How to Prevent Inventory Stockouts – 7 Strategies for Shopify Stores

Running out of stock is one of the most frustrating experiences for both Shopify store owners and customers. Stockouts not only result in lost sales but can damage customer loyalty and your brand's reputation. In this article, we'll explore seven proven strategies to help prevent inventory stockouts and keep your Shopify business running smoothly.

Why Preventing Stockouts Matters for Your Shopify Store

Stockouts can cost your business significantly. According to retail industry research, businesses lose nearly $1 trillion annually due to stockouts, overstocks, and returns. For Shopify merchants, the impact is even more immediate - when a customer can't purchase what they want, they'll likely head to a competitor's store.

The consequences of stockouts include:

• Immediate revenue loss from missed sales
• Long-term revenue loss from customers who won't return
• Damaged brand reputation and reduced customer trust
• Lower search rankings and visibility on marketplaces
• Increased marketing costs to acquire replacement customers

Strategy 1: Implement Accurate Demand Forecasting

Effective demand forecasting helps you anticipate future inventory needs based on historical data, market trends, and seasonal patterns.

Steps to improve your forecasting:

• Analyze at least 12 months of sales data to identify patterns
• Account for seasonality, promotions, and market trends
• Use Shopify reports and analytics to track product performance
• Consider external factors like competitive activity and economic conditions
• Regularly review and refine forecasts based on actual performance

Strategy 2: Set Proper Reorder Points

Reorder points are inventory thresholds that trigger new purchase orders. Setting these correctly ensures you order new stock before running out.

How to determine your reorder point:

Use this formula: Reorder Point = (Average Daily Sales × Lead Time) + Safety Stock

For example, if you sell 10 units daily, your supplier takes 14 days to deliver, and you keep 30 units as safety stock:

Reorder Point = (10 × 14) + 30 = 170 units

When inventory drops to 170 units, it's time to reorder. You can use our free Reorder Point Calculator to make this process easier.

Strategy 3: Maintain Adequate Safety Stock

Safety stock is extra inventory kept as insurance against unexpected demand spikes or supply chain disruptions.

How to calculate safety stock:

A simple formula is: Safety Stock = (Maximum Daily Sales × Maximum Lead Time) – (Average Daily Sales × Average Lead Time)

For example, if your maximum daily sales are 15 units, maximum lead time is 20 days, average daily sales are 10 units, and average lead time is 14 days:

Safety Stock = (15 × 20) – (10 × 14) = 300 – 140 = 160 units

Our Safety Stock Calculator can help you determine the right amount for your products.

Strategy 4: Diversify Your Supplier Network

Relying on a single supplier is risky. If they experience production issues or shipping delays, your inventory could be compromised.

How to build a resilient supplier network:

• Identify and vet multiple suppliers for key products
• Establish relationships with local suppliers who can provide rush orders
• Negotiate flexible ordering terms to accommodate demand fluctuations
• Regularly review supplier performance and reliability
• Consider dropshipping as a backup for critical products

Strategy 5: Implement Inventory Management Software

The right inventory management solution can automate tracking, provide real-time visibility, and alert you before stockouts occur.

Key features to look for:

• Real-time inventory tracking across sales channels
• Automated reorder notifications
• Demand forecasting capabilities
• Supplier management tools
• Reporting and analytics

Strategy 6: Optimize Your Product Mix

Not all products contribute equally to your business. Focus your inventory management efforts on your most important items.

Using ABC analysis to prioritize:

ABC analysis is a powerful inventory categorization method that helps you focus on your most important products:

• A items: High-value products (top 20% that generate 80% of revenue)
• B items: Medium-value products (30% that generate 15% of revenue)
• C items: Low-value products (50% that generate 5% of revenue)

Maintain higher safety stock levels for A items, moderate levels for B items, and minimal levels for C items to optimize your inventory investment.

Strategy 7: Implement a Pre-Order System

Pre-orders allow you to capture sales even when items are temporarily out of stock, keeping customers engaged and providing valuable demand data.

Tips for effective pre-order systems:

• Clearly communicate estimated shipping dates
• Offer incentives like discounts or free shipping for pre-orders
• Use pre-order data to inform purchasing decisions
• Keep customers updated on order status
• Consider requiring partial or full payment upfront

Conclusion

Stockouts don't have to be an inevitable part of running a Shopify store. By implementing these seven strategies, you can significantly reduce the risk of running out of inventory and create a more reliable shopping experience for your customers.

Remember that inventory management is an ongoing process that requires regular attention and refinement. Use the free tools we offer, like our Reorder Point Calculator and Safety Stock Calculator, to make data-driven decisions about your inventory.