Inventory how-to

How to choose inventory KPIs for a small store

Pick a small number of KPIs that tell you if you have too little stock, too much stock, or the wrong mix.

Short answer: Pick a small number of KPIs that tell you if you have too little stock, too much stock, or the wrong mix. For a small store, four or five metrics tracked weekly or monthly is enough. More than that and nobody looks at them.

Start with stockouts and sell-through

A stockout rate (how often a variant hits zero while it still has demand) tells you where you lost sales. Sell-through rate (units sold divided by units received, over a period) tells you if a SKU is moving or stalling. These two cover the basics: are you running out, or are you sitting on dead stock.

Add days of stock and reorder timing

Days of stock (on hand divided by average daily sales) shows how long each SKU will last at current pace. Pair it with on-time order rate: the percentage of purchase orders placed before the order-by date, not after. If you keep missing order-by dates, your days-of-stock numbers will drift down no matter what else you track.

Watch cash tied up, not just units

Inventory value (units on hand times cost) by category tells you where your cash is sitting. A small store does not need full landed cost accounting for this. Even a rough cost-per-unit times quantity gives you a usable signal for which categories are eating your cash without selling fast.

Keep it to a handful of numbers

Pick one KPI for understocking (stockout rate or days of stock), one for overstocking (sell-through or aged inventory over 90 days), one for process (on-time order rate), and one for cash (inventory value by category). Review them on the same day each week or month so you can compare trends, not just snapshots.

Step by step

  1. List your top 20 SKUs by revenue and track their days of stock weekly.
  2. Calculate sell-through monthly: units sold divided by units received in that period.
  3. Set a stockout check: review any SKU that hit zero units in the last 28 days.
  4. Track on-time order rate: orders placed by the order-by date versus total orders.
  5. Tag inventory older than 90 days and total its cost monthly.
  6. Review all KPIs on a fixed schedule, for example the first Monday of each month.
  7. Drop any KPI you have not acted on in two review cycles.

Worked example

Riverside Goods tracks four KPIs each month. Their best-selling candle has 40 units on hand and sells 2 units a day, giving 20 days of stock, which flags it for reorder soon. Their sell-through on a winter scarf line was 60 units sold out of 100 received, so 60 percent, which they judge too slow and decide not to reorder. Their on-time order rate was 8 out of 10 purchase orders placed before the order-by date, so 80 percent, which they want to push toward 100 percent next quarter.

How SteadyShelf helps

SteadyShelf directly supports two of these KPIs: it calculates days of stock per variant from your 28-day sales window, and it tracks order-by dates so you can measure your own on-time order rate. It does not build dashboards for sell-through, aged inventory value, or multi-location KPIs, since it does not do per-location forecasting or stocktakes. For those, pull the numbers manually from your sales and inventory reports on whatever schedule you choose.

$29/month flat, unlimited products and suppliers, 30-day free trial. Run the numbers now with the free reorder point calculator.

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

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FAQ

Should a small store track inventory turnover ratio too?

Turnover ratio (cost of goods sold divided by average inventory value) is useful but it is really the same signal as sell-through viewed over a longer period. If you already track sell-through monthly, add turnover only once you have enough history, around 12 months, to compare year over year. Before that it adds noise more than insight.

How many KPIs is too many for a two-person store team?

More than five or six becomes hard to review consistently with limited staff time. If a KPI has not changed any decision in two review cycles, drop it. It is better to act reliably on four numbers than to collect ten and ignore half of them.

Let SteadyShelf do this math for every SKU

Order-by dates per supplier, seasonal forecasts and draft POs for your Shopify store. $29/month after a 30-day free trial.

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