{"id":1146,"date":"2025-04-18T16:53:52","date_gmt":"2025-04-18T16:53:52","guid":{"rendered":"https:\/\/www.shipbob.com\/uk\/blog\/inventory-replenishment\/"},"modified":"2025-10-01T20:13:36","modified_gmt":"2025-10-01T20:13:36","slug":"inventory-replenishment","status":"publish","type":"blog","link":"https:\/\/www.shipbob.com\/uk\/blog\/inventory-replenishment\/","title":{"rendered":"What Is Inventory Replenishment? Meaning, Processes, and Best Practices for Online Retailers"},"content":{"rendered":"\n

Table of Contents<\/p>

** Minutes<\/p><\/div><\/div>\n

What is inventory replenishment?<\/a><\/p>\n\n\n\n

Why is inventory replenishment important for thriving businesses?<\/a><\/p>\n\n\n\n

3 effective inventory replenishment methods<\/a><\/p>\n\n\n\n

Inventory replenishment tips for success<\/a><\/p>\n\n\n\n

Inventory replenishment is easy with ShipBob’s fulfilment services<\/a><\/p>\n\n\n\n

Optimise your own inventory management with ShipBob’s WMS<\/a><\/p>\n\n\n\n

Conclusion<\/a><\/p>\n\n\n\n

Inventory replenishment FAQs<\/a><\/p>\n<\/div>\n\n\n\n

After hours of searching online, you finally find the product you\u2019ve been looking for \u2014 only to find out it\u2019s out of stock. It\u2019s a huge let down, and it\u2019s a lost sale for the merchant. <\/span><\/p>\n\n\n\n

Even if the product is temporarily out of stock, it will take much longer to fulfil and ship. <\/span>34%<\/span><\/a> of businesses ship orders late due to items being out of stock at the time of purchase.<\/span><\/p>\n\n\n\n

Inventory management<\/span><\/a> is a crucial part of the ecommerce supply chain<\/a> that impacts customer loyalty and the overall brand experience. <\/span><\/p>\n\n\n\n

Managing inventory involves maintaining optimal stock levels, so all products featured on your store are in stock and ready to ship. <\/span><\/p>\n\n\n\n

In this article, you will learn about the inventory replenishment process, why it is important, and how a fulfilment provider like ShipBob can help.<\/span><\/p>\n\n\n\n

What is inventory replenishment?<\/h2>\n\n\n\n

Inventory replenishment, also known as stock replenishment, is the process of restocking products in line with current demand to prevent shortages and minimise excess inventory<\/a>. This process involves moving items from reserve storage<\/a> to active picking locations or receiving new shipments from suppliers, ensuring orders are fulfilled on time across all sales channels.<\/p>\n\n\n\n

When the replenishment process is managed correctly, there is enough inventory ready to be picked and packed as soon as each order comes in. Inventory replenishment is one of the most essential logistics operations<\/a> tasks as it can highly impact customer satisfaction. <\/span><\/p>\n\n\n\n

How inventory replenishment works: 5 key factors that drive stock management<\/h3>\n\n\n\n

1. Lead times <\/strong>– Lead time, or the period between ordering and receiving inventory, is a critical part of the inventory replenishment strategy. Longer lead times require earlier reordering and higher safety stock to maintain supply chain efficiency and prevent stockouts.<\/p>\n\n\n\n

2. Demand forecasting<\/strong> – Accurate demand forecasting helps businesses predict future inventory needs based on sales data, seasonality, and trends. When demand is well-forecasted, inventory replenishment becomes more efficient, reducing the risk of overstocking or running out of products.<\/p>\n\n\n\n

3. Reorder points (ROP) <\/strong>– Reorder points are preset inventory levels that signal when it’s time to place a new order. Calculating ROP based on average sales and supplier lead times allows businesses to automate stock replenishment and maintain optimal inventory levels.<\/p>\n\n\n\n

4. Safety stock<\/strong> – Safety stock is extra inventory kept on hand to cover unexpected spikes in demand or supply delays. It\u2019s a key component of inventory control that helps reduce the risk of lost sales while keeping your fulfilment operations running smoothly.<\/p>\n\n\n\n

5. Inventory replenishment costs and profitability<\/strong> – Inventory replenishment comes with purchasing, storage, shipping, and handling costs that directly impact profit margins. Optimising order quantities and timing helps reduce carrying costs and improve overall inventory management efficiency. Keeping replenishment cost-effective is key to maintaining a healthy supply chain and maximising ROI.<\/p>\n\n\n\n

Why is inventory replenishment important for thriving businesses?<\/h2>\n\n\n\n

Efficiently replenishing inventory is a critical process that directly impacts an online brand\u2019s ability to meet customer demand, fulfil orders, and turn a profit. Here are three reasons why inventory replenishment<\/a> is important for ecommerce retailers.<\/span><\/p>\n\n\n\n

1. Avoid stockouts<\/h3>\n\n\n\n

If a merchant fails to replenish inventory at the correct time, they risk having a stockout<\/a>, which consists of items being out of stock at the time of purchase. <\/span><\/p>\n\n\n\n

Backorders<\/span><\/a> can also occur, which means an order has a pre-determined date on when the item will be available to ship. Both stockouts and backorders can cause major frustration for your customers. <\/span><\/p>\n\n\n\n

The best way to avoid common stockout issues is to always have <\/span>safety stock<\/span><\/a>, a <\/span>certain amount of back-up or emergency inventory on hand<\/a>. This is also a good idea in case there is an unexpected supply chain issue (which many merchants experienced when the COVID-19 pandemic<\/a> hit).<\/span><\/p>\n\n\n\n

2. Prevent overstocking<\/h3>\n\n\n\n

A smart inventory replenishment process can also help prevent overstocking on inventory that might become unsellable if it sits too long, including food and beverages<\/a> or beauty products<\/a> that have an expiration date. Similar to not having enough inventory, overstocking can also impact your bottom line. <\/span><\/p>\n\n\n\n

Replenishing stock too early or without regard to changes in customer demand or<\/span>seasonality<\/span><\/a>can cause<\/span>dead stock<\/span><\/a>, which increases<\/span>carrying costs<\/span><\/a>by having unsellable inventory sit on shelves for too long.<\/span><\/p>\n\n\n\n

To avoid overstocking and high warehousing logistics costs<\/a>, the <\/span>economic order quantity<\/span><\/a> (EOQ) formula<\/span> is a simply way to find the optimal amount of inventory to have on hand to meet order demand.<\/p>\n\n\n\n

By calculating EOQ, you gain a better understanding of how much inventory, including safety stock, you should have on hand while keeping ecommerce warehousing<\/a> costs as low as possible.<\/p>\n\n\n\n

3. Reduce shipping costs<\/h3>\n\n\n\n

Let\u2019s say a customer ordered several items from you at the same time. If one item is out of stock at the closest warehouse location to the customer but is available at a different location, you would need to send a<\/span>split shipment<\/span><\/a> (sending different items from one order in separate packages, often from a different location or at a different time) to fulfil the customer\u2019s entire order.  <\/span><\/p>\n\n\n\n

Sending items from one order in multiple shipments increases <\/span>shipping costs<\/span><\/a>, creates more packaging waste, and can cause customers to be confused. By forecasting demand, you can decide how much inventory at the SKU level to store at each warehouse location based on historical data.<\/span><\/p>\n\n\n\n

Note: <\/span>Spitting your inventory across fulfilment centres<\/span><\/a> is a retail supply chain<\/a> best practice that consists of keeping inventory closest to your customers. <\/span><\/p>\n\n\n\n

It can<\/span>reduce shipping costs<\/span><\/a>and<\/span>last-mile delivery<\/span><\/a>. However, each fulfilment centre location should always be stocked with the right amount of inventory for this fulfilment strategy to work the way it should.<\/span><\/p>\n\n\n\n

3 effective inventory replenishment methods<\/h2>\n\n\n\n

Different ecommerce retailers<\/a> employ different replenishment methods, depending on their business model, monthly order volume, and products. If you are hitting roadblocks with your current replenishment strategy, here are three effective inventory replenishment methods to adopt. <\/span><\/p>\n\n\n\n

1. Reorder point method<\/h3>\n\n\n\n

Inventory reorder points helps to ensure you always have enough stock on hand to satisfy customer demand. Reorder points also provide more financial flexibility by keeping a minimum amount of inventory in stock at all times.<\/span><\/p>\n\n\n\n

The<\/span>reorder point formula<\/span><\/a> (demand during lead time + safety stock) helps you calculate the right stock levels to meet customer demand, so you know the reorder quantity<\/a> you need and when based on historical order data. <\/span><\/p>\n\n\n\n

Note: Keep in mind that a single reorder point will not work for everySKU<\/a> \u2014 all products have different reorder points and should be calculated accordingly. <\/span><\/p>\n\n\n\n

2. Top-off method<\/h3>\n\n\n\n

When your inventory includes a lot of fast-moving SKUs, the top-off method tends to be the most suitable inventory replenishment strategy.<\/span><\/p>\n\n\n\n

Using this strategy, inventory levels for a particular product are \u201ctopped off\u201d in their respective storage locations during slower periods or down time, so that you can maintain a high<\/span>inventory turnover rate<\/span><\/a>without encountering stockouts for pickers. <\/span><\/p>\n\n\n\n

3. Periodic inventory replenishment method<\/h3>\n\n\n\n

Using the <\/span>periodic inventory<\/span><\/a> replenishment method, inventory is restocked<\/a> at set intervals. Inventory levels are only assessed at periodically<\/a> specific times or dates, no matter how low stock levels may drop before that point. This method is mostly used in warehouses with larger storage capacity.<\/span><\/p>\n\n\n\n

Inventory replenishment tips for success<\/h2>\n\n\n\n

An effective inventory replenishment strategy takes planning and effort to develop. While planning replenishment<\/a>, you should always do your research and incorporate the following three best practices into the process. <\/span><\/p>\n\n\n\n

1. Implement the right technology<\/h3>\n\n\n\n

Having the right ecommerce tech stack in place can help you<\/span>optimise your supply chain.<\/span><\/a><\/p>\n\n\n\n

For instance, implementing<\/span>inventory management software<\/span><\/a>is an easy way to provide more visibility into inventory levels in various locations in real-time, which can help you make better inventory decisions. <\/span><\/p>\n\n\n\n

By using<\/span>inventory automation<\/span><\/a> tools for inventory optimisation<\/a>, you can easily stay on top of <\/span>inventory control<\/span><\/a>, track inventory trends, and avoid common stock issues. <\/span><\/p>\n\n\n\n

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\u201cAnother ShipBob integration I love is Inventory Planner. It saves me hours every week in Excel spreadsheets, and I can raise a PO in minutes when it used to take me hours. <\/p>\n\n\n\n

For every order I placed for years, I was ordering too much or not enough. Between inventory forecasting tools and the ability to auto-create WROs, we don\u2019t have stockouts much anymore. I sleep better at night.\u201d <\/p>\n\n\n\n

Wes Brown, Head of Operations at Black Claw LLC<\/a><\/p>\n<\/blockquote>\n\n\n\n

2. Use inventory replenishment data<\/h3>\n\n\n\n

Having access to real-time inventory data gives you insights into which items are slow moving versus fast moving, so you can make better decisions on when it\u2019s time to reorder inventory.<\/span><\/p>\n\n\n\n

Armed with this data, you will be able to improve<\/span>demand forecasting<\/span><\/a>, calculate<\/span>safety stock<\/span><\/a> quantities, identify<\/span>inventory turnover rate<\/span><\/a> for your products, and other considerations that can impact your business financially. <\/span><\/p>\n\n\n\n

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\u201cWe love ShipBob\u2019s technology. The dashboard is very intuitive and the integrations are also very good. For my Shopify store, I just sync it and my new products show up straightaway in ShipBob. I like to look at the analytics in the ShipBob dashboard, knowing exactly what I have for storage. I can also set up alerts to know when I\u2019m low on inventory for certain products to make replenishment easier.\u201d<\/span><\/p>\n\n\n\n

The IZIMINI team <\/span><\/p>\n<\/blockquote>\n\n\n\n

3. Create better inventory management strategies<\/h3>\n\n\n\n

Inventory replenishment is just one function of the entire inventory management process. Without a proper inventory management process, it will be difficult to make decisions on when it\u2019s time to reorder inventory. <\/span><\/p>\n\n\n\n

Regular <\/span>inventory audits<\/span><\/a>, standardwarehouse receiving<\/a>procedures, and warehousing best practices can help you track inventory more efficiently. <\/span><\/p>\n\n\n\n

Holding costs<\/span><\/a> \u2014<\/span> including warehouse staffing, storage, <\/span>shrinkage<\/span><\/a>, and depreciation costs \u2014 should be closely monitored and calculated to ensure there is no major cuts into profit margins. <\/span><\/p>\n\n\n\n

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“We rely heavily on ShipBob for inventory tracking and forecasting and that\u2019s been a key part of our partnership. Our area of expertise is not logistics or inventory management, so we lean on ShipBob a lot for that. <\/span><\/p>\n\n\n\n

We\u2019ve learned so much about this industry since working with ShipBob, as they are true supply chain experts, which has been good for everyone on our team. When thinking about fulfilment, there\u2019s such a focus on the packing and shipping aspect that the inventory management piece can often go unnoticed. But ShipBob\u2019s ability to help us track and reconcile inventory is really great.<\/span>“<\/p>\n\n\n\n

Callie Tivnan, E-commerce Manager, and Christina Williams, Customer Success Manager at Barefaced<\/span><\/p>\n<\/blockquote>\n\n\n\n

Inventory replenishment is easy with ShipBob’s fulfilment services<\/h2>\n\n\n\n

ShipBob offers fast-growing ecommerce brands best-in-class fulfilment solutions, a<\/span>global fulfilment<\/span><\/a>network, and proprietary technology. <\/span><\/p>\n\n\n\n

ShipBob offers ecommerce fulfilment<\/a> services, from<\/span>warehousing<\/span><\/a>to<\/span>order fulfilment<\/span><\/a>, kitting<\/a> to automated shipping<\/a> and returns processing, so our customers have what they need to build an end-to-end ecommerce solution<\/a>.<\/span><\/p>\n\n\n\n

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