Running out of your bestseller during a sale event is the most expensive mistake in ecommerce operations. Overstocking a seasonal item is the second most expensive. Inventory management is the art of avoiding both.
ABC Analysis: Know Your Inventory Hierarchy
Not all SKUs are equal. ABC analysis segments your inventory by revenue contribution: A-items (top 20% SKUs, 80% of revenue), B-items (30% SKUs, 15% revenue), C-items (50% SKUs, 5% revenue). Manage A-items obsessively, B-items systematically, and C-items lightly.
Setting Reorder Points
A reorder point is the stock level at which you automatically place a replenishment order. Formula: Reorder Point = (Average Daily Sales × Lead Time in Days) + Safety Stock.
Example
You sell 20 units per day of a product. Your supplier takes 7 days to deliver. Safety stock = 3 days × 20 = 60 units. Reorder Point = (20 × 7) + 60 = 200 units. Order when you hit 200 units remaining.
Safety Stock: Your Buffer Against Uncertainty
Safety stock protects against demand spikes and supplier delays. For Indian supply chains — where courier delays and supplier stock-outs are common — maintain 3–7 days of safety stock for A-items.
Dead Stock: The Hidden Cost
Dead stock (inventory that hasn't moved in 90+ days) ties up capital and takes up warehouse space. Analyze your slow-movers quarterly and use bundles, discounts, or flash sales to liquidate. Better a ₹100 loss now than ₹500 in storage and eventual obsolescence.
Multi-Location Inventory
Once you're shipping more than 200 orders per day, consider splitting inventory between North (Delhi NCR), West (Mumbai), and South (Bengaluru/Hyderabad). Proximity to buyers reduces delivery time, cuts shipping costs, and improves customer experience.
- LetBuyy supports multi-location inventory with per-warehouse stock tracking
- Set fulfillment priority rules (nearest warehouse to delivery address)
- Use separate reorder points per warehouse based on regional demand
- Track inter-warehouse transfers for full inventory visibility
