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Setting up inventory for the first time

Setting up inventory correctly from the start helps you avoid issues later and ensures accurate stock levels for your customers. This guide helps you set up your inventory in Shopify, from deciding which products to track to entering your initial quantities.

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Before you begin

Before setting up inventory, consider the following questions:

  • Do you have physical products that need quantity tracking?
  • Do you have one location or multiple locations?
  • Are you using Shopify POS for retail sales?
  • Do any products ship directly from suppliers?

Your answers help determine the right inventory setup for your business.

Step 1: Determining which products need inventory tracking

Not all products require inventory tracking in Shopify. Inventory tracking is useful when you need to monitor stock levels and prevent overselling, but some product types work better without it.

Products that might need inventory tracking

Consider activating inventory tracking for the following products:

  • Physical products that you stock and ship
  • Products with limited quantities
  • Items that you need to reorder from suppliers
  • Products sold in retail stores using Shopify POS

Products that might not need inventory tracking

Consider not activating inventory tracking for the following products:

  • Digital products, such as ebooks, music downloads, or digital art
  • Services, such as consultations, classes, or appointments
  • Made-to-order products, such as custom items created after purchase
  • Gift cards

Step 2: Reviewing your location setup

Inventory is stored at locations, which represent physical places such as warehouses, retail stores, or fulfillment centers. Your Shopify store comes with one default location, but you can add more if needed. Consider setting up your locations before assigning inventory to products. This ensures that you can allocate inventory to the correct locations from the start.

Review your location needs:

  • One location: If you have a single warehouse or store, then your default location is sufficient.
  • Multiple locations: If you have multiple stores, warehouses, or sell both in person and online, then you need to set up additional locations.

Learn more about setting up and managing locations.

Step 3: Activate inventory tracking for products

After you determine which products need tracking, activate inventory tracking for those products.

Steps:

  1. From your Shopify admin, go to Products.

  2. Click the product that you want to track.

  3. In the Inventory section, activate inventory tracking.

  4. Optional: If you have multiple locations, then select which locations stock this product from the Inventory will be stocked at drop-down menu.

  5. Click Save.

Repeat these steps for each product that needs inventory tracking.

Learn more about setting up inventory tracking.

Step 4: Entering your initial inventory quantities

Enter the starting quantities for each product. Accurate initial quantities ensure customers can only order what you have in stock.

You can enter quantities in the following ways:

  • Individually: Enter quantities one product at a time on the product details page.
  • Bulk editor: Update multiple products simultaneously using the bulk editor.
  • CSV import: Upload a CSV file with quantities for many products. Learn about importing inventory using CSV files.

Step 5: Configuring product out-of-stock behavior

Decide what happens when products run out of stock. You can choose from the following options:

  • Stop selling when out of stock: This is the default setting. When a product reaches zero inventory, customers can't add it to their cart. This prevents overselling and customer disappointment.
  • Continue selling when out of stock: Continue selling when out of stock**: You can allow customers to purchase products even after the inventory reaches zero. This might be useful for the following types of products or orders:
    • Products that you can quickly restock
    • Pre-orders for upcoming products
    • Made-to-order items that you produce after receiving orders

Learn more about selling when out of stock and hiding out-of-stock products.

Step 6: Test your inventory setup

After setting up inventory, test your configuration to ensure everything works correctly.

If inventory doesn't update as expected, then review your inventory states and ensure tracking is activated correctly.

Steps:

  1. From your Shopify admin, go to Products > Inventory.

  2. Verify that your products display with the correct quantities.

  3. Optional: Place a test order to confirm that the inventory decreases correctly.

  4. Optional: Cancel the test order and verify that the inventory returns to the previous quantity.

Common inventory setup scenarios

After testing your setup, review the following common scenarios to determine which matches your business model.

Scenario A: Online-only store with one warehouse

  • Scenario: You sell handmade candles online from your home workshop. You have 20 vanilla candles and 15 lavender candles in stock.
  • Result: Your store tracks inventory for physical products at one location and prevents overselling.

Steps:

  1. Use your default location.
  2. Activate tracking for both candle products.
  3. Enter quantities: Vanilla (20), Lavender (15).
  4. Keep default out-of-stock setting.

Scenario B: Retail store and online sales

  • Scenario: You have a retail bookstore and also sell online. Some inventory is in your store, and some is in a back warehouse.
  • Result: Your inventory is tracked separately at each location, and you can sell both in-store and online from the correct locations.

Steps:

  1. Rename your default location to "Main Store".
  2. Add a location that's named "Back Warehouse".
  3. Activate tracking on all physical products.
  4. Assign books to appropriate locations.
  5. Set up Shopify POS for retail sales.
  6. Configure shipping from each location.

Learn about managing inventory from multiple locations.

Scenario C: Mix of stocked and dropshipped products

  • Scenario: You stock popular t-shirts in your warehouse but dropship specialty items from suppliers.
  • Result: Your stocked products have accurate inventory tracking, while dropshipped products are managed separately.

Steps:

  1. Use your default location for stocked products.
  2. Activate tracking for t-shirts you stock.
  3. Enter t-shirt quantities at your warehouse location.
  4. For dropshipped items, either don't activate tracking, or use a dropshipping app that syncs supplier inventory.

Scenario D: Multiple retail locations

  • Scenario: You have three clothing stores in different cities that each need separate inventory tracking.
  • Result: Each store location tracks its own inventory, and you can transfer stock between locations as needed.

Steps:

  1. Create locations: "Downtown Store", "Mall Location", "Westside Shop".
  2. Activate tracking on all clothing items.
  3. Assign inventory to each location based on physical counts.
  4. Set up Shopify POS at each retail location.
  5. Configure inventory transfers between locations if needed.