In this post, we’ll explore four essential KPIs that every business should track to streamline basic inventory management: stock reach, available stock across channels, inventory overview, and product performance. We’ll also look at real-world examples to show you how these KPIs work in action.
Efficient inventory management is crucial for any business dealing with physical products, whether you’re running a local boutique or managing an e-commerce empire. Without a solid handle on your inventory KPIs (Key Performance Indicators), you risk stockouts, overstocking, overselling, and ultimately unhappy customers.
1. Stock Reach: How Long Will Your Inventory Last?
Definition: Stock reach measures how many days your current inventory will last based on your recent sales volume. It’s a forecast metric that helps you avoid stockouts or excess stock.
Formula:
Stock Reach (in days) = Current Stock / Average Daily Sales
Example:
You have 500 units of a best-selling product in stock. Over the past 30 days, you’ve sold 300 units, averaging 10 units per day.
So your stock reach is:
500 ÷ 10 = 50 days
This tells you that you have enough inventory to last 50 more days at your current sales rate. If your lead time from suppliers is 20 days, you know you still have a buffer — but if your stock reach drops below that lead time, it’s time to reorder.
Why it matters:
A good grasp of stock reach helps you make proactive decisions about reordering and avoid running out of products that customers want. On the flip side, if a product has a 200-day stock reach and isn’t moving fast, it may be tying up cash that could be used more wisely elsewhere.
2. Available Stock Across Channels: Avoiding the Oversell Trap
Definition: Available stock refers to the inventory you can actively sell. When you sell across multiple channels (like Shopify, Amazon, Etsy, and your own website), it’s vital to ensure you’re not advertising more stock than you actually have.
Challenge:
If you have 100 units of a product, and your Shopify and Amazon stores each show that all 100 units are available, you risk overselling when orders come in simultaneously.
Example:
Let’s say you have 100 T-shirts in stock and list them on three sales channels. If you don’t have a centralized inventory management system, each platform might think all 100 are available, leading to 150 units being sold before you can react. Now you’ve got 50 disappointed customers and potential negative reviews.
Solution:
Use inventory management software that syncs stock across all platforms in real-time. When a sale is made on one channel, your available stock on the others is automatically updated.
Why it matters:
Overselling not only hurts customer satisfaction but also damages your brand reputation and can lead to penalties on platforms like Amazon or eBay. A clear picture of what’s actually available across all channels helps avoid this mess.
3. Keeping the Overview: Ordered, In-Stock, and Sold
Definition: This KPI isn’t a single number, but rather a trio of related figures:
- What you’ve ordered (incoming stock)
- What you have on hand (current stock)
- What you’ve sold (historical performance)
Example:
Imagine you’re tracking a kitchen appliance in your system:
- Ordered: 200 units arriving next week
- In-stock: 150 units in your warehouse
- Sold: 180 units sold in the past month
This snapshot gives you valuable insight into trends, whether you’re underestimating or overestimating demand, and whether your reordering patterns make sense.
Why it matters:
Without this full-picture view, it’s easy to lose track. You might reorder items that are already an route or miss the fact that a top-seller is running dangerously low. Keeping track of inventory management flow helps with cash flow planning and avoids tying up money in slow-moving stock.
Tip: Use dashboards or reports that visually break this down by SKU, product category, or vendor.
4. Identifying Best and Worst Sellers: Adjusting Your Product Portfolio
Definition: Sales performance KPIs help you evaluate which products are driving revenue — and which are dragging you down.
Metrics to track:
- Units sold per product
- Revenue per SKU
- Gross margin
- Sell-through rate
Example:
Let’s say you sell apparel online and notice the following over the last 60 days:
- Product A (Denim Jacket): 400 units sold, $12,000 in revenue, 75% sell-through
- Product B (Wool Scarf): 40 units sold, $800 in revenue, 10% sell-through
Clearly, Product A is a hit, while Product B is gathering dust. That might be due to seasonality, pricing, poor marketing, or just low demand.
Actionable insights:
- Double down on best-sellers with more stock and marketing.
- Discount, bundle, or phase out worst-sellers.
- Use this data to guide your buying decisions for the next season.
Why it matters:
Your product portfolio should reflect what customers actually want. Regularly reviewing these KPIs helps you trim the fat and invest in winners — ultimately improving profitability and customer satisfaction.
Final Thoughts: Start Simple, Stay Consistent
Inventory management doesn’t have to be overwhelming. Start by tracking these four KPIs regularly. Even simple spreadsheets or tools like Shopify’s inventory reports or Google Data Studio dashboards can help.
By mastering these basic KPIs, you’ll not only improve your Inventory management — you’ll also lay the foundation for smarter decisions, healthier margins, and happier customers.
Now that you’ve come this far, let us introduce ourselves — because this is exactly the level of inventory management, control, and analysis that we’ve built into Salesoperator.net.
Introducing Salesoperator: Built by Merchants, for Merchants
Salesoperator is a SaaS application currently in development, created by a then small ambitious B2C merchant who understands the real-world struggles of online selling. Our mission is to empower small online sellers to successfully implement international multichannel strategies—with tools that are actually useful, not overly complex.
We believe that easy access to crucial business data—especially around inventory—is key to making informed decisions that drive growth. That’s why Salesoperator is designed to be straightforward, practical, and built for impact, with a focus on what you really need to run your business, not what looks flashy in a demo. We’re now getting ready to open for alpha testing, and we’d love for you to be part of it. Visit salesoperator.net to sign up and join us early on this journey.
Feel free to give us a shot.
