Inventory management

Keeping track of your inventory is crucial to ensure that your orders can be fulfilled quickly and efficiently. Working with the Shopify Fulfillment Network (SFN) to keep your inventory predictable and accounted for saves time and resources when you fulfill and manage your orders.

To build predictable inventory practices when using the Shopify Fulfillment Network, there are several concepts and processes you should know about.

Inventory states

Inventory states help you divide your inventory into groups that show where your inventory is physically and whether it can be sold. The Shopify Fulfillment Network uses the following states to group, or bucket, your inventory:

  • On Hand - Inventory that's physically at Shopify Fulfillment Network fulfillment centers. On hand inventory includes committed inventory and available inventory.
  • Incoming - Inventory that's in transit to a Shopify Fulfillment Network fulfillment center. This inventory isn't available for sale until it's been received by a fulfillment center and the state is changed to Available.
  • Pending Fulfillment - Inventory that hasn't been processed or submitted to a fulfillment center because of your paid order delay.
  • Packing and Shipping - Inventory that's assigned to an order at a fulfillment center.
  • Reserved - Inventory that's excluded from selling.
  • Available - Inventory that's available for allocation to new orders.

Available inventory is calculated using the following equation:

On Hand - Pending Fulfillment - Packing and Shipping - Reserved = Available

Inventory syncing

Keeping accurate records of the current state of your inventory helps your orders be fulfilled efficiently and helps you plan for the inventory you need in the near future.

To ensure that the Shopify Fulfillment Network inventory levels match your own inventory levels, an inventory sync is performed periodically. There are two inventory syncing methods that can be used: delta sync and override sync. If you aren't sure which sync you're currently using for your Shopify Fulfillment Network inventory location, then contact the Fulfillment Success team from the Overview tab in your Shopify Fulfillment Network app.

Delta sync

When a new SKU is sent to the Shopify Fulfillment Network in an inbound transfer, the fulfillment center approves and verifies it for fulfillment. For more information on finding the available inventory amounts in your Shopify admin, refer to View your product inventory.

If your store is on the delta sync method, then the Available quantity at the Shopify Fulfillment Network location is updated each time that an order is placed. If there are adjustments at the fulfillment center, such as for mis-counts, damaged products, or special projects, then the adjustment is applied to your Available inventory that evening.

The Shopify Fulfillment Network never automatically overrides the Available quantity. If you make manual changes to it, then your new inventory levels will likely be incorrect.

Override sync

Similar to delta sync, when a SKU is sent to the Shopify Fulfillment Network in an inbound transfer the fulfillment center approves and verifies it for fulfillment. After the SKU is verified, the Available inventory for the Shopify Fulfilment Network location in your Shopify admin is updated.

If your store is on the override sync method, then your Available inventory is recalculated at various times as changes happen to your SKUs, such as every time an order for that SKU is created or edited. This means that you can't make changes to inventory quantities for the Shopify Fulfillment Network location in your Shopify admin without them being overridden.

On-demand kits

An on-demand kit is a SKU that is assembled from other SKUs. You can request a fulfillment center to assemble these on-demand kits for you. If you're set up for the Shopify Fulfillment Network to fulfill on-demand kits, then there are a few things you should know to keep your inventory replenished and to understand what you see as an Available quantity.

The following criteria is used to determine how many kits you can sell on your store:

  • the Available quantity of each SKU part
  • the required number of parts per Kit
  • the Available quantities per fulfillment center

When replenishing kit parts through inbound transfers to a fulfillment center, take all these factors into account.

Fulfillment priority settings

If you have inventory that's managed by multiple locations, then you need to set the fulfillment priority order.

The orders are assigned to locations based on the fulfillment priority and the following rules:

  • Try to assign the order to a single location.
  • If required, assign a line item to a location that has enough inventory, but do not split line items between locations.
  • If an item is oversold, then assign the order to the priority location where the item is stocked.

For example, suppose that your locations are set in the following fulfillment priority order:

  1. Shopify Fulfillment Network
  2. Home Office
  3. Retail Storefront

In this example, the Shopify Fulfillment Network has first priority for incoming orders with products assigned to its location.

When you create a draft order, make sure that you manually select which fulfillment center that you want to fulfill the order. For example, if you want to fulfill your draft order at SFN, then make sure to manually select SFN as your fulfillment location.

To learn more about setting your fulfillment priority, refer to Set the priority of locations for fulfilling orders.

Avoid overselling inventory

Overselling product happens when your Shopify store has Available inventory for a product, but the Shopify Fulfillment Network doesn't have any inventory for that product to allocate to an order that was placed. Review the following table to learn how to avoid overselling.

Causes of overselling and how to avoid them
Cause Steps to avoid
Manual adjustments Avoid making any manual adjustments to inventory for the Shopify Fulfillment Network location in your Shopify admin. Use override syncing as your inventory syncing method.
On-demand kits Due to the nature of on-demand kits, there's always a risk of overselling, especially during periods of heavy demand. This is because kit parts can be shared across multiple kits and sometimes sold individually, which leads to delays in inventory calculation in real time. Make sure you have high availability for kits parts that are shared across on-demand kits to avoid overselling or selling out.
Third-party apps Some third-party apps, such as inventory management solutions, pre-selling, and bundling apps, attempt to make adjustments to your Available inventory in your managed locations in your Shopify admin. Make sure that you aren't using an app that could adjust the Available inventory in the Shopify Fulfillment Network location.

Set up inventory reservations

If you want to stop selling inventory that you have in stock, or inventory that you will have in stock at some point in the future, then you can use the Inventory reservations feature.

Steps:

  1. In the SFN app, on the Inventory tab, select a product.
  2. Click Edit reserved, and then set an amount of stock that you want to be able to reserve.
  3. Click Save.

After you save this amount, this quantity is subtracted from the Available quantity for the product in your Shopify admin. Any orders that are already listed Pending fulfilment will still be fulfilled. You can only reserve inventory that has not already been sold.

If you want to use inventory reservations, then don't enable Continue to sell when out of stock on the variant in shopify. If you enable this function, then the ability to modify your inventory reservations is automatically disabled. Any existing product reservations made before you enabled Continue to sell when out of stock will continue selling without any limitations.

You can't place a reservation and a preorder on the same product at the same time.

Set up preorders

If you want to sell inventory that's currently out of stock in the Shopify Fulfillment Network, then you can use the Preorders feature.

Steps:

  1. In the SFN app, on the Inventory tab, select a product.
  2. Click Edit preorder quantity, and then set an amount of stock that you want available to preorder.
  3. Click Save.

After you save this amount, this quantity is added to the Available quantity for the product in your Shopify admin.

Orders that are placed on products that have preorders set and an inventory amount of 0 in the SFN are placed on hold and listed as Insufficient inventory. These orders are automatically processed when the SFN receives new inventory for the product. If you store the product at multiple fulfillment centers, then the first fulfillment center to receive new inventory from you begins processing all of your preorders.

If you want to use preorders, then you shouldn't enable Continue to sell when out of stock on the variant in shopify. If you enable this function, then the ability to modify your inventory reservations is automatically disabled. Any existing product preorders made before you enabled Continue to sell when out of stock will continue selling without a limit to the amount of preorders that can be purchased.

You can't place a reservation and a preorder on the same product at the same time.

If a preorder quantity sells out, then the product doesn't automatically reset to 0 in the SFN when new units of the product are received. If you don't want to oversell a product, then you need to manually reset the preorder value to 0.

Transfer products between SFN fulfillment centers

You can transfer inventory between different SFN fulfilment centers if, for example, your inventory in one SFN fulfillment center is running low.

Steps:

  1. Create and export a CSV file of the SKUs and units that you want to transfer.
  2. Send an email to sfn-help@shopify.com with the details of your inventory transfer and the CSV file.
  3. The SFN support team will provide you with the instruction needed to correctly label your inventory and schedule shipping before you transfer your inventory.
  4. After the transfer is processed, you need to email the shipping details to sfn-help@shopify.com to receive the information needed by inbound receiving at the SFN fulfillment center.

You're responsible for any customs or import fees associated with transferring inventory between SFN fulfillment centers. Any inventory transfer going from the US to Canada must have a Bill of Lading (BOL) with the Canadian broker listed, along with a Canadian phone number, otherwise the shipment can't cross the border. You can't list Shopify as a cosignee. If you need assistance with this process, then contact your customs broker.

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