Inventory glossary

What is Damaged inventory?

Damaged inventory is stock that cannot be sold at full price because it is broken, defective, water damaged, or otherwise flawed.

Damaged inventory sits in your count but is not really sellable. If you ignore it, your stock numbers look healthier than they are, and you may think you have more usable units than you do. For a small store this matters at reorder time, because ordering based on raw stock counts instead of sellable counts can leave you short.

Track damaged units separately from good stock. Pull them out of your sellable quantity right away, decide whether to return them to the supplier, discount them, or write them off, and record the loss so your margin numbers stay accurate.

Example

A candle store receives 100 units of a new scent. On unboxing, 6 jars arrived cracked. The store marks 94 units as sellable stock and 6 as damaged inventory, pending a return to the supplier.

Common mistakes

  • Counting damaged units as part of sellable stock on hand.
  • Not recording damaged inventory at all, so losses never show up in the books.
  • Delaying the decision to return, discount, or write off, which lets damaged stock quietly take up shelf space.

Damaged inventory and SteadyShelf

SteadyShelf forecasts and reorder suggestions work off sellable stock, so flagging damaged units separately keeps order quantities accurate.

SteadyShelf is launching on the Shopify App Store. Join early access to get the install link first.

Related terms

Receiving · Inventory shrinkage · Return to vendor · Inventory write-off · Quarantined inventory

Full inventory glossary

FAQ

Does damaged inventory count toward stock on hand?

No. It should be separated out and excluded from sellable stock counts, since it cannot be sold as is.

What should a small store do with damaged inventory?

Record it right away, then decide to return it to the supplier for credit, discount it as clearance, or write it off as a loss.

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