well as send them to your customers by email.


Sales Returns

Sales return (or return material authorization) is a process in which the seller accepts a purchased item back from the consumer. In return, the customer will receive a cash refund, credit or replacement. Most common cases when this process takes place is receiving damaged or expired merchandise.


Purchase Orders

This is an official document that you issue to your vendors. A purchase order indicates relevant details of what you want to buy, the negotiated price and the quantity of the specific product or service.

You can create purchase orders directly or from your contacts. Also, you can import them into your Zoho Inventory account, link bills to purchase orders, and export them from your Inventory account. 

One other document closely associated to the purchase orders is the purchase receive. It is a document that records the items that have been delivered by your vendor into your warehouse. Essentially, this is a way for you to record the items and delivery notes received from your vendors for your purchases.

There are numerous advantages to creating purchase receives. First, you can keep track of all the items that you receive from your vendors. Secondly, receives can be converted to bills, which allows you to raise bills for only those items that you have received. Finally, based on purchase receives, you can calculate the stock on hand for a specific item.


Price Lists

Lists of prices of items that are on sale are listed in price lists. You can use them to mass control and modify the prices of your items for a specific customer or vendor.

Price lists can sure come in handy if you have, let’s say, 3000 items in your inventory. You want to give a 20% discount for a holiday sale. It would be very time-consuming to edit the item prices one by one. Well, that’s where the price lists come in.

You can create a price list for different situations (higher prices, lower prices, different prices depending on the country) and apply them to your contacts or transactions accordingly.


Multi-Currency

This feature of Zoho Inventory comes really in handy if you sell merchandise or offer services on a global scale. You can add multiple currencies and exchange rates that your business deals in, to your Inventory account.

First, you will set a base currency when you create your organization in the Inventory app. This will be your operating currency against which exchange rates will be quoted in a chosen country. It will be applied to your item prices, transaction, and reports. Keep in mind that you cannot delete your base currency, you can only change it if you have no transactions in your Inventory account.

You can also tie currencies to specific contacts, which comes in handy when you deal with contacts from different countries.

The multi-currency feature also allows you to enable auto exchange rates, or you can manually add them.


Taxes

The finances of your business will be affected by regulatory taxes. Every organization has different taxes that are specific to each country. The settings module allows you to add and manage your taxes.

Also, some businesses may add a compound tax. Some countries may require you to collect more than one tax from your customers. In such cases, the provincial tax will be applied to the total sum that includes the item or invoice amount, and the federal tax amount. These taxes are called compound taxes.


Transaction Approval

Transaction approvals allow you to approve and verify the transaction that your employees create in Zoho Inventory. That means that only the approved transaction will be shown in your accounts and reports. The approval workflow can help with avoiding situations where wrong items or incorrect quantities are recorded while making a purchase.

Users with an administrator role in Zoho Inventory have an approver role by default. Administrators can add this role to other users, which will come in handy in the multilevel approval process.

Once you have set up the roles, the users added in your organization can create and submit various transactions for their supervisors with the approver role. For sales entities, transaction approval is available for invoices and sales orders. On the other hand, for purchase entities, transaction approval is available for bills and purchase orders. 

Of course, all the approvers can either approve or reject transactions. In case that the transaction has been rejected, it can be resubmitted by the user.


Automation

This functionality enables you to create a set of rules for various modules of the Zoho Inventory. These rules are based on which appropriate actions would be performed during a trigger. 

Email Alert

Field Update

Webhooks

Custom Functions


Reports

Business owners and key decision-makers appreciate reports which enable them to make informed business decisions. Zoho Inventory provides systematic reports that will help you track your inventory, sales, and purchases.


Inventory Reports

These are all the reports generated for the tracked items in the inventory of your organization. There are seven types of reports in this section:

Product Sales Report

Active Purchase Orders Report

Inventory Details

Inventory Valuation Summary

FIFO Cost Lot Tracking

Batch Details Report

Batch Transaction Summary Report


Sales Reports

In this report section, you can find all the reports associated with the recorded and managed sales in Zoho Inventory. There are ten types of reports in this section:

Sales Order History

Order Fulfillment by Item

Sales by Category

Invoice History

Payments Received

Packing History

Sales by Customer

Sales by Item

Customer Balance

Sales by Sales Person


Purchase Reports

Here, you can see all the purchases that you record and manage in the Zoho Inventory. There are seven types of reports in this section:

Active Purchase Orders Report

Receive History

Purchase by Vendor

Purchase by Item

Bill Details

Payments Made

Vendor Balance


Activity Reports

The activity reports section helps monitor what your users are doing in Zoho Inventory. There are three types of reports in this section:

System Mails

Activity Logs

API Usage Report


Integrations

Zoho Inventory enables you to integrate with various Zoho applications. This feature gives you much better reach to potential customers and establishes you as the optimal vendor for your customers. Here are some of the most useful integrations for Zoho Inventory:

Zoho Books

Zoho CRM

Zoho Analytics

Shipping Carriers


Closing Words

I hope that you have a better understanding of the main features, capabilities, and different integrations that you can get with the Zoho Inventory application. You can choose from different pricing plans that tailor the features of Inventory to the scale of your business.

In the section below, you can see the tables that summarize all of the specified features of the Zoho Inventory divided into three pricing plans.