Physical Inventory

You want to store your physical inventory so that it is accessible for shipping and protected from damage. As your sales increase, so will the time you need to spend shipping. You want to manage this time since new listings are the way to generate additional sales - not searching for a lost item. Plus, if you cannot find an item you sold, or it is now damaged, you will need to refund the buyer and risk negative feedback and/or low star ratings. When you start out, you may just need to set aside a shelf in a closet or garage for your items. As your inventory grows additional organization will save you time.

Consider using clear storage bins. You can stack the bins or line them up on a shelf. This helps protect your inventory from dust, moisture and damage. It also helps to organize items by type for faster retrieval.

Label the outside of the bin with the category of the item.
Since my categories tend to increase and decrease in storage requirements I tape a post-it to the outside that can easily be replaced/updated.

Put individual items in clear storage bags (ziploc style) inside the bin.
This may seem reduntant. However, when you are looking through the bin for a specific item it helps protect the other items. For instance, you do not want to snag clothes or get items dirty. Using clear storage bags makes it easier and faster to sort through the bin.