How does Shopify track inventory?

Shopify tracks inventory by counting stock for each product variant at each location. When orders are placed, inventory is automatically reduced. You can enable or disable tracking per product and manage stock from multiple locations.

Can I sell products when out of stock on Shopify?

Yes. In your product settings, you can choose to 'Continue selling when out of stock' to allow backorders. Otherwise, Shopify will show products as sold out when inventory reaches zero.

How do I set up low stock alerts in Shopify?

Shopify doesn't have built-in low stock alerts, but you can use inventory reports to monitor levels, or install apps from the Shopify App Store that provide automated low-stock notifications.

Can Shopify manage inventory across multiple locations?

Yes. Shopify supports multi-location inventory management, allowing you to track stock separately at each warehouse, retail store, or fulfillment center. Orders can be fulfilled from the most appropriate location.

Shopify Inventory Management: Complete Guide

Effective inventory management is essential for running a successful Shopify store. Track too little and you'll face stockouts that frustrate customers. Track too much and you'll tie up cash in products that aren't selling. This guide covers how to use Shopify's inventory features to maintain optimal stock levels.

Understanding Shopify Inventory Tracking

Shopify's inventory system tracks stock quantities at the variant level. Each product variant (size, color, etc.) has its own inventory count, which decreases automatically when orders are placed and can be adjusted manually as needed.

Key Inventory Concepts

Available: Stock available for sale (not reserved by pending orders)
Committed: Reserved by orders but not yet fulfilled
On hand: Total physical inventory (available + committed)
Incoming: Stock in transfer that hasn't arrived yet

Setting Up Inventory Tracking

Enable Tracking for Products

Go to Products in your Shopify admin
Select a product to edit
In the Inventory section, check "Track quantity"
Enter your current stock level
Choose whether to "Continue selling when out of stock" (for backorders)
Save the product

Managing Product Variants

For products with variants (size, color, etc.), each variant has its own inventory:

Each variant can have different stock levels
Assign unique SKUs and barcodes to each variant
Track inventory separately per variant

Multi-Location Inventory

If you have multiple warehouses or retail locations, Shopify can track inventory at each:

Setting Up Locations

Go to Settings > Locations
Add each warehouse, store, or fulfillment center
Assign inventory quantities per location for each product
Configure which locations can fulfill online orders

Benefits of Multi-Location Tracking

Fulfill orders from the nearest location to reduce shipping costs
Know exactly where your stock is located
Support omnichannel retail (online + physical stores)

Adjusting Inventory

Manual Adjustments

Update stock levels when receiving shipments or making corrections:

Go to Products > Inventory
Find the product/variant to adjust
Click the quantity to edit it directly, or use "Adjust" to add/subtract
Add a reason for the adjustment (received, damaged, theft, etc.)

Bulk Editing

For large inventory updates:

Use the bulk editor in Products > Inventory
Export/import inventory via CSV files
Use inventory management apps for advanced bulk operations

Transfers Between Locations

Move inventory between locations:

Go to Products > Transfers
Create a new transfer specifying origin and destination
Add products and quantities
Mark as "Pending" until received, then mark "Received"

Inventory and Collections

Automated collections can use inventory as a condition:

"In Stock" collection: Inventory is greater than 0
"Low Stock" collection: Inventory is less than 5
Hide sold-out products: Only show available items in collections

Automate Inventory-Based Collections: AWSM Collections makes it easy to create collections that automatically show or hide products based on stock levels, keeping your store current without manual updates.

Inventory Reports and Analytics

Use Shopify Analytics to monitor inventory health:

Key Reports

Inventory snapshot: Current stock levels by product
Average inventory sold per day: Helps forecast reorder timing
Percent of inventory sold: Identifies slow-moving products
Days of inventory remaining: Predicts stockout dates

Using Data for Decisions

Identify bestsellers to ensure adequate stock
Find slow-moving items for promotions or discontinuation
Calculate reorder points based on sales velocity
Optimize inventory investment by reducing overstock

Inventory Management Best Practices

Set Reorder Points

Calculate when to reorder based on:

Average daily sales
Lead time from suppliers
Safety stock buffer

Formula: Reorder Point = (Average Daily Sales × Lead Time) + Safety Stock

Conduct Regular Audits

Perform cycle counts regularly (count portions of inventory on rotation)
Reconcile physical counts with Shopify records
Investigate and document discrepancies

Use SKUs Consistently

Create a logical SKU system (e.g., CATEGORY-PRODUCT-VARIANT)
Use SKUs for all products and variants
SKUs make inventory management and fulfillment more efficient

Common Inventory Problems

Stockouts: Lose sales and frustrate customers. Solution: Set reorder points and safety stock.
Overstock: Ties up cash and warehouse space. Solution: Use data to forecast demand accurately.
Discrepancies: Physical vs. system counts don't match. Solution: Regular audits and adjustment tracking.
Variant confusion: Wrong items shipped. Solution: Clear SKUs and proper variant naming.

Conclusion

Good inventory management balances having enough stock to meet demand without tying up excess capital. Use Shopify's tracking features, monitor your reports, and establish processes for receiving, auditing, and reordering. The goal is visibility and control over your inventory at all times.