What is Lost sales?

Lost sales do not show up in your accounting the way a return or a discount does. The order simply never happens, so the cost is easy to miss. A customer who wants a candle you do not have usually buys from someone else, or buys a different scent from you, or just leaves.

Track lost sales by watching stockout days on your best sellers and estimating what they would have sold based on normal demand. If a product sells 5 units a day and sits out of stock for 4 days, that is roughly 20 units of lost sales. Use this number when you review reorder points, not just the stockout itself, because a short stockout on a slow mover matters less than one on a top seller.

Formula

Example

A candle store sells its lavender candle at 6 units per day on average. It runs out of stock and stays out for 5 days before the next shipment arrives. Estimated lost sales = 6 x 5 = 30 units, worth $450 if each candle sells for $15.

Common mistakes

• Confusing lost sales with returned or cancelled orders, which are different problems.
• Ignoring lost sales because they do not appear as a line item anywhere in your reports.
• Assuming customers will wait and buy later instead of switching to a competitor or substitute product.

Lost sales and SteadyShelf

SteadyShelf forecasts demand per variant and sets order-by dates so you reorder before stock runs out, which reduces the stockouts that cause lost sales.

Work it out for your own products with our free tool: Stockout cost calculator.

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

Related terms

Stockout · Service level · Fill rate · Safety stock · Backorder

Full inventory glossary

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