The E-commerce Inventory Planning Guide

Every unit on a shelf is cash you can't spend on ads, product or people. The goal isn't maximum stock — it's enough to never stock out a bestseller, and no more. That balance is what the metrics below manage.

Sales velocity is units sold per day (or week). It's the foundation of every other inventory number, and its trend is an early signal: rising velocity may mean reorder sooner or scale ads; falling velocity is a problem to investigate before it becomes dead stock. Adjust it for expected growth and seasonality rather than using a flat average.

The reorder point is the stock level that should trigger a new order, so fresh stock lands before you sell out. It equals expected demand during the supplier lead time plus safety stock: (average daily sales × lead time) + safety stock. Hit that level, place the order.

Safety stock absorbs demand spikes and supplier delays. Size it to your product's volatility and how reliable your lead times are — often expressed as a number of days of cover. Zero safety stock guarantees eventual stockouts; too much ties up cash. It's built into the reorder point.

Runway is units in stock ÷ daily sales — the days of stock remaining. Watching it fall (adjusted for growth) is what lets you act before zero. Reorder when runway drops to your lead time plus safety buffer, and order roughly enough to cover the next cycle.

The point of these numbers is to be warned, not to do arithmetic. Put runway, velocity and reorder status for your top SKUs on one board with alerts, so a product approaching its reorder point flags itself — before the stockout, not after.