Beginners Guide to Shopify Inventory Types

Inventory refers to the stock of goods your business holds for sale. Shopify provides an intuitive platform to help businesses track inventory with precision. To ensure seamless operations, it’s crucial to understand the following inventory types:

This refers to the total stock physically available in your warehouse(s) or storage locations. On-hand inventory is the foundation for fulfilling customer orders and is updated whenever new stock is received or items are returned.

Committed inventory is the stock that has already been allocated to unfulfilled customer orders. Although it’s counted as part of your inventory, it is essentially “reserved” and cannot be sold again.

Available inventory is the stock ready for new sales. It’s calculated by subtracting committed inventory from on-hand inventory. For example, if you have 100 units on hand and 30 units are committed, your available inventory is 70 units.

Unavailable inventory includes items that are damaged, quarantined, or otherwise not sellable. It may also include stock in transit that isn’t ready for fulfillment yet.

This inventory is generated based on purchase orders and transfer orders. Remember each of the inventory levels are held on a single location, so this will be the expected stock coming into the location your inventory is held. This is inventory that is not yet part of your stock, but is already on an order for stock to come in. When the stock is checked-in, it will be added to to on-hand and available inventory.

Effective inventory management ensures you always have the right amount of stock available to meet demand while minimizing costs. Here are some practical strategies:

A well-structured fulfillment process ensures that orders are shipped accurately and on time. Using Shopify’s inventory tools, you can track stock levels in real-time and intelligently route orders to the appropriate warehouse or location.

Safety stock refers to the extra inventory you maintain to buffer against unexpected spikes in demand or supply chain delays. Determining an appropriate safety stock level is essential for avoiding stockouts while minimizing excess holding costs.

Track purchase orders and incoming shipments to maintain visibility over your future inventory. Shopify allows you to input expected inventory quantities, ensuring smoother transitions and enabling accurate planning.

Regularly update your inventory levels and perform cycle counts or physical audits to ensure the accuracy of your on-hand inventory. Discrepancies between your records and actual stock can lead to overselling or lost sales opportunities.

Predict demand trends based on historical sales, seasonal fluctuations, and market insights. This helps you make smarter purchasing decisions and maintain optimal inventory levels.

While Shopify's native inventory tools are robust, integrating a third-party solution like SKUSavvy can take your inventory management to the next level. SKUSavvy is specifically designed for e-commerce businesses, offering an intuitive platform to streamline warehouse operations and boost efficiency. Here’s how it can enhance your Shopify store:

SKUSavvy automates repetitive inventory management tasks, such as tracking stock levels, updating product availability, and syncing multiple warehouses. This reduces manual errors and saves time.

Gain a 360-degree view of your inventory status, including on-hand, committed, and incoming stock. SKUSavvy also provides advanced analytics, helping you identify trends and make data-driven decisions.

SKUSavvy simplifies purchase order (PO) creation and tracking. It enables you to forecast demand, place accurate replenishment orders, and monitor delivery schedules with ease.

With SKUSavvy, you can optimize pick-and-pack operations based on inventory locations. This reduces order prep time and ensures accurate shipments every time.

The Bottom Line

Mastering Shopify inventory management is vital for the growth and sustainability of your e-commerce business. By understanding the different types of inventory—on-hand, committed, available, and unavailable—you can maintain better control over stock levels and streamline fulfillment.

Leveraging tools like SKUSavvy can further enhance your operations by automating inventory tasks, improving tracking, and facilitating purchase order management. Whether you're scaling your store or striving for better efficiency, the right inventory practices and integrations can make a world of difference.

Take the steps today to optimize your Shopify inventory management and watch your business thrive!