How to Know When to Reorder Stock (Without Guessing)

Most Shopify brand owners reorder stock the same way: they look at their inventory, think "that looks low", and place an order. Sometimes the gut is right. Often it is wrong in one of two directions. Order too late and your best seller stocks out for weeks while you wait for the replacement shipment. Order too early and you tie up cash in stock you did not need yet — cash that could have funded a new product launch or a marketing campaign. Gut-feel ordering is especially dangerous when lead times are long. With a 10-week lead time, the consequences of a wrong decision do not show up for months.

The reorder point removes guesswork by turning the decision into a number. The formula is: Reorder Point = (Average Daily Sales x Lead Time in Days) + Safety Stock. When your stock level drops to this number, you place the order. No thinking required.

Here is a worked example. You sell a harness that averages 3 units per day. Your supplier in China takes 70 days to produce and 120 days to ship — 190 days total lead time. Your safety buffer is 14 days of extra stock. Reorder Point = (3 x 190) + (3 x 14) = 570 + 42 = 612 units. When your stock of that harness hits 612 units, you order. If you wait until stock hits 200 units, you are already 137 days too late and will be out of stock for over 4 months.

Use the last 30-90 days of sales data. Divide total units sold by the number of days. For a product that sold 150 units in the last 30 days: 150 / 30 = 5 units per day. Use 30-day data for fast-moving products with stable demand. Use 90-day data for products with more variable demand — it smooths out spikes and dips. Do this calculation at the variant level (size, colour) not the product level. A Medium harness and an XS harness sell at very different rates.

Safety stock protects you from two types of uncertainty: demand spikes (selling more than expected) and supply delays (supplier delivering later than promised). A simple approach: set safety stock at 14-21 days of average daily sales. For a product selling 5 units per day, that is 70-105 units of safety stock. Increase the buffer for products with volatile demand or unreliable suppliers. Decrease it for stable, predictable products with reliable supply. The goal is not zero stockouts — that would require infinite stock. The goal is reducing stockout probability to an acceptable level.

The basic reorder point formula works well for products with stable, predictable demand. It breaks down in three situations. First, seasonal products: a product that sells 2 units per day in January but 10 per day in November needs different reorder points for each season. Use last year's data for the equivalent period, not a rolling average. Second, new products with no sales history: estimate conservatively, monitor weekly, and adjust as data comes in. Third, products that are components of bundles: a harness that sells 3 units individually but also appears in 5 different bundle products might actually deplete at 8 units per day. Factor in bundle demand.