Inventory how-to

How to decide when to discontinue a product

Discontinue a product when its sales rate is too low to justify the cash tied up in stock, or when margin has shrunk to a point where it is not worth the shelf space and attention.

Short answer: Discontinue a product when its sales rate is too low to justify the cash tied up in stock, or when margin has shrunk to a point where it is not worth the shelf space and attention. Look at sales trend, days of stock, and margin together rather than any single number.

Check the sales trend first

Pull the sales for each variant over a fixed window, for example the last 90 days, and compare it to the 90 days before that. If sales have dropped and kept dropping for two or three periods in a row, that is a real decline, not noise. A single slow month is not enough evidence on its own, especially for seasonal items.

Look at days of stock against how slow it is moving

Days of stock = on hand / daily sales. If a SKU has 300 days of stock at current sales speed, you are financing a very long wait for cash to come back. Compare that to how long you are willing to tie up money in that product. If the answer is "longer than I am comfortable with" and sales are not recovering, that is a discontinue signal.

Check margin, not just revenue

A product can sell steadily and still be worth dropping if the margin after discounts, returns and shipping cost has fallen too low. Pull landed cost and current selling price outside Shopify since margin and landed cost are not things stock tools calculate for you. If margin is thin and the product also needs manual attention (returns, substitutions, supplier chasing), that extra cost is real even if it never shows up in a report.

Decide what to do with remaining stock before you commit

Before marking something discontinued, decide if you will sell through existing stock at a discount, bundle it, or write it off. This affects timing: you may want to stop reordering now but keep selling the item until it clears, rather than pulling it immediately.

Step by step

  1. List each variant's sales for the last two 90-day periods and flag ones that dropped in both.
  2. Calculate days of stock (on hand / daily sales) for each flagged variant.
  3. Pull current margin per unit, including discounts and shipping cost, from your own cost records.
  4. Set a simple rule, for example: stop reordering if sales fell over two periods and days of stock exceeds 180.
  5. Stop future purchase orders for flagged SKUs rather than cancelling stock in hand.
  6. Decide a sell-through plan for remaining stock: discount, bundle, or write off.
  7. Mark the product discontinued in your store only after stock is cleared or written off.

Worked example

A store sells a phone case variant at 2 units/day over the last 90 days, down from 5 units/day in the prior 90 days. On hand is 400 units, so days of stock = 400 / 2 = 200 days. Margin per unit after shipping cost is $1.20, down from $3.50 a year ago. Given the falling sales, long days of stock, and thin margin, the owner stops reordering immediately, drops the price 20 percent to sell through the 400 units over the next few months, and marks it discontinued once stock hits zero.

How SteadyShelf helps

SteadyShelf can show you the sales trend and days of stock per variant, which covers two of the three signals you need. It does not track margin, landed cost or write-offs, so you will need to pull cost and price data separately to finish the decision; once you decide to stop, you just stop generating purchase order suggestions for that SKU.

$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 I discontinue a product the moment sales slow down?

No. Check two consecutive periods of decline, not one, since a single slow month can be seasonal or a one-off. Also weigh in margin and how much stock you are holding before deciding.

What if a product still sells well but makes almost no profit?

Low margin on its own can be a reason to discontinue, even with steady sales, especially if the product also takes up manual time for returns or supplier issues. Compare the margin against your other products and decide if the shelf space and cash are better used elsewhere.

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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