What is a stockout, and what does it cost a Shopify store?

What is a stockout?

A stockout is when a product you sell has no stock left, so customers cannot buy it. On Shopify that can be a whole product or just one variant, such as a single size or colour. It means the same as being out of stock.

A stockout has three costs. There are the sales you could not make, the money you spent sending people to a product that could not be bought, and the customers who tried, gave up and did not come back. The first two you can count. The third you can only describe honestly, and this guide does not put a number on it.

How do I work out my stockout rate?

There is no single official formula, and different shops use different ones. This guide uses a simple, common one: the number of products out of stock on a given day, divided by the number of products you sell.

Example with made-up numbers: you sell 100 products and 5 are out of stock today. 5 divided by 100 is 0.05, which is 5 in every 100. Other shops count the share of orders they could not fill, or the share of days a product was out of stock. Pick one measure, write down which, and use it the same way each time so the numbers can be compared.

How do I calculate lost sales due to stockouts?

1. Pick one product that has been out of stock. Work with a single variant if the product has several.
2. Find how many units it usually sells in a day. In your Shopify admin, go to Analytics, then Reports, and set the Category filter to Inventory. The Inventory sold daily by product report shows the average number of items sold per day for each variant.
3. Count the days it was out of stock. The Inventory adjustment changes report lists the adjustments made in a period, including orders, manual edits and app changes. Read the adjustments for your product alongside your own notes to see when its stock reached zero and when it came back.
4. Multiply: units sold per day, times days out of stock, times the price. That is the sales you missed.
5. For a more honest view, use the profit on each unit instead of the price. That is the price minus what the item cost you.

Treat your answer as the most you could have lost, not an exact loss. Some shoppers wait for the restock and some buy a similar product from you instead.

What are the other stockout costs?

Advertising spent while a product is out. If an advert, email or social post sends people to a product page that cannot sell, that spend bought you nothing for those days. Look in your advertising account for what you spent on that product, or on the campaign that points to it, on each day it was out of stock, and add it up. Continuing the same made-up product: £15 a day of advertising pointing at the page, for 6 days, is £90.

Customers who do not come back. Someone who finds an item unavailable may buy it somewhere else, and may not return for their next order either. That cost is real, but it is different for every shop and cannot be worked out from a sum, so we will not pretend to give you a figure. You can still keep an eye on it. Note how many customers email to ask when something will be back, and which products they ask about. A product that keeps appearing on that list is one to protect.

How do I add up the cost of stockouts?

For one stockout, add the profit you missed to the advertising spend that was wasted. In the made-up example, £240 of missed profit plus £90 of advertising is £330. Do the same for each product that went out of stock over a month, and you have a number you can weigh against the effort of preventing it.

When does counting stockouts by hand stop being practical?

The hardest input is the number of days out of stock, especially when many products are involved. Working it out from adjustment reports for each product is slow, and it is easy to miss one.

Stock Monitor keeps this record for you. It takes a nightly record of stock for each variant and shows how many days each product has been out of stock, so the days are already counted when you do the sum. Its daily report also states how many products are out of stock out of the total it monitors, which gives you the two numbers for the stockout rate above (the total counts only the products it monitors). You can also set a low stock threshold to see products that are running down before they reach zero (see how to set the low stock threshold). Stock Monitor does not work out money for you. The sum above is still yours to do.

How can I stop stockouts costing me?

Knowing quickly is most of it. See how Shopify tracks inventory and how to check it for the checks you can do in your admin, and how to connect Shopify to Slack for stock alerts if your team lives there. If you advertise a product, pause or redirect the advert as soon as you find it is out.