Inventory how-to

How to do cycle counts in a small store

Cycle counting means you count a small slice of your inventory on a regular schedule instead of shutting down for one big yearly count.

Short answer: Cycle counting means you count a small slice of your inventory on a regular schedule instead of shutting down for one big yearly count. Pick a rule for which SKUs to count each week, count them, fix the numbers in your store admin, and look for why they were wrong. Over a few months every SKU gets checked without ever stopping the shop for a full count.

Why cycle counts beat one big annual count

A full stocktake takes a lot of time and usually happens once a year, so errors sit uncorrected for months. Cycle counts spread the work out. You count a portion of your SKUs each week, so mistakes get caught sooner and the count itself takes an hour or two instead of a whole weekend.

Pick a counting rule

A simple rule works best for a small store. Common options: count your top 20 percent of SKUs by sales volume every month, count everything else once or twice a year, or divide your whole catalog into equal groups and count one group per week on rotation. Pick whichever rule you can actually stick to.

Run the count

Print or pull up a list of the SKUs due this cycle with their expected on-hand quantity. Physically count the stock, including any in a back room or overflow spot. Write down the counted number next to the expected number for each SKU, do not just update the system as you go, so you keep a record of the gap.

Fix the records and investigate gaps

Update each SKU's quantity in your store admin to match the physical count. For any SKU that was off, especially by a large amount, check for an obvious cause: a missed delivery, a return that was not logged, theft, or a sale that did not deduct stock correctly. If a cause is not obvious, flag the SKU for a recount next cycle to confirm the new number sticks.

Step by step

  1. Group your SKUs into a few buckets, for example by sales velocity or by shelf location.
  2. Assign each bucket a counting frequency, such as monthly for fast movers and quarterly for slow movers.
  3. Each week, pull the list of SKUs due for a count and their expected quantities.
  4. Count the physical stock and record it separately before changing anything in the system.
  5. Update the system quantities to match the physical count.
  6. Investigate any large discrepancies and note the likely cause.
  7. Recount flagged SKUs the following cycle to confirm the fix held.

Worked example

A store with 400 SKUs splits them into four buckets of 100 and counts one bucket per week, so the whole catalog gets checked every four weeks. In week one, SKU "Blue Mug 12oz" shows 85 units in the system but the physical count comes to 78. The store updates the system to 78 and checks recent orders, finding a 7-unit order that was packed but never marked as fulfilled. It fixes the fulfillment record and flags the SKU for a quick recount next month.

How SteadyShelf helps

SteadyShelf does not do stocktakes or cycle counts. It assumes the on-hand numbers in your store are accurate and builds its forecasts and reorder points from them, so keeping those numbers correct with regular manual counts directly improves the quality of your reorder suggestions.

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

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FAQ

What happens to my reorder suggestions if my inventory counts are wrong?

SteadyShelf calculates order quantities using your on-hand stock as one of the inputs, alongside daily sales and lead time. If the on-hand number is wrong, the suggested order quantity will be wrong too, either over-ordering or under-ordering. Regular cycle counts keep this input accurate.

How often should a small store with limited staff time do cycle counts?

There is no fixed rule, but a common approach is to count fast-selling SKUs monthly and slower ones quarterly, so the busiest items get checked more often. Adjust the frequency based on how much staff time you have available each week.

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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