Inventory how-to

How to decide which products to stock and which to dropship

Stock the products that sell often enough and reliably enough that holding inventory is cheaper than the margin and control you lose by dropshipping.

Short answer: Stock the products that sell often enough and reliably enough that holding inventory is cheaper than the margin and control you lose by dropshipping. Dropship the slow movers, the untested new products, and anything with wide or unpredictable size and color spreads. Most stores end up with a mix, and that mix should change as sales data comes in.

Look at sell-through and demand consistency

A product worth stocking sells regularly enough that you are not guessing. If a SKU moves every week and the pattern is fairly stable, holding stock means faster shipping and better margin. If a SKU sells once or twice a month, the carrying cost and risk of dead stock usually outweigh the benefit of owning it.

New products are the hardest case. Until you have real sales data, you do not know the demand pattern. Many stores dropship or small-batch a new product for the first month or two, then switch it to stocked once a sales pattern shows up.

Compare margin and landed cost against dropship fees

Stocking only makes sense if the margin improvement covers your storage, cash tied up, and the risk of markdowns on leftover units. If a supplier's dropship price is close to what you would pay buying in bulk, there is little reason to hold inventory and take on that risk yourself.

Also weigh shipping speed. Customers often tolerate a slower delivery for a cheaper or niche item but not for a core product. If a product is central to your store's reputation, stocking it so you control fulfillment speed can be worth a thinner margin.

Factor in supplier reliability and lead time

A supplier with a long or unreliable lead time pushes you toward stocking, because you cannot promise delivery dates on something dropshipped from them. A supplier who ships fast and consistently makes dropshipping safer, since you are not exposing customers to your supplier's delays.

If a product comes from a supplier you also buy other stocked items from, check whether adding it to an existing purchase order is nearly free in terms of effort. If so, stocking a slower mover from that same supplier can make sense even if it would not on its own.

Re-check the split on a schedule, not once

The right split between stocked and dropshipped items shifts as products age, as seasons change, and as suppliers change terms. A product that was a slow mover at launch can become a steady seller six months later. Review the split quarterly rather than deciding once and leaving it.

Step by step

  1. List every SKU with units sold in the last 90 days and sort by frequency of sale.
  2. Mark anything selling fewer than roughly 1-2 units a week as a dropship or test candidate.
  3. For the rest, compare your bulk cost plus storage against the dropship price per unit.
  4. Check each supplier's lead time and reliability; long or shaky lead times push toward stocking.
  5. Group stock-candidates by supplier to see if adding them to an existing order is low effort.
  6. Set a recurring quarterly review to move products between stocked and dropshipped based on actual sales.
  7. Keep dropshipping anything with wide variant spread (many sizes or colors) unless specific variants prove to be steady sellers.

Worked example

Riverbend Outdoor sells a camp stove at 14 units a month with stable demand and a 20 point margin improvement if bought in bulk from a supplier with a 10 day lead time: they stock it. A folding table from the same supplier sells 3 units a month and ties up cash with little margin gain over the dropship price, so they keep it as dropship. A new tent model launches with no sales history, so they dropship it for 60 days, then review: it sells 9 units in that window with a steady weekly pattern, so they switch it to stocked.

How SteadyShelf helps

SteadyShelf forecasts and reorders for products you already stock, but it does not decide which products belong in inventory versus dropship, and it does not handle dropship orders at all. Once you decide a SKU should be stocked, SteadyShelf will track its sales pattern and tell you when and how much to reorder from that supplier.

$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

Can I stock a product for some suppliers and dropship the same product from another?

Yes, some stores do this to compare reliability and cost between two suppliers of the same item. Just make sure your store tracks them as separate variants or uses a clear process so staff know which supply route applies to which order.

What if a dropship supplier suddenly becomes unreliable?

Treat that as a trigger to re-run the stock-versus-dropship decision for that product immediately rather than waiting for your scheduled review. If the product sells well, moving it to stocked inventory with a different supplier may now make more sense.

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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