Stock, for a shop with one person in it

Stock is the largest decision a small shop makes repeatedly, and it is made on feeling more often than on arithmetic. Too much and the money is sitting in a cupboard; too little and you are refunding people who wanted to buy.

What holding stock actually costs

• The cash, which is the big one. Money in stock is money you cannot use for anything else, including the thing that is selling.
• The space, whether that is rent or the spare room you stopped using.
• The deterioration: things that expire, discolour, go out of season or stop being wanted.
• The discount you will eventually take to clear it, which is the cost people forget when they buy a larger quantity for a better unit price.
• Your attention, which is finite and is being spent counting, moving and worrying about boxes.

That last discount is the one that undoes most bulk-buying decisions. A better unit price on three times the quantity is not a saving if a third of it sells at half price eighteen months later.

The three numbers worth knowing

1. 01How many of each you sell in a month, averaged over enough months to see the pattern rather than last week.
2. 02How long a reorder takes to arrive, measured from when you place it to when it is on the shelf, including the week it sat in customs.
3. 03How many weeks of stock you currently hold, which is the first number divided into what is on the shelf.

Those three give you a reorder point: you place the order when the weeks of cover left is a little more than the lead time. Everything else in inventory management is refinement on that one idea, and most small shops do not need the refinement.

Counting, without it taking a day

• Count a few lines each week rather than everything twice a year. Spreading it out means you find the discrepancy while you can still work out what caused it.
• Count the valuable and the fast-moving more often, and the rest rarely. Equal attention to every line is how counting becomes a day nobody has.
• Write down the discrepancies rather than just correcting them. A line that is persistently short has a cause: breakage, theft, a packing error, or an order that was never recorded.
• Reconcile with what your shop says it has, every time. A storefront advertising stock you do not hold is the expensive version of this problem.

Running out, and what you owe

Overselling is not only an apology, it is a legal position. In the European Union, where no delivery date was agreed, the trader must deliver without undue delay and in any event within thirty days of the contract; if that passes, the consumer gives an additional reasonable period, and if that passes too they may terminate and be reimbursed.

So a backorder that stretches is not a neutral inconvenience. Either give a realistic date at the point of sale, or take the item out of the shop. The second is less painful than it feels: a visitor who cannot buy today is annoyed, and a customer who paid six weeks ago and is being told to wait a little longer is writing a review.

Dead stock

1. 01Decide a threshold, such as nothing sold in six months, and apply it rather than revisiting the decision per item.
2. 02Discount once, visibly, rather than in three stages. A line that did not sell at full price will not sell at ten per cent off either.
3. 03Bundle it with something that does sell, where that makes sense for the customer rather than only for you.
4. 04Then give it away, write it off, or return it if your supplier allows, and take the loss in the month it happened.

The error is holding it at full price because the loss is not real until you admit it. It is real now; the only question is whether the cupboard is also occupied.

Old stock and current rules

One practical point for anybody selling physical goods into the European Union. The General Product Safety Regulation has applied since 13 December 2024, and the Commission's guidance states that its new traceability and safety labelling requirements do not apply to products that were placed on the market before that date, which can still be sold afterwards.

That matters if you are sitting on older inventory. It does not exempt you from the rest, and anything offered online still has to show the manufacturer's details and, where the manufacturer is outside the European Union, the responsible operator's name and contact details.