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Everything you need to know about Magento Multi Source Inventory

We all know that the way in which customers shop has changed dramatically and even more after last year. The popularity of online shopping is growing every day. As the digital and in-store experiences blur - Online-to-Offline (o2o), it is opening new opportunities for retailers, as well as new challenges to make this shopping experience smoother and easier for their customers as well as for themselves.

No matter which shopping channel customers are using, it's extremely important for retailers to avoid any trouble with buying or receiving the order. Retailers therefore must invest in additional processes that can make the shopping experience consistent and smooth for their shoppers.

Efficient Shipping with Magento Multi-Source Inventory (MSI) improves inventory management and allows merchants to manage it without third-party extensions or platforms. Moreover, it allows merchants (or pre-defined algorithtms) to easily attribute sales and shipments to warehouses based on their availability, proximity or other custom logic.

What are the main benefits of MSI?

Let’s say you’re selling different pieces of furniture that are stored in different locations. If before it would be difficult to achieve an exact statement about how many of them are where with MSI you can easily see the actual quantity in each warehouse and it allows you to control their inventory from the Magento admin panel. With running algorithms in the background that are constantly updating the number of products in stock, checkout process and shipping options, it really makes multiple stock inventory easy to use and affordable.

As the primary element of the new inventory system, a physical place where the product is located is called the Source. This location may be a warehouse, brick-and-mortar store, distribution center or any other location. Store owners are allowed to add a new source and set the quantity of the available products for every single source.

With MSI you can do the following:

  • Assign your products and the quantities to different sources (warehouses, physical stores, distribution centers etc.)

  • Satisfy customer expectations by increasing the visibility of your inventory to provide your customer the location information or deliver their order from any warehouse

  • Create different rules - set priorities and decide which stock to use first when fulfilling each order

  • Set up an external source for Dropshipping. Add your shipping partner to your list of available sources

  • ''Buy online and pick up in-store'' option to increase your sales and customer convenience when shopping

  • Integrate with third-party extensions to customize the MSI workflow

How does multi-source inventory management actually work?

After upgrading to the 2.3 edition of Magento it’s now possible to create multiple sources and assign different stock levels while working in a multi-source mode.

Use Case Scenario

Imagine you have 3 different places where you can find a particular product – your warehouse, a flagship store and another store in a different location. Stocks are the virtual representation for multiple sources, so you have created 3 different stocks. And now you have to distribute them to 4 different sales channels – your e-Bay store, your Denmark online store, UK online store and the Netherlands online store. Set up rules to manage the primary and secondary delivery sources.

Currently, the system is using an algorithm called the priority algorithm. As the name suggests, this logic assigns the orders to the priority sources with the biggest stock levels. It’s also possible to develop new solutions with the help of SourceSelectionInterface. These algorithms can be applied at the checkout stage, for example, if the shipping costs differ depending on the location of the warehouse.

Magento 2 MSI Source Selection Algorithm

The source selection algorithm is used to analyze whether the combination between sources and shipping using prioritized source order is the best. An important function of this algorithm during order shipment is suggesting proper sources, available quantities and amounts for shipping deduction.

OmniziO POS and Magento MSI ( A Powerful O2O Omnichannel mix) As part of your Online-to-Offline (O2O) digital marketing campaigns, a cloud based POS like OmniziO may be of interest where your customers can shop on any channel, check-out in seconds, and pay in any method where your online and offline inventory are in sync thanks to MSI and OmniziO POS.


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