Introduction
Inventory management is one of the most critical (and often most challenging) aspects of running a successful ecommerce store. Overstocking ties up cash, understocking leads to missed sales, and poor inventory visibility creates customer dissatisfaction.
Fortunately, if you’re running your store on Shopify, you have powerful inventory management tools at your fingertips — but only if you know how to use them correctly.
In this guide, we’ll break down how to effectively manage inventory with Shopify, avoid costly mistakes, and ensure your store operates smoothly as you scale.
Why Inventory Management Matters in Ecommerce
Whether you’re selling a few dozen products or thousands of SKUs, effective inventory management helps you:
- Prevent stockouts and overselling
- Improve cash flow
- Forecast demand accurately
- Simplify fulfillment operations
- Enhance customer satisfaction
- Reduce operational costs
Inaccurate inventory data leads to lost sales, frustrated customers, and damaged brand trust. Shopify’s built-in features make it easier to maintain control — but they require proper setup and monitoring.
Core Shopify Inventory Management Features
1. Inventory Tracking Per Product
Shopify allows you to enable inventory tracking on a per-product or per-variant basis.
- You can enter current stock levels.
- Shopify automatically updates inventory as sales occur.
- You can set inventory thresholds for notifications.
Why it’s important:
Real-time inventory tracking helps prevent overselling and alerts you before stock levels run dangerously low.
2. Inventory Locations
For merchants using multiple warehouses, retail stores, or fulfillment partners, Shopify’s multi-location inventory feature allows you to:
- Track inventory across multiple locations.
- Route orders based on stock availability per location.
- Prevent fulfillment delays caused by stockouts in individual warehouses.
Pro tip:
Assign stock accurately to each location for reliable fulfillment automation.
3. Stock Notifications
Shopify allows you to set up low stock alerts, ensuring you know when to reorder before running out.
You can:
- Use built-in Shopify reports.
- Install apps like Stocky (available for Shopify POS Pro users).
- Connect third-party inventory management apps for advanced alerting.
Why it’s important:
Timely notifications prevent lost sales due to stockouts.
4. Inventory Reports
Shopify offers comprehensive inventory reporting under Analytics > Reports. You can view:
- Current stock levels
- Inventory history
- Sales velocity
- Aging inventory
Pro tip:
Review inventory aging reports regularly to identify slow-moving products that may require discounting or removal.
5. Pre-orders and Back-in-Stock Options
When inventory levels hit zero, Shopify allows you to:
- Continue selling when out of stock (if configured).
- Use back-in-stock notification apps to alert customers once inventory is replenished.
- Manage pre-orders for high-demand items.
Why it’s important:
This feature helps retain potential sales even when stock is temporarily unavailable.
6 Best Practices for Shopify Inventory Management
1. Accurate SKU Management
- Assign unique SKUs (Stock Keeping Units) to each product variant.
- Maintain consistency between your online store and warehouse system.
- Use SKU naming conventions that scale as your catalog grows.
Why it matters:
Accurate SKUs simplify order fulfillment, reporting, and supplier reordering.
2. Set Up Inventory Buffers (Safety Stock)
- Maintain a buffer to account for supplier delays or demand spikes.
- Calculate safety stock based on sales velocity and lead times.
Pro tip:
Use Shopify apps like Inventory Planner to automate reorder point calculations.
3. Automate Inventory Sync Across Sales Channels
If you sell on multiple channels (Shopify, Amazon, eBay, POS), ensure inventory is synced in real-time using apps or integrations.
Popular integration tools:
- Shopify Markets (for international expansion)
- ChannelAdvisor
- Linnworks
- Sellbrite
Why it matters:
Prevents overselling across multiple platforms and maintains consistent inventory data.
4. Leverage Barcode and Scanning Tools
Barcoding simplifies receiving, picking, and inventory audits.
- Use Shopify POS and compatible scanners.
- Scan products during fulfillment to prevent shipping errors.
- Speed up cycle counting and stocktakes.
5. Regular Cycle Counts
Instead of relying solely on year-end physical counts:
- Implement weekly or monthly cycle counting for your top-selling SKUs.
- Identify discrepancies early and adjust inventory records promptly.
Why it matters:
Maintains inventory accuracy throughout the year and avoids major surprises during audits.
6. Use Inventory Forecasting Tools
- Forecast demand based on seasonality, trends, and sales history.
- Automate purchase orders and replenishment based on projected needs.
Shopify apps for forecasting:
- Inventory Planner
- ForecastRx
- Katana MRP
Common Shopify Inventory Mistakes to Avoid
| Mistake | Impact |
|---|---|
| Not enabling inventory tracking | Overselling and fulfillment issues |
| Incorrect SKUs | Picking, packing, and reporting errors |
| Ignoring multi-location setup | Delayed shipments or stockouts |
| No safety stock buffer | Frequent stockouts during demand spikes |
| Lack of regular audits | Inventory inaccuracies snowball over time |
Case Study: Shopify Inventory Optimisation
A mid-sized fashion retailer running on Shopify struggled with:
- Frequent overselling
- High return rates due to incorrect fulfillment
- Lack of inventory visibility across warehouses
Solutions implemented:
- Enabled multi-location inventory tracking
- Adopted barcoding for receiving and fulfillment
- Integrated Inventory Planner for forecasting
- Set up automated low-stock alerts
Results after 90 days:
- Inventory accuracy improved to 99%
- Stockouts reduced by 35%
- Order error rate dropped by 22%
- Revenue grew due to fewer lost sales
Conclusion
Shopify offers a robust foundation for inventory management, but like any system, its effectiveness depends on proper setup, routine maintenance, and process discipline.
By following best practices — from accurate SKUs to cycle counting and multi-location tracking — you’ll create a system that:
- Keeps customers happy
- Maximises sales
- Reduces operational headaches
- Supports scalable growth
Strong inventory management turns ecommerce complexity into competitive advantage.
