How to Create Inventory Reports to Optimize Your Retail Store

Inventory is your biggest asset as a retailer. But if you have incorrect stock counts, products that have been sitting on the shelves for months, or vendors who are underperforming, you’re losing money. 

In the US, retailers hold $1.28 worth of inventory for every dollar of sales. That’s too much investment not to monitor and optimize it for higher profits.

Inventory management reports can help you improve inventory accuracy, meet demand more effectively, and reduce stockouts: the perfect blend for keeping customers satisfied and loyal.

This guide explains the different types of inventory reports you can gather and how to create accurate reports, so you can start improving inventory management in your store. 

What is an inventory report?

An inventory report is an organized summary of how much inventory you have at a given time. Reports are either electronic or physical, and they tell you how much product you can sell now, how much inventory is in transit, and what inventory you need. 

Inventory report template: what to include

Inventory is much more nuanced than an in-stock or out-of-stock toggle. A good inventory management software tracks movement across different inventory states and destinations. Your reporting template needs to speak the same language as the admin. 

Here’s how to build a report that mirrors Shopify’s logic. 

Core fields for any inventory report

Start with the baseline columns. 

• Report date/snapshot date. Tracks your inventory position at a specific point in time. Shopify’s reports are period-based, so the date indicates when the position applies. 
• Product title and Variant title. Essential for identification, as Shopify manages inventory at the variant level.
• SKU/barcode number. Used in the inventory adjustment changes report for traceability. Also key for syncing with third-party logistics (3PLs) or scanning apps.
• Location. Distinguishes between warehouse, storefront, or 3PL stock.

Next, label your inventory states. These will explain why you might have 100 items on the shelf, but zero available to sell. 

• On hand. The total physical stock currently sitting at the location.
• Available. Sellable stock (On hand minus Committed).
• Committed. Stock already sold in an order but not yet fulfilled/shipped.
• Incoming. Stock currently in transit via a Purchase Order or Transfer.

Last, include financial metrics:

• Total inventory value. Show average quantities sold and percentages of variant inventory sold for a selected period.
• Sales velocity. Expressed as inventory sold daily by product. This shows the items of the product variant sold per day during a selected period. 
• Adjustment history. Explains why the stock was adjusted across dimensions like SKU, location, staff member, app, and adjustment reason.

Optional fields for multichannel and multilocation inventory

Once you split inventory across warehouses, stores, 3PLs, and multiple selling channels, you’ll want to produce more advanced inventory reports. Here are the key items to include:

• Origin and destination. Where is it coming from and where is it going?
• Transfer status. Is it a Draft, In Progress, or already Received?
• Transfer reference. The tracking number or internal ID to link the physical box to the digital record.
• Vendor/Supplier. Who is sending the goods?
• PO number and status: Essential for reconciling partial shipments.
• ETA (Expected Arrival): Helps operations know when they can start promotions. 

Benefits of inventory reporting

An inventory report is the single source of truth that connects your warehouse operations to your customer experience. With standardized data, you can make informed decisions to improve demand forecasting and reduce stockouts. 

Inventory tracking

Inconsistent inventory tracking leads to double-handling of products and lost inventory. With an effective inventory reporting system, you can track the location of products throughout your retail supply chain, from your warehouse to the shelves in your store. 

This method of tracking inventory also helps you:

• Maintain updated stock levels
• Improve inventory accuracy
• Understand inventory valuation and carrying costs 
• Avoid stock shortages 

Standardized inventory categorization

Two popular ways retailers categorize inventory are ABC analysis and by location or type. Regardless of which method you use, an inventory report is critical to categorizing your inventory. 

A report will show you in real time where inventory is throughout the supply chain, from raw materials to ready-to-sell items. Knowing where products are helps you understand the cost of goods sold during each phase. It also helps you optimize inventory management and meet the future demands of customers. 

Improved forecasting

In inventory forecasting, also called demand planning, past data and trends are used to predict future inventory requirements. 

Carry too little inventory and you risk turning away customers ready to give you money. Too much inventory and your stockroom becomes a mess, increasing storage costs and overwhelming customers on the floor. 

An inventory forecasting report can help you meet changes in demand and stock the right amount of inventory in your store. Is a trending product selling faster than expected? Forecasting can help you catch demand early and transfer stock from one location or create a purchase order to replenish your location. You can strategically manage stock items, avoid overstocking, and ensure you have enough stock to fulfill customers’ orders. 

Better customer service

Having enough inventory on hand doesn’t just benefit retailers—it also improves customer satisfaction and loyalty. 

Imagine going into a store with a particular item in mind, only to find it’s out of stock. You likely won’t hang around with no clue of how long you’d be waiting. You’d shop around and find another brand with same-day pickup instead.

Accurate inventory reporting will tell you exactly when to order more stock, so you can keep more products on the shelves, avoid lost sales, and keep customers happy. A great in-store experience allows you to sell that item and fulfill stock from another retail location based on your order fulfillment strategy, or surface inventory available at other retail locations.

Types of inventory reporting

The most useful inventory metrics tell you how quickly inventory sells and how accurately it is measured. Here are the main ones to track. 

Sell-through rate

Sell-through rate is the percentage of your available inventory that sells during a specific window. The formula is (Units Sold / Units Available) x 100. It depicts supply chain efficiency and product demand, and is typically measured every 30 days. 

A high STR suggests strong sales and efficient inventory processes, while a low rate indicates overstocking and the need for markdowns. 

Inventory turnover and days sales in inventory (DSI)

Inventory turnover and days sales in inventory (DSI) go hand in hand. Inventory turnover measures how many times you’ve replaced inventory over a period of time. Some companies measure it annually, while others review it quarterly or monthly to assess sales performance. 

The formula is: Inventory Turnover = Cost of Goods Sold / Average Inventory.

DSI tells you how many days your current stock will last at your sales pace. It’s calculated (Average Inventory / Cost of Goods Sold) x 365. 

Here’s how to act on these sales velocity metrics.

Shrink rate

Shrink is inventory that disappears without a sale. It tells you the magnitude of loss due to theft, damage, or administrative error. 

To get the dollar amount of shrink, you’d take your Book Inventory and subtract it from your Actual Inventory. You can also view it as a percentage by dividing the value of lost stock by total sales and multiplying by 100. 

For example, if your store has $30,000 in lost, stolen, or damaged inventory and total sales of $1 million, the shrink percentage is 3%. 

With the inventory adjustment changes report in your Shopify admin, you can get a better understanding of the why behind some shrink. It allows you to see which SKUs were most affected by manual adjustments, the reasons for the adjustments, and who made them. 

The total adjustment count can provide insight into shrink. A high number of small adjustments can point to a flawed warehouse process or a need for better staff training, whereas a few large adjustments might indicate a major receiving error or systemic theft.

Reorder point (ROP)

Reorder points tell you the inventory level that triggers a new purchase order. If you use Stocky, Shopify’s inventory management system, this math is largely done for you. It pulls sales velocity and lead times to surface an ROP column automatically. 

Lead time variability

One threat to your reorder point is lead-time drift, where a supplier promises 14 days but consistently delivers in 21. You have to plan for the actual lead time, which, in this case, is a seven-day gap. 

If your actual lead time exceeds your planned lead time regularly, increase your safety stock levels to prevent stockouts, even if sales remain stable.

Types of inventory reporting

These nine types of reports will provide a complete snapshot of your inventory, including how many items you have on hand, how specific products are performing in the context of your full inventory, and when you’ll receive your next shipment. 

• Inventory on hand
• Shrinkage report
• Inventory valuation report
• Product performance report
• Inventory turnover report
• Inventory location report
• ABC analysis
• Cost of goods sold
• Stock reorders

Inventory on hand

An inventory-on-hand report shows you the exact amount of stock available and its value. It indicates how much capital is in inventory, so you can better forecast, reorder, and budget for the future. 

When you use different platforms to run your online and retail stores, inventory discrepancies are more likely to happen. This can lead to more frequent inventory counts to reconcile differences and ensure stock levels are accurate. Use an inventory management system that integrates with every sales channel—including your POS system and online store—to prevent discrepancies and maintain accurate data.

Shrinkage report

The National Retail Federation’s Impact of Retail Theft & Violence 2025 report found retailers reported a combined 19% increase in external shoplifting and merchandise theft incidents from 2023 to 2024. Inventory shrinkage reports monitor shrinkage rates over time to see if you need to address any major problems.

Inventory performance report

Inventory performance reports tell you specifics about your product sales across all sales channels, such as:

• Bestsellers
• Worst sellers
• Best year-over-year growth 

Also known as a product performance report, you can use this information to plan reordering raw materials or replenishment stock. If an in-demand product is selling like crazy, you can order more. 

An inventory performance report also reveals sales trends. If you notice a specific item hasn’t sold in a while, for example, you can dig deeper to understand why. 

Inventory valuation report

Your warehouse is full of products waiting to be sold. These items are stock you’ve spent money and resources on to acquire, and they have value. Your inventory valuation report reflects the total value of stock currently sitting in your warehouse. 

With an inventory value report, you can:

• Determine revenue goals 
• Save on taxes 
• Get small business financing 

The goal is to give you a clear picture of your business’s financial position and profitability. 

Inventory turnover report

Inventory turnover rate describes how many times you’ve replenished your inventory over a given time frame. 

For example, if you’re creating a three-month inventory turnover report and notice that a particular SKU has been replenished 12 times, you might consider upping the minimum inventory level or ordering more safety stock. You might be able to get more beneficial bulk discounts (and therefore reduce the cost per unit) by placing larger, less frequent orders with suppliers.

Inventory location report

An inventory location report shows how many quantities of each product you have at each storage location. It’s critical for retailers that have multiple retail locations, work with 3PL companies, or operate shipping warehouses. 

Low stock in one storage location could be rectified by diverting a shipment due to arrive at another warehouse, without necessarily having to order new stock from your supplier. 

Similarly, if you’re selling online as well as in-store, the location report helps you stock inventory closest to the customer. This results in cheaper shipping costs and faster delivery—two important drivers of purchasing decisions. 

Stock reorders

Stock reorder reports show all product variants that match or have fallen below the reorder point. There is a listing of all products on hand, pending purchase orders, sales orders, and a variant’s reorder level. Based on the amount of stock in hand and to be delivered, you can determine how much stock needs to be reordered. 

ABC analysis

An ABC analysis report places each SKU into one of the following categories:

• A grade: Best performing inventory. These items account for 80% of total revenue. These products should be safeguarded against stockouts with safety stock or high minimum quantities. 
• B grade: Mid-performing inventory that accounts for the next 15% of total revenue. It’s not the best performing, but not the worst. 
• C grade: Worst performing inventory. These products account for the remaining 5% of your revenue. Deprioritize these products and clear the excess inventory, even if it’s at a heavy discount, to make room for more A players.

Cost of goods sold

A business’s cost of goods sold (COGS) is the direct cost of producing the products it sells. This is also called the “cost of sales,” or “COGS report,” as it includes the costs of materials and labor directly related to retail product production.

COGS reports deliver insights that help you:

• Set the best price for products 
• Manage quarterly taxes 
• Find opportunities for growth

Incoming inventory 

Knowing what inventory is on its way to you is key. If you know a shipment is 48 hours away, you can keep your product pages active without adding a Sold Out tag. If you see a shipment is delayed, you can pause ad spend so you aren’t paying for clicks to an empty self. 

Shopify’s inventory reports treat Incoming as an inventory state. It tracks inventory from transfers, purchase orders, or apps. Incoming inventory should always be tied to a destination location so teams don’t assume a PO fixes stockouts everywhere. 

How to create an inventory report

Once you have your template set up and connected to your POS, running an inventory report is simple. 

Here’s how to get started: 

1. Choose an inventory management system

A manual inventory reporting process helps you understand your inventory counts at one point in time. An automated inventory management system, however, will keep track of inventory in real time, making adjustments as you buy and sell items. 

Shopify’s automated inventory reporting features can speed up the reporting process and avoid human errors. You can also sync all your systems together and run more efficiently, giving you one central dashboard to view inventory data as opposed to logging into different systems (or worse: asking reps to send an updated list of inventory at the end of every day). 

2. Build an inventory list

Now that you’ve got your inventory data in one place, export data from your POS system or inventory management system. It will have information you need like:

• Available stock
• Location of stock
• Variants available 
• SKU numbers
• Price
• Number of units

Leave space for each product’s description in another column. You can keep track of differences between inventory items this way. If you want to highlight a product’s unique characteristics, for example, you can provide more detail. You can also note if an item is damaged or missing.

Each item should also have a price so you can easily figure out how much your inventory is worth. In some businesses, you may track purchase or manufacturing costs separately from the selling price.

3. Establish a reporting timeframe

Make sure you retrieve all the data from the same time frame. You can look at inventory reporting metrics by quarter or by day. 

When you’re comparing periods, keep seasonal shopping trends in mind. If you look at April numbers compared to November, for example, you’ll see a big discrepancy because of the holidays.

4. Choose a report to run

Once you have your data and date ranges, choose a report that answers the question you want to dig into. For example, an inventory performance report can help you understand changes in the best- and worst-performing products. Shrinkage reports can help uncover changes in shrinkage. 

5. Run your inventory report

Last but not least, run the numbers and analyze. Look for positive and negative inventory and sales trends in your reports. For example, if you see a new product is selling quickly, you’ll want to set higher reorder points than you do for products that sell more slowly. 

How often do you need an inventory management report?

Reporting frequency depends on your needs. You should run reports more often if you have a high volume store, since your numbers change frequently.

In any case, making it a regular task to generate inventory reports is important for any size retailer. 

Some common periods to run inventory reports are:

Weekly and monthly

It’s easy to pull weekly and monthly reports from your POS system and inventory management software. Weekly and monthly reports can give you a regular look at your inventory health, set inventory thresholds to meet customer demand, and even inform marketing teams on how a promotion went. 

Before and after busy seasons

Real-time sales reports are a big win for retailers. But understanding period-over-period growth is critical to maximizing sales. For example, you’ll want to run inventory reports to compare Black Friday Cyber Monday (BCFM) 2025 to BFCM 2024. You can run reports during other busy seasons like back-to-school shopping or Valentine’s Day. 

Depending on your operations

For stores with high volumes of daily or hourly orders, more reporting will be needed to inform purchasing decisions. The goal is to find the right balance for your store to keep customers happy and your store profitable.

Inventory reporting tips

With the right organization and management tactics in place, inventory reporting will be accurate and stress-free. 

Start with these three tips: 

Keep an organized stockroom

Stockrooms hold the vast bulk of the inventory in your store. It’s an important area in your store, but customers never see it. When your stockroom is a complete mess, you’ll likely experience inaccurate inventory counts and inefficiencies in your store, which will negatively affect your customers and your sales and profitability.

An organized stockroom helps you:

• Quickly find shopper requests 
• Run efficient inventory counts 
• Easily restock inventory 
• Avoid stockouts

Organizing your stockroom might seem hard, but there are many stockroom layout examples you can experiment with in your store. Retailers will also make tweaks like keeping their bestsellers in front of the stockroom and investing in inventory management tools to improve efficiencies. 

Hire an inventory specialist

You wear enough hats as a retail business owner: accounting, sales, human resources, marketing. Hiring an inventory reporting specialist can take inventory reporting off your to-do list. 

A specialist in inventory management keeps track of all your stock, ensuring your products are in great condition and ready to sell. They also make sure your inventory records are accurate and that you always have enough stock on hand. 

Some skills to look for when hiring an inventory specialist are:

• Record-keeping abilities
• Strong organizational skills
• Good interpersonal skills
• Basic computer skills

💡 PRO TIP: Want to control which staff can count, receive, and adjust inventory quantities? Use roles and permissions to set boundaries on what staff can and can’t do when logged in to your POS system, like accessing its inventory management tools.

Audit inventory regularly

Inventory audits compare your actual inventory levels with your financial records. They also help make sure your inventory system matches your physical inventory.

Inventory records can be off for many reasons, and the only way to spot errors is to audit them regularly. Internal audits can be done on your own or at the request of an outside auditor. It’s also possible to hire a third-party company to manage your inventory.

Regular audits help identify shrinkage and ensure inventory accuracy. They reduce the likelihood of ending up with phantom inventory and make reconciling your records easier.