What is a reorder point?
A reorder point (ROP) is the specific inventory level at which you should place a new purchase order with your supplier. It's designed to ensure new stock arrives before you run out — accounting for how long your supplier takes to deliver and how fast you sell.
Think of it like a fuel gauge with a "refill now" indicator. The reorder point is that indicator — not "you're empty," but "order now so you don't run empty before the next delivery arrives."
Most Shopify merchants either don't have reorder points configured, or set them based on gut feel. Both approaches lead to stockouts — 53% of Shopify products experience at least one stockout per year, with an average duration of 35 days. That's 35 days of lost sales and customer churn on that SKU.
The reorder point formula
Each component:
- Average Daily Sales: Your average units sold per day over the last 30–90 days. Use a shorter window for fast-moving or seasonal products.
- Supplier Lead Time: The number of days between placing an order and receiving stock. Use actual lead time, not what your supplier claims.
- Safety Stock: A buffer for demand spikes and supplier delays. Calculated separately (see below).
Use our free Reorder Point Calculator to compute this for each SKU automatically.
Three real examples
Example 1: Stable product, single supplier
Premium Yoga Mat — 80 units/month average, one supplier with 14-day lead time
- Average daily sales: 80 ÷ 30 = 2.67 units/day
- Lead time: 14 days
- Safety stock: 20 units (for demand spikes)
- Reorder point: (2.67 × 14) + 20 = 37.4 → 38 units
When your yoga mat inventory hits 38 units, place the reorder. The 20 units of safety stock protects you if demand spikes or your supplier is 3–4 days late.
Example 2: Fast-moving product, long lead time
Protein Shaker 20oz — 200 units/month, overseas supplier with 28-day lead time
- Average daily sales: 200 ÷ 30 = 6.67 units/day
- Lead time: 28 days
- Safety stock: 40 units
- Reorder point: (6.67 × 28) + 40 = 186.76 → 187 units
This is the trap most merchants fall into with overseas suppliers. A reorder point of 187 units feels uncomfortably high — but it reflects reality. At 6.67 units/day over 28 days, you'll sell 187 units while waiting for stock. Order when you hit 187 or you're stocked out before the shipment arrives.
Example 3: Seasonal product
Jump Rope — 20/month in off-peak, 90/month in peak (January, summer)
Seasonal products need two reorder points:
Off-peak ROP:
- Daily sales: 20 ÷ 30 = 0.67 units/day
- Lead time: 10 days, safety stock: 10 units
- ROP: (0.67 × 10) + 10 = 17 units
Peak ROP:
- Daily sales: 90 ÷ 30 = 3 units/day
- Lead time: 10 days, safety stock: 20 units
- ROP: (3 × 10) + 20 = 50 units
Switch to the peak ROP 4–6 weeks before your peak season starts — before demand accelerates, not after.
Why safety stock matters (and how to calculate it)
Safety stock is the buffer that absorbs variability. Without it, your reorder point assumes two things that are rarely true: (1) your demand is exactly average every day, and (2) your supplier delivers in exactly their stated lead time.
In practice, demand fluctuates. Suppliers run late. An unexpected social media mention can triple your daily sales for a week. Safety stock is what keeps you in stock through all of that.
The simple safety stock formula:
Example: Max daily sales = 8, max lead time = 18 days, avg daily = 5, avg lead time = 14 days.
Safety stock = (8 × 18) − (5 × 14) = 144 − 70 = 74 units
That feels like a lot — but if your supplier is ever 4 days late during a demand spike, that buffer is what keeps you selling. Use our Safety Stock Calculator for both the simple and statistical methods.
Getting lead time right — the most common mistake
Suppliers almost universally quote optimistic lead times. If your supplier says "14 days," they probably mean 14 days under ideal conditions — not during Chinese New Year, not when they have a production backlog, not when there's a port delay.
Analyze your last 10–20 POs. Calculate:
- Average actual lead time
- Maximum actual lead time
- Standard deviation (how much it varies)
Use the average actual in your reorder point formula, not the stated lead time. Use the maximum actual to set your safety stock. If you don't have historical data yet, add 25% to your supplier's stated lead time as a conservative estimate until you do.
Our Supplier Lead Time Tracker helps you log actual vs. stated lead times and calculates a reliability score per supplier.
Adjusting reorder points for seasonal demand
Seasonal adjustment is the piece most merchants skip until they get burned by a holiday stockout. Here's a practical approach:
- 4–6 weeks before peak season: Switch to your peak ROP for all seasonal SKUs
- During peak: Monitor daily sales rate actively — if you're selling faster than expected, recalculate your ROP immediately
- Post-peak: Switch back to off-peak ROP and consider whether to run down safety stock or hold it for the next peak
For Black Friday/Cyber Monday specifically: most DTC brands place their pre-season POs in August–September. Your supplier's lead time in October–November is often longer than normal because every brand is placing orders simultaneously. Factor in a 30–50% lead time buffer for Q4 orders.
How to monitor reorder points automatically
Setting reorder points is the analysis work. Monitoring them is the ongoing ops work — and it's where most merchants fall down. Checking 80 SKUs manually every day isn't realistic.
Three options for automated monitoring:
Option 1: Shopify low stock alerts (free, limited)
Shopify can send you an email when a product hits a quantity threshold. Go to Settings → Notifications → Low inventory. The downside: it only alerts you — you still have to draft and send the PO manually.
Option 2: Shopify Flow (Shopify/Plus plans)
Flow can trigger more complex automations — internal Slack messages, tagging products, creating tasks. Still doesn't email suppliers directly.
Option 3: Reorderly (automated POs)
Reorderly monitors your inventory 24/7, detects when any SKU hits its reorder point, drafts a professional PO email to your supplier, and sends it automatically. You get notified when POs go out — not when you need to send them. The whole loop closes without you.
Everything covered in this guide can be handled automatically by Reorderly — 24/7, without manual work.
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