How to set reorder points for your Shopify store
A reorder point is the inventory level at which you place a new order for a SKU. Set it right and stock arrives just before you would have run out. Set it too low and you sell out while the shipment is still on the water. Set it too high and your cash sits on a shelf.
Shopify does not calculate reorder points for you. It will show you inventory levels and sales reports, but the decision of when to reorder is yours. The good news is that the math behind a proper reorder point is genuinely simple, and you can build the whole thing in a spreadsheet this afternoon.
The formula
For each SKU:
Reorder point = (daily sales velocity × lead time in days) + safety stock
That is the entire formula. The first part answers "how much will I sell while I wait for the next delivery?" The second part is a buffer for the weeks when reality refuses to match the average.
Let's build each piece.
Step 1: Daily sales velocity
Sales velocity is units sold divided by days in the period. Pull it from Shopify admin under Analytics, or from a sales-by-product report exported as CSV.
Say your best-selling candle sold 150 units in the last 30 days:
150 units ÷ 30 days = 5.0 units per day
Two cautions here. First, check a longer window too. If the same candle sold 360 units over the last 90 days, that is 4.0 per day, which tells you demand has been accelerating recently. Which number you use depends on whether you believe the recent trend will hold. Our guide on sales velocity forecasting with real math covers blending windows properly.
Second, watch for stockout distortion. If the candle was out of stock for 6 of those 30 days, you sold 150 units in 24 selling days, and the true velocity is 6.25 per day. Dividing by days you were actually in stock is the single biggest accuracy improvement you can make.
Step 2: Lead time
Lead time is the number of days between placing an order with your supplier and having the stock ready to sell. Not the quoted time on the supplier's website: the real, observed time, including production queues, shipping, customs, and the day it sits in your back room before someone counts it in.
Look at your last three to five purchase orders for that supplier. If they took 12, 15, and 18 days from order to shelf, your average lead time is 15 days. Keep the 18 in mind for the next step.
Step 3: Safety stock
Safety stock covers the gap between the average and the bad weeks: a demand spike, a delayed container, a supplier holiday you forgot about.
The simplest method is days of cover. Decide how many extra days of sales you want in reserve and multiply by velocity. For a 5 day buffer on our candle:
5 days × 5.0 units per day = 25 units
A slightly sharper method uses your lead time variability: take the difference between your worst observed lead time and your average, and multiply by velocity. With an 18 day worst case against a 15 day average, that is 3 days × 5.0 = 15 units. If demand also swings a lot, add a few days of cover on top.
For most small stores, the days-of-cover method is accurate enough and easy to reason about. Longer, less reliable supply chains deserve bigger buffers. A supplier two suburbs away might need two days; a factory overseas might need ten.
The worked example, assembled
Our candle:
- Velocity: 5.0 units per day
- Lead time: 15 days
- Safety stock: 25 units (5 days of cover)
Reorder point = (5.0 × 15) + 25 = 100 units
When available stock for this SKU drops to 100, place the next order. One important detail: "available stock" should mean on-hand plus anything already on order. If you have 90 units on the shelf and 60 more arriving next week, you are at 150, comfortably above the trigger.
Building the spreadsheet
One row per SKU, with these columns:
- SKU and product name
- Units sold, last 30 days (from Shopify reports)
- Days in stock during that window
- Daily velocity (column 2 ÷ column 3)
- Lead time in days
- Safety stock days
- Safety stock units (column 4 × column 6)
- Reorder point (column 4 × column 5 + column 7)
- Current on-hand (from Shopify)
- On order
- Flag: does column 9 + column 10 fall below column 8?
Column 11 is your weekly to-do list. Sort by it, and the SKUs that need ordering float to the top.
Where the spreadsheet starts to strain
The spreadsheet works, and for a store with 20 steady SKUs it may be all you ever need. But it has known failure modes:
- The numbers go stale. Velocity from last month's export does not notice this month's spike until you re-export and re-paste.
- Nobody watches column 11. A reorder point only helps if something checks it every day. The week you skip is the week you stock out.
- Stockout days are invisible. Shopify's sales report does not tell you which days a SKU was unsellable, so column 3 usually gets guessed.
- Seasonality gets ignored. A velocity from a quiet month will under-order for a busy one.
- SKU counts grow. At 200 SKUs across two locations, maintenance becomes a part-time job.
This is the point where an app earns its fee: recalculating velocity daily from live order data, correcting for out-of-stock days, and alerting you instead of waiting to be checked. Restockly, which we build, does exactly this loop for Shopify stores: per-SKU reorder points from lead time and safety stock, velocity recalculated from synced orders, and low-stock alerts in admin plus a daily email digest. It is launching soon, is free under 50 SKUs, and you can read more at useadvira.com/restockly.
Start with five SKUs
You do not need to set reorder points for your whole catalog today. Pick your five best sellers, work through the formula above, and put the trigger levels somewhere you will see them. Those five SKUs are where a stockout costs you the most, and an hour of arithmetic is cheap insurance.