The Context
Why Inventory Mattered
"We can't recommend Xero for goods-based businesses"
Xero had a strong platform position, but Inventory was a weak fit for goods-based businesses. That created a product gap for customers, accountants, and partners trying to recommend Xero to businesses with stock, suppliers, and product reporting needs.
Driving churn
13% of offboarding comments mentioned Inventory as a key driving factor in why users were leaving Xero.
Prevents adoption
Our accounting partners often say they are unable to sell Xero to their clients because it is unsuitable for anyone with inventory needs.
Low usage
Of the more than 4 million active organisations in Xero, less than 10% use inventory, with only around 5% actively using inventory features.
User research
Let's understand why
What the community was saying
I started by understanding the problem at a high level through community forums. The same themes kept coming up: efficiency, automation, and better insights.
Competitor analysis
I also mapped competitor feature sets to see where Xero was not competitive. The gaps were clear: weak organisational tools, limited management capabilities, vague reporting, and very little automation despite strong AI potential.
What I heard in Melbourne
I flew over to Melbourne to sit with five of the leading accountants in the Australian market. What struck me wasn't any one workflow complaint. It was how unanimously none of them would recommend Xero Inventory to their goods-based clients. We had the bare minimum on paper, but the standards had moved on. In a world of ecommerce and hybrid businesses, the bare minimum wasn't bare minimum anymore.
Too rigid and basic
Although Xero offered the basics, its system was very rigid and lacked the flexibility and advanced features needed by many businesses.
“It's time-consuming and simply doesn't work for a lot of businesses”
Very manual
Many common workflows are highly manual, and while Xero has significant potential for automation, we currently don't offer any.
“I don't understand why we, as business owners, need to do all this; it wastes a lot of time”
Not very insightful
Our inventory provides very little in terms of insights, meaning users must rely on third-party apps for more detailed reports and analysis.
“Many business owners aren't the most business-savvy, so insights would be great”
Design
Two themes were emerging
Inefficiencies in managing inventory
Managing a large inventory of items or services can be challenging for businesses. The lack of organisation leads to inefficiencies, such as time-consuming manual tasks and UX issues like the inability to group or categorise items.
“Often, it's the last thing I want to do; it honestly takes way too long”
Better and deeper insights
While users can access high-level insights, they lack deeper insights, such as identifying top-performing products or those underperforming. This forces them to be reactive rather than strategic, ultimately hindering their growth.
“We need to assess how every part of the business is performing”
Design considerations
Building with AI in mind
Mapping our touchpoints
Inventory touches multiple points across Xero, so we mapped user flows and product dependencies to understand where changes would ripple and where collaboration with other workstreams was required.
Building with AI in mind
Our long-term vision was for JAX to act as an inventory agent: managing stock levels, providing insight, and suggesting actions to grow the business. To support that future, part of this work focused on linking the right data and designing around the gaps that still existed.
Hypothesis
“If we shipped categories and default supplier first, users would spend less time organising inventory day-to-day, and we'd capture the structured data Phases 2 and 3 were blocked on.”
Design strategy
Start with the data
Inventory's problems feed each other. The system is rigid, so workflows stay manual, so the data they produce is too messy for real insights. None of that gets fixed in one project. The question wasn't what to ship. It was what to ship first without it getting thrown out when Phases 2 and 3 came round. Categories and default supplier won that. Small fields, but they're where structured data starts. And structured data is the thing the rest of the roadmap is blocked on.
Design
Phased design approach
Phase 1 - Supplier and category fields
Two new fields on every inventory item: category, and a default supplier pulled from Xero's contact database. Small fields, but they cut a chunk of manual work out of day-to-day inventory. They also start capturing the structured supplier and sales data Phases 2 and 3 need to work.
Phase 2 - Actionable insights
Insights surfaced directly on the inventory page, so users don't have to leave Inventory to know how things are tracking. Phase 1's cleaner data makes the early version possible. As ongoing API work lands, the insights get deeper.
Phase 3 - AI automation
With cleaner data underneath, Phase 3 puts JAX directly into the inventory page. The early focus is the manual stuff users complain about most: adding new items, and matching them to the right records as stock comes and goes.
Testing
Early confidence before rollout
"When is this coming?"
We took a clickable prototype to eight Xero users and walked them through Stage 1 (categories and default supplier) before showing the longer-term vision. The test was encouraging on two fronts. Our read on their workflows held up, and the phased approach matched what they wanted shipped first. The question kept landing on Stage 1: the smallest piece, but also the one users wanted in their hands first.
Reflections
Reflections and next steps
In active development
Categories and default supplier are being built right now. We've been getting steady interest and feedback from users about when it will land. Even before launch, the signal is telling us we're solving the right problem.
Bigger than we thought
The discovery work surfaced more than an inventory redesign. After taking the findings back to leadership, we identified a $10B NZD opportunity in multi-channel sellers. The project expanded to include a real Inventory API to connect Xero with those channels, and it strengthens the data layer underneath everything else we're building.
Pushing into strategy
Honestly, this was the kind of project I want more of. The parts that mattered most to me weren't the screens. They were the user conversations and the strategy conversations with leadership. The next push for me is moving design into product and company decisions, not just craft ones.