Inventory how-to

How to use the two bin system in an online store

The two bin system works for an online store the same way it works in a warehouse.

Short answer: The two bin system works for an online store the same way it works in a warehouse. You split your stock into two bins, sell from bin one, and when it runs out you reorder and start selling from bin two while you wait for the new stock. For ecommerce you can run this with a number instead of physical bins, as long as you know your reorder point.

What the two bin system actually does

The two bin system is a simple way to trigger reorders without checking stock levels every day. Bin one holds enough stock to sell while you wait for a new order to arrive, plus a bit extra for safety. Bin two holds the same. When bin one is empty, you place an order and start pulling from bin two.

In a physical shop this means two literal containers. In an online store you do not need two containers. You need a number: the point at which remaining stock equals what bin two represents. That number is your reorder point.

Setting your bin size (reorder point)

Your reorder point should cover your average daily sales for the length of your supplier's lead time, plus a few safety days in case sales spike or the supplier is late. The formula is: reorder point = daily sales x (lead time + safety days).

Work this out per SKU, not per product line. Two variants of the same product can sell at very different speeds, so a single reorder point for the whole product will be wrong for at least one variant.

Running it manually

If you are doing this by hand, pull a stock report weekly, sort by SKU, and flag anything at or below its reorder point. Place the order that day or the next day, not a week later, since any delay eats into your safety days. Keep a simple spreadsheet with SKU, daily sales average, lead time, safety days, and reorder point so you are not recalculating from scratch each time.

The weak point of doing this manually is that sales speed changes and nobody updates the spreadsheet. A SKU that sold slowly in January can be your top seller in November, and if the reorder point was never revised you will stock out despite having a system in place.

Keeping it accurate over time

Review your daily sales averages at least monthly, more often for seasonal products. If a supplier's lead time changes, update the reorder point immediately, since lead time is one of the two inputs that defines bin size. Treat the two bin system as a starting point, not a fixed rule, because it only stays useful if the numbers behind it stay current.

Step by step

  1. List every active SKU with its average daily sales, supplier lead time, and a safety day buffer
  2. Calculate each SKU's reorder point: daily sales x (lead time + safety days)
  3. Check stock against reorder points on a fixed schedule, weekly at minimum
  4. Place an order the moment a SKU hits its reorder point, sized to cover lead time plus extra days of cover
  5. Log the order date and expected arrival so you can spot late suppliers
  6. Update daily sales averages and lead times regularly so reorder points stay accurate
  7. Revisit safety days around seasonal peaks when demand is less predictable

Worked example

Say you sell a candle that moves 6 units a day on average. Your supplier takes 10 days to deliver, and you keep a 4 day safety buffer. Your reorder point is 6 x (10 + 4) = 84 units. When stock falls to 84, you place an order. If you want 20 days of cover and currently have 10 units on order already, order quantity = 6 x (10 + 20) - (84 + 10) = 180 - 94 = 86 units.

How SteadyShelf helps

SteadyShelf automates this exact logic per variant: it tracks daily sales, calculates the reorder point from each supplier's lead time and safety days, and emails you a reorder alert and draft purchase order when a SKU hits it, so you are not maintaining a spreadsheet by hand. It does not manage physical bins or per-location stock, so if you split inventory across multiple warehouses or store locations you will still need to handle that allocation yourself.

$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

Does the two bin system work for seasonal products?

It works less well because daily sales swing a lot, so a reorder point based on a 28 day average can be too low heading into a peak or too high coming out of one. Increase safety days before known peaks and recalculate the reorder point more often during those periods, for example weekly instead of monthly.

What happens if my supplier's lead time is inconsistent?

Use your worst realistic lead time, not the average, when setting safety days. If a supplier sometimes takes 14 days instead of the usual 10, build that gap into your safety days rather than your base lead time, so you are covered without inflating the reorder point for every order.

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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