Learn · Inventory
Inventory management for online stores
Ecommerce inventory management is really cash management. Every unit on a shelf is money you've already spent and can't use for anything else until it sells. Hold too little and you stock out, losing sales and wasting the ad spend that sent shoppers to an empty product page. Hold too much and cash sits idle while storage, shrinkage and obsolescence slowly eat into it.
These guides cover the decisions that sit between those two mistakes. The metrics section shows how to measure how fast stock is turning into cash, and how to spot dead stock early. Reordering covers lead time, reorder points, safety stock and the main replenishment methods, so you know when to buy and how much. Valuation and counting explains FIFO, LIFO and weighted average cost, SKU structure and how to run a stocktake. Forecasting looks at demand planning and how to measure whether your forecasts are any good.
Each guide includes the formula, a worked example with realistic Shopify-scale numbers, and a link to the matching free calculator.
Inventory metrics
- Days inventory outstanding: formula and how to lower itDays inventory outstanding (DIO) formula, a worked Shopify example, US retail benchmarks by category, and practical ways to lower your inventory days.
- Dead stock: the real cost of inventory that will not sellWhat is dead stock? How to spot it in Shopify reports, what carrying costs add up to, and how to price and clear excess inventory before it costs you more.
- How to measure demand forecast accuracyHow to measure demand forecast accuracy: the MAPE formula with a worked monthly table, forecast accuracy as 100% minus MAPE, and how error sets safety stock.
Reordering and replenishment
- What is lead time in inventory management?What is lead time? The lead time meaning and formula, the types of lead time, how to measure it, and how it drives your reorder points and safety stock.
- Inventory replenishment: how to restock without overstockingInventory replenishment meaning, methods and formulas: reorder point, periodic review, min/max and forecast-based restocking, with examples and common mistakes.
- Backorder vs stockout: what is the difference?What does backorder mean, and how does it differ from a stockout? Definitions, a comparison table, what stockouts cost, and how to allow backorders on Shopify.
- What does MOQ mean?MOQ meaning: what a minimum order quantity is, MOQ vs EOQ with a worked example, how MOQs affect cash and dead stock, and practical tips for negotiating MOQs.
- Inventory management methods for online storesInventory management methods for online stores: just-in-time, ABC analysis, EOQ, and safety stock with reorder points, plus which ones fit a Shopify brand.
- What is vendor-managed inventory?Vendor-managed inventory explained: what VMI is, how it works, the pros and cons for small ecommerce brands, and practical alternatives if VMI isn't an option.
Valuation, SKUs and counting
- FIFO inventory method explained (and FIFO vs LIFO)FIFO inventory method explained: first in, first out as valuation and stock rotation, a worked cost-layer example, and FIFO vs LIFO vs weighted average cost.
- What is a SKU?What is a SKU? The meaning of stock keeping unit, SKU vs UPC vs GTIN, a simple SKU naming scheme with examples, and how to set SKUs on Shopify products.
- How to run a stocktakeHow to do a stocktake for an online store: a step-by-step process, full counts vs cycle counting, handling variances, and a free stocktake sheet (Excel, CSV).
- How to make a bill of materialsHow to make a bill of materials (BOM) for an online store: single vs multi-level BOMs, a BOM template example for a gift set, and how bundles work on Shopify.
Forecasting and multi-location
- Demand planning vs supply planningDemand planning vs supply planning for ecommerce: what each one is, how they connect, and simple demand forecasting methods small brands can use, with examples.
- Managing inventory across multiple Shopify locationsShopify multi-location inventory explained: locations vs multiple stores, how stock gets out of balance, and when to transfer stock instead of reordering.
Inventory calculators
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Reorder Point Calculator
The exact stock level that should trigger your next reorder.
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Safety Stock Calculator
How much buffer stock you need to cover demand and lead-time swings.
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Economic Order Quantity (EOQ) Calculator
The order size that minimizes your combined ordering and holding costs.
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Inventory Turnover Rate Calculator
How many times a year your inventory turns over, and how many days that takes.
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Dead Stock Carrying Cost Calculator
What stock unsold 90+ days is actually costing you every month.
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Stockout Revenue Loss Estimator
The revenue and profit a stockout costs you, based on normal daily sales.
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Cash Tied Up in Inventory Calculator
How many days your cash sits as inventory before it becomes cash again.
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Multi-Location Inventory Imbalance Estimator
Which of two locations is overstocked or understocked, and how many units to move.
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Seasonal Lead-Time Buffer Calculator
The extra stock you need to survive peak-season demand and slower lead times.
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Contribution Margin per SKU Calculator
What a single SKU actually contributes after COGS, shipping, and fees.