7 Ways to Prevent Stockouts in Your Online Store

Stockouts can hurt your online store by driving customers to competitors and damaging your reputation. Preventing them not only boosts sales but also builds customer trust. Here’s how to keep your inventory in check:

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1. Real-Time Inventory Tracking: Use Shopify’s tools to sync inventory across sales channels and avoid overselling.
2. Set Reorder Points and Safety Stock: Calculate when to restock and keep a buffer for unexpected demand.
3. Low-Stock Alerts: Get notifications when inventory levels dip, so you can act quickly.
4. Forecast Demand Using Historical Data: Analyze past sales to predict future needs and plan accordingly.
5. ABC Analysis: Focus on high-revenue products while minimizing stock for slower movers.
6. Improve Supplier Coordination: Strengthen relationships and monitor supplier performance to reduce delays.
7. Back-in-Stock Notifications: Recover lost sales by letting customers know when items are restocked.

These steps ensure you’re prepared for demand, reduce the risk of stockouts, and keep customers coming back.

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Mastering Shopify Inventory: Avoid Stockouts & Manage Stock Easily

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Method 1: Use Real-Time Inventory Tracking

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Keeping track of your inventory in real time is a game-changer for avoiding stockouts. With automatic updates for every sale, return, or adjustment, you eliminate guesswork, ensuring you don’t oversell or leave customers disappointed.

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The biggest advantage? Instant accuracy. Every time a customer makes a purchase, your inventory count updates immediately across all your sales channels. This prevents awkward situations where multiple customers try to buy the same last item at once, leading to overselling and unhappy shoppers.

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Real-time tracking also gives you valuable insights into product performance. You can easily spot which items are flying off the shelves and need restocking, as well as slower-moving products that might be tying up your cash flow. Ready to make this work for your Shopify store? Let’s break it down.

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Set Up Inventory Settings in Shopify

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Shopify’s inventory management tools are powerful when used correctly. To get started, you’ll need to enable two key settings for every product and variant in your store.

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Here’s how:

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1. Go to your Shopify admin and click on Products.
2. Select a product you want to track. Scroll to the Inventory section.
3. Enable both 'Track quantity' and 'Stop selling when out of stock.' These settings ensure your inventory updates automatically and prevents overselling.

If your product has multiple variants, like different sizes or colors, you’ll need to configure these settings for each variant. This way, customers can still buy available options, even if one variant is sold out.

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For added control, consider setting up inventory locations if you operate out of multiple warehouses or retail stores. Shopify’s system allows you to track stock across all locations, giving you a clear picture of your total inventory. This feature becomes especially useful as your business expands.

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Once your setup is complete, there are a few common mistakes to watch out for.

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Avoid Common Mistakes

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Even with real-time tracking, errors can creep in. Here are some pitfalls to avoid:

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• Untracked variants: Always enable tracking for new variants before they go live.
• Duplicate listings or import errors: Double-check bulk imports to prevent inaccurate counts.
• Manual inventory adjustments: Add notes for every adjustment to maintain an audit trail.
• Returned inventory delays: Restock returned items promptly to keep counts accurate.
• Third-party app conflicts: Make sure all inventory tools sync properly with Shopify.
• Staff training gaps: Ensure your team follows consistent procedures to avoid mix-ups.

If you’re using Forstock’s inventory management platform, their real-time dashboard provides an extra layer of accuracy. With features like Stock Intelligence, you’ll get alerts whenever there’s a mismatch between your digital and physical inventory.

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Don’t forget to schedule regular inventory audits - especially for your best-selling items. Monthly spot-checks can help you catch discrepancies early, so they don’t spiral into bigger issues. If you notice mismatches, investigate right away to find and fix the root cause.

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Method 2: Set Reorder Points and Safety Stock

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Reorder points tell you exactly when to restock, while safety stock acts as a buffer to handle unexpected demand surges or supplier hiccups. Together, these tools ensure you're ordering at the right time and keeping a cushion of inventory for those "just in case" moments. Let’s dive into why these strategies are essential for maintaining a steady inventory flow.

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Why Reorder Points and Safety Stock Are Important

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Reorder points take the guesswork out of inventory management by triggering orders based on actual sales and lead times. This helps you avoid two major headaches: stockouts and costly last-minute orders. Meanwhile, safety stock protects against surprises - whether it’s an unexpected rush of orders or delays in delivery - so your shelves stay stocked.

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Stockouts don’t just mean missed sales; they can also damage customer loyalty and send buyers straight to your competitors. Keeping enough safety stock for your best-selling items ensures you're ready to meet demand during busy periods, so you don’t lose those crucial sales opportunities.

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How to Calculate Reorder Points

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To calculate reorder points, you’ll need three key numbers: your average daily sales (ADS), your supplier’s lead time, and your desired safety stock.

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Step 1: Determine your average daily sales (ADS).

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Use Shopify reports to find your average daily sales over a 30–90 day period. Exclude any outliers, like one-time spikes or unusually slow days, for a more accurate number.

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Step 2: Figure out your supplier lead time.

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This is how many days it takes for your supplier to deliver inventory after you place an order. Check your recent purchase orders to find an average. If your supplier typically delivers in 7 days but occasionally takes 10, factor in the longer lead time to stay on the safe side.

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Step 3: Use the formula.

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Here’s the basic formula for reorder points:
Reorder Point = (Average Daily Sales × Lead Time) + Safety Stock

For example, let’s say you sell a skincare product that averages 15 units per day, your supplier’s lead time is 10 days, and you want a safety stock of 75 units. Your reorder point would be:
(15 × 10) + 75 = 225 units
When your inventory drops to 225 units, it’s time to reorder.

Calculating safety stock:
For a more precise safety stock calculation, you can use this formula:
Safety Stock = Z × √((σd² × L) + (ADS² × σL²))

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In this formula:

• σd is the variability in daily demand
• σL is the variability in lead time
• L is the average lead time
• ADS is your average daily sales
• Z is the service level factor (e.g., 1.65 for a 95% service level)

If you’re just starting out and don’t have detailed variability data, a simple rule of thumb works too: Keep safety stock equal to 1–2 weeks of average sales. You can refine this number as you gather more data. Once you’ve calculated your reorder points, the next step is to implement them in Shopify.

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Setting Up Thresholds in Shopify

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To put your new reorder points into action, set low-stock alerts in Shopify. Go to your product page in Shopify, scroll to the inventory section, and enter your calculated reorder point as the low-stock threshold. For instance, if your skincare product’s reorder point is 225 units, set that as your threshold.

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Enable notifications to get alerts when stock levels drop, and adjust these thresholds seasonally to prepare for peak demand. Many Shopify merchants take it a step further by integrating these alerts into their daily routines - some even set up Slack notifications or use inventory management apps for more advanced systems.

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Automated alerts save time and reduce the risk of human error. However, it’s important to revisit your reorder points regularly. For fast-selling products, review them monthly; for slower-moving items, a quarterly check should do the trick. Frequent stockouts or consistently high inventory levels are signs that it’s time to fine-tune your calculations with updated data.

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Method 3: Set Up Low-Stock Alerts

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Low-stock alerts are your safety net, ensuring you don’t miss when inventory levels dip dangerously low. While reorder points tell you when to replenish stock, alerts make sure you actually notice and take action. The key is setting these alerts to go off at just the right time.

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Building on your reorder point strategy, smart alert rules can help you restock efficiently. They also allow you to focus on the products that need immediate attention, especially when juggling hundreds of SKUs.

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Create Alert Rules

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Not every product demands the same urgency, so tailor your alert rules accordingly. For instance, set stricter triggers for your top sellers - say, when there are 7–10 days of stock left. For slower-moving items, you might extend that window to 14–21 days. This way, you have enough time to reorder without overstocking.

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If you’re using Shopify, head into your inventory settings to configure low-stock notifications. A good tactic is to add a small buffer above your reorder point. This gives you an early warning before you hit the actual threshold.

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Consider using a two-tier alert system:

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• Low stock alerts: Trigger when inventory reaches 150% of the reorder point.
• Critical alerts: Trigger at the exact reorder point.

This setup is especially helpful for products with unpredictable demand or long lead times. For seasonal items, adjust your alert thresholds to match expected demand. For example, if you sell Halloween costumes, your August alerts should be more aggressive than in December. Many Shopify stores increase their safety margins by 25-50% during peak seasons to avoid running out of stock.

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Tailor alerts to your suppliers. If you work with multiple suppliers, factor in their delivery times. Reliable suppliers with a 5-day lead time can have tighter alert thresholds, while items from suppliers requiring 2-3 weeks should trigger earlier warnings.

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Add Alerts to Daily Workflows

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Once your rules are in place, make alerts part of your daily routine. This ensures you act quickly to maintain consistent stock levels across your catalog.

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Spend 10–15 minutes each morning reviewing your low-stock alerts. Focus on three areas:

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• Products that hit critical thresholds overnight.
• Items nearing reorder points.
• Any unusual inventory changes that might indicate data errors.

Many Shopify merchants use email alerts sent directly to their phones, making it easy to check inventory status over their morning coffee. Schedule these alerts to arrive early enough so you can act before supplier order deadlines.

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Prioritize by revenue impact. If multiple products trigger alerts at once, address them based on their contribution to your bottom line. For instance, restocking a product that brings in $10,000 per month should take precedence over one generating $500. This approach ensures you’re focusing on what matters most.

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Leverage inventory management tools. Tools like Forstock integrate with Shopify to provide real-time dashboards and automated reorder suggestions. These platforms can prioritize alerts based on factors like sales velocity and supplier lead times, streamlining your morning inventory review and helping you focus on high-impact decisions.

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Finally, schedule weekly reviews to fine-tune your alert settings. If certain products keep triggering false alarms or you’re overwhelmed with too many alerts, adjust the thresholds. Aim to keep your alerts actionable - around 5-15 per day for most stores - so they help you stay ahead without bogging you down.

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Method 4: Use Historical Data to Forecast Demand

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Tap into past sales data to make informed predictions about future demand and plan your inventory strategy with confidence.

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Historical data offers a treasure trove of insights, often highlighting trends that aren’t immediately visible. By analyzing these patterns, you can make sure you’re stocking the right products at the right time.

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Analyze Sales and Seasonal Trends

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Once you’ve set up alerts and reorder points, dig into your historical sales data to sharpen your demand forecasts. Start by gathering sales figures from the past 12–24 months. Pay close attention to your best-selling products, as they’re usually the backbone of your revenue.

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Seasonal patterns often stand out when you take a closer look. For instance, certain clothing lines might sell more during specific seasons, while home goods could see a surge around holidays or back-to-school periods. Identifying these trends is key to managing inventory effectively.

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Break your analysis down by product category. One category might show steady, year-round growth with occasional holiday boosts, while another - like seasonal items - could have sharp fluctuations. To keep things organized, create a spreadsheet that tracks monthly sales for each product line. Don’t forget to log any unusual events like supply chain hiccups or major marketing pushes that might have influenced sales.

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It’s also worth zooming in on shorter-term trends within each season. For example, some weeks around major holidays might consistently outperform others. Spotting these micro-patterns can help you refine your inventory strategy even further.

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Use tools like Shopify analytics to separate products with steady, predictable sales from those with more erratic demand. For items with consistent sales, you can gradually increase inventory. For products with unpredictable demand, consider maintaining a larger safety stock to cushion against sudden spikes.

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Don’t overlook external factors that could have skewed past sales, such as one-off promotions or unexpected events. Adjust your forecasts to account for these anomalies.

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Implement Demand Forecasts

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Once you’ve analyzed your sales data, it’s time to turn those insights into action. Use them to guide your inventory orders with precision.

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Start by creating monthly demand forecasts for your top products. From there, work backward to determine the best ordering timelines. Take into account your current stock levels and safety stock to calculate the right order quantities and timing.

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Here’s a simple formula to guide you:

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(Forecasted Demand + Safety Stock) – Current Inventory = Order Quantity
Adjust the safety stock level based on how volatile each product’s demand tends to be.

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To streamline this process, take advantage of inventory management tools. These platforms can automatically factor in seasonal trends, growth patterns, and supplier lead times, helping you generate accurate purchase orders. This reduces the need for manual tracking and minimizes the risk of forecasting errors.

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Prepare for demand spikes by placing larger orders well ahead of anticipated busy periods. For example, if you’ve seen a big sales jump during a past promotional event, plan to build up inventory before the rush, rather than scrambling at the last minute.

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Finally, make it a habit to regularly review and refine your forecasts. Compare your predictions with actual sales data to spot any discrepancies. Over time, this iterative process will improve your forecasting accuracy, helping you avoid both stockouts and overstocking.

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Optimize Your Inventory Management

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Join hundreds of Shopify brands using Forstock to prevent stockouts, reduce overstock, and streamline inventory operations with real-time analytics and AI-driven demand forecasting.

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Get Started

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Method 5: Prioritize Inventory with ABC Analysis

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Organize your inventory by focusing on products that significantly impact your revenue and sales velocity.

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Not all items in your store deserve the same level of attention. Some products are the backbone of your revenue, while others barely make a dent. ABC analysis helps you pinpoint which products need constant oversight and which can be managed with less effort.

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What Is ABC Analysis?

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ABC analysis divides your inventory into three categories based on their contribution to revenue and sales speed. It’s rooted in the Pareto Principle, which states that roughly 20% of your products generate 80% of your revenue.

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• Category A items: These are your moneymakers, accounting for 70-80% of sales but only 10-20% of your inventory. Think of them as your bestsellers or high-margin products that should never go out of stock.
• Category B items: These contribute 15-25% of revenue and make up 20-30% of your inventory. They need regular, but not daily, attention.
• Category C items: These are the slow movers - 50-70% of your SKUs but only 5-10% of revenue. These items require minimal monitoring.

To perform an ABC analysis, export your sales data from the past year and calculate each product’s revenue contribution. Rank them by total revenue, then assign categories based on cumulative revenue percentages. Adjust the thresholds to suit your business model, but the goal is clear: identify your top performers and focus your efforts there.

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Once you’ve categorized your inventory, you can fine-tune your replenishment strategies for each group.

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Adjust Replenishment by Category

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Tailor your restocking approach to match each category’s importance and risk.

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• Category A items: Keep safety stock levels 25-40% above the reorder point and monitor these products daily. Set up alerts for low stock and source from multiple suppliers to avoid disruptions. Place frequent orders with shorter lead times, even if it means higher costs per unit. Stockouts for these items are far more expensive than paying a premium for quick replenishment. Track metrics like inventory turnover and days of stock weekly.
• Category B items: Maintain safety stock at 15-25% above reorder points and review inventory levels weekly. These items can tolerate slightly longer lead times, but they still deserve attention when making purchasing decisions.
• Category C items: Hold minimal safety stock - 5-15% above reorder points - and review inventory monthly. For these products, consider options like drop-shipping or discontinuing low-performing items altogether. This approach frees up cash flow and storage space for higher-priority products.

Method 6: Improve Supplier Coordination

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Building strong relationships with your suppliers is key to maintaining a steady inventory flow and avoiding stockouts. When coordination with suppliers falters, it often leads to late deliveries, incorrect quantities, or costly last-minute orders that eat into your profits. On the other hand, treating suppliers as partners - rather than just vendors - helps set clear expectations and enables consistent performance tracking. Just like accurate forecasting and low-stock alerts protect your inventory, solid supplier coordination ensures a reliable supply chain that works seamlessly with your inventory management systems.

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Track Supplier Performance Metrics

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Keeping tabs on supplier performance is essential for making informed decisions about your supply chain. Without measurable data, it’s hard to identify which suppliers are helping or hindering your efforts to avoid stockouts.

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Here’s what to monitor:

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• On-time delivery rates: Track the percentage of orders delivered on schedule.
• Lead time accuracy: Measure how closely actual delivery times match the promised timelines.
• Order accuracy: Compare ordered quantities, specifications, and quality against what’s received.
• Minimum order quantities: Assess how these terms align with your cash flow needs.
• Communication responsiveness: Note how quickly suppliers respond to emails, quotes, and urgent requests.

You can log this data manually or use tools like Forstock’s automated supplier management features. Create a scorecard for each supplier, rating them on a 1-5 scale across these metrics. Review these scores quarterly to spot patterns, address issues, and make better sourcing decisions.

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Best Practices for Purchase Orders

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Once you’ve gathered reliable supplier data, use it to fine-tune your purchase order process. A well-structured purchase order minimizes miscommunication and reduces the chances of receiving incorrect shipments that could lead to stockouts.

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Here’s what every purchase order should include:

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• Detailed product specifications: Include exact SKUs, quantities, colors, sizes, and any special requirements.
• Delivery details: Specify exact delivery dates, your business address, preferred delivery times, and shipping instructions.
• Payment terms: Establish these upfront to avoid delays.
• Consistent purchase order numbers: Use these in all communications for easy tracking.

Always send purchase orders in writing to ensure clarity and keep a record. Follow up within 24-48 hours of placing the order and check in again midway through the expected lead time. Build buffer time into your schedule - for example, if you need products by March 15th, place your order early enough to account for minor delays.

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It’s also smart to maintain relationships with backup suppliers for your most critical products. Place occasional small orders with these suppliers to keep the relationship active. Finally, centralize all supplier information - such as order statuses, contact details, and delivery schedules - in a shared system. This ensures smooth operations even if key team members are unavailable.

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Method 7: Use Back-in-Stock Notifications

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Even with the best inventory planning, stockouts happen. When they do, back-in-stock notifications can help you recover missed sales and keep customers engaged. These alerts notify shoppers as soon as their desired items are available again, reducing the chances they'll turn to competitors. Considering that SMS notifications have open rates exceeding 98% ^[1], this approach can make a big difference - especially when stockouts cost retailers nearly $1 billion annually ^[2].

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Beyond salvaging sales, these notifications provide useful insights into customer demand, helping you fine-tune future inventory decisions.

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Set Up Back-in-Stock Alerts

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Creating a system that captures customer interest during stockouts can turn unavailable items into future sales opportunities.

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Start by adding "Notify Me" buttons to your product pages when items go out of stock. Place these buttons where the "Add to Cart" button usually appears, or use pop-ups or banners to make them even more visible. The easier it is for customers to sign up, the more likely they are to leave their email or phone number.

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Set minimum stock thresholds before sending alerts. For example, avoid triggering notifications for minor restocks, like a single returned item, as this can frustrate customers if the product sells out again quickly. A good rule of thumb is to wait until restocked quantities are at least double your daily sales before sending notifications.

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Craft attention-grabbing content for your alerts. In emails, use subject lines like, "Your favorite sneakers are back in stock!" For SMS, mention the restock within the first few words since many people preview messages before opening them. Always send emails from your domain to build trust, and include product images, pricing, and a direct purchase link. Adding urgency - like limited stock warnings or exclusive discount codes - can further drive conversions.

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Only enable notifications for products you plan to restock. For discontinued items, deactivate the notification option to avoid misleading customers and wasting resources.

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Use Preorders to Capture Demand

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After setting up your notification system, take it a step further by offering preorders. This allows you to secure sales even when items are temporarily unavailable.

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For products available for preorder, enable back-in-stock notifications alongside an active "Add to Cart" option. This setup lets you gather interest from hesitant customers while converting ready buyers into immediate sales.

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Be transparent about preorder details, including estimated delivery dates, potential delays, and billing terms. To encourage preorders, consider offering perks like a 10% discount or free shipping.

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Preorder data can also inform inventory planning. For instance, if you receive an unexpectedly high number of preorders - say, 200 in a single day - it could indicate higher demand than anticipated, prompting you to adjust future stock levels to avoid another shortage.

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Automate your notification system to ensure real-time alerts. Automation reduces delays, which is especially important for high-demand products. Set up workflows so notifications are triggered as soon as stock reaches your defined thresholds.

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Finally, monitor the performance of your back-in-stock notifications. Track metrics like conversion rates, click-through rates, and the time between notification and purchase. This data will help you fine-tune your messaging, timing, and inventory thresholds to maximize results.

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Conclusion: Key Takeaways and Next Steps

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Stockouts don’t have to be a constant headache. The seven methods discussed here offer a practical roadmap for keeping your inventory in check and meeting customer expectations.

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Summary of Stockout Prevention Methods

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Real-time inventory tracking is your starting point for better visibility and smarter stock decisions. By setting up Shopify's inventory settings correctly and steering clear of manual errors, you lay a strong foundation for success.

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Strategic reorder points and safety stock act as your safety net, ensuring you’re prepared for unexpected demand. Pair these with low-stock alerts to stay proactive, integrating them into your daily routines for seamless management.

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Historical data and demand forecasting allow you to turn past sales trends into actionable inventory strategies. Combine this with ABC analysis to focus your efforts on your most valuable products, ensuring resources are allocated where they matter most.

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Supplier coordination is another critical piece of the puzzle. Monitoring supplier performance and fine-tuning purchase orders can reduce lead times and improve accuracy, strengthening your supply chain overall.

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And when stockouts do happen, back-in-stock notifications help you recover lost sales and gather insights for better planning in the future.

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Together, these strategies create a solid, flexible system that minimizes stockouts and keeps your business running smoothly.

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Next Steps for Shopify Store Owners

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Ready to take action? Start by assessing your current inventory practices with these strategies in mind. Begin with real-time inventory tracking and low-stock alerts to gain immediate control over your stock levels.

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Focus on implementing one method at a time to avoid overwhelm. Start with your top-performing products or those with long lead times, as these are most likely to impact your revenue if stockouts occur.

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Consider using tools like Forstock for features like real-time forecasting and automated purchase orders. Plans start at $39 per month and can simplify stockout prevention significantly.

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Track your progress by monitoring stockout frequency and customer feedback. Set achievable goals - most businesses see improvements within 60–90 days - and remember, this isn’t a one-and-done process.

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Keep refining your reorder points, safety stock levels, and supplier agreements to adapt to market changes. Regular reviews and adjustments will ensure your system stays efficient and responsive over time.

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FAQs

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How does real-time inventory tracking help prevent stockouts and keep customers happy?

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Real-time inventory tracking keeps you in the loop with up-to-the-minute updates on your stock levels. This means your online store always shows accurate product availability, cutting down the risk of overselling or running out of bestsellers.

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With precise stock counts, you can process orders faster and avoid frustrating your customers with delays or unavailable items. On top of that, this level of visibility helps you adapt quickly to shifts in demand, streamline your inventory management, and keep your operations running smoothly. The result? Fewer lost sales and more satisfied customers.

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How can I set reorder points and safety stock to keep my inventory flowing smoothly?

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To keep your inventory running smoothly, start by figuring out your safety stock. This acts as a buffer to handle surprises like unexpected demand or delays. You'll calculate it by looking at demand variability, lead time fluctuations, and the service level you aim for - say, 95%.

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Once you’ve nailed down your safety stock, move on to your reorder point (ROP). This is the sweet spot where you combine the average demand during lead time with your safety stock. It ensures you restock at just the right time, steering clear of both stockouts and excess inventory. Make it a habit to revisit and tweak these numbers as demand patterns or supply chain conditions shift, so you’re always prepared for what’s next.

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How can I use historical data and demand forecasting to better plan inventory and avoid running out of stock?

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To stay on top of your inventory and avoid stockouts, start by diving into your historical sales data. Pay attention to patterns like seasonal fluctuations, product popularity cycles, and the effects of previous promotions. Pair this with real-time sales data for a more accurate understanding of what your inventory should look like.

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Next, apply demand forecasting methods like statistical models or predictive analytics to predict future needs. Don’t forget to consider external factors such as market shifts, upcoming holidays, or planned marketing efforts. By setting precise reorder points and fine-tuning inventory levels based on these insights, you can keep shelves stocked, reduce lost sales, and steer clear of overstocking pitfalls.