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Inventory management basics for small D2C brands

Keep the right stock without tying up cash: SKU rules, counts, reorder points, safety stock, ABC analysis, dead stock and simple forecasting.

By Orvexa TeamUpdated 3 min read
Stacks of colourful pots for sale in Pune
Photo: Katharva, CC BY 3.0 · All photo credits
Key takeaways
  • Give every product variant a unique SKU and keep counts accurate
  • Reorder point = daily demand × lead time + safety stock
  • Review slow and fast movers every month, and clear dead stock before it eats cash

Stock is cash sitting on a shelf. Too little and you lose sales. Too much and you cannot pay suppliers. Good basics fix both.

Start with clean SKUs

A SKU (stock keeping unit) is a unique code for each sellable variant: a size, colour or pack. Use a consistent pattern, such as KHD-IND-M for khadi, indigo, medium. Do not reuse codes. Match them across your store, spreadsheet, courier labels and supplier orders.

Count accurately

  • Count stock when it arrives, and record it the same day.
  • Do cycle counts: check a few SKUs each week instead of one huge yearly count.
  • Reconcile counts with orders, and investigate gaps.
  • Keep returned stock separate until it is inspected and either restocked or written off.

Know your numbers

  • Daily demand = units sold in a period ÷ days in the period. Use a recent window, adjusted for seasonality.
  • Lead time = days from placing a supplier order to having stock ready to ship.
  • Safety stock = a buffer for surprises, such as a demand spike or a delayed supplier.

Reorder point = (daily demand × lead time) + safety stock

Example (illustrative)

A best seller sells 12 units a day. The supplier takes 15 days. You hold 5 days of safety stock (60 units). Reorder point = (12 × 15) + 60 = 240 units. When stock falls to 240, order more.

Sort products with ABC analysis

ClassWhatTreatment
AA small share of products that bring most of the revenueNever run out; count often
BMiddle groupStandard checks
CMany products that sell littleKeep lean; consider removing

Deal with slow and dead stock

Check each month for items that have not sold for 60 to 90 days. Options: a bundle with a best seller, a measured offer (discounts), a gift with purchase, a donation or a write-off. Do not reorder them.

Think about expiry and batches

For food, cosmetics or supplements, track batch numbers and expiry dates, and ship the earliest-expiring stock first.

Sync across channels

If you sell on your own store and a marketplace, make sure stock updates on both quickly, or you will oversell. A single source of truth, either a spreadsheet you update daily or a tool that syncs, is better than guessing.

Plan for festive peaks

Forecast higher demand and order earlier, because suppliers are slow at peak. See the festive playbook.

Measure

MetricMeaning
Stock-out rateSales lost to no stock
Days of inventoryHow long stock lasts at current sales
Sell-throughShare of stock sold in a period
Dead stock valueCash locked in non-movers

What to do next

Make a sheet of your top 20 SKUs with daily demand, lead time and current stock, and calculate reorder points. Order anything already below its point.

Frequently asked questions

How much safety stock do I need?

Enough to cover normal variation in demand and supplier delay, balanced against the cost of holding it. Start with a few days and adjust using your real stock-out history.

Do I need inventory software?

A spreadsheet works for a small catalogue. Move to software when you have many SKUs, several channels or multiple warehouses.

What about made-to-order products?

Track raw materials and lead times instead, and show realistic delivery estimates on the product page.

Topics:inventorystockreorder pointforecastingoperations

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