Automate Your Shopify Store
Learn about the best ways to automate your e-commerce business and manage your inventory across multiple Shopify stores.
Out-of-stockFIFO Management System: The Key to Effective Shopify InventoriesAlthough there are methods and tips for selling when out of stock on Shopify, such as back-in-stock notification forms and monitoring your inventory-to-sales ratio, managing your stock can be the difference between a profitable, customer-serving business and a failed store with all its capital tied into inventory and no sales.
Why Is Inventory Management Important?
Knowing the cost of your inventory will not only help prevent you from over-investing in stock but also help reduce warehouse costs, help monitor theft and loss, and help produce more accurate stock cost values.
The logistics of stock management can become complicated, especially for larger stores. That's why implementing an inventory tracking system is crucial for a smoothly running online store.
What Is the FIFO Inventory Management Method?
The FIFO (first in, first out) inventory management system aims to value a business's inventory in a way that reduces the loss of products because it has expired or become obsolete.
This inventory costing assumption method calculates the inventory cost of the first items that arrived in stock and uses the newest inventory as the remaining stock.
In short, the first stock and its associated costs are used before your new stock.
Why Use FIFO for Shopify Instead of Other Methods?
FIFO is the most widely-used inventory management method and the most accurate when assuming expected costs with the flow of goods.
Additional benefits of FIFO include the following:
Using FIFO in your Shopify automated inventory management system will provide you with the most accurate way to align stock prices and sales.FIFO will help reduce the impact of inflation if we assume that the cost of old inventory is less than newer inventory. Therefore, your net profit will be higher.FIFO will help reduce expired stock and items that have become obsolete.
However, it's important to note that there are other inventory management methods available to consider, such as:
LIFO Inventory Management (Last in, first out)
This method is the opposite of FIFO, where the last inventory purchase is the first to be sold.Average Cost Inventory
It is calculated by dividing the total cost of your goods by the total number of goods available for sale. This produces a single average cost price.Specific Inventory Tracking
It is used when all finished product costs are known. With all aspects known, any of the above methods are appropriate.
Calculating FIFO
To calculate your COGS (cost of goods sold) using the FIFO method, simply calculate the cost of the oldest inventory sold, and multiply it by the number of items sold.
In a formula, this would look as follows:
COGS (FIFO) = (Cost of Oldest Inventory) x (Total Inventory Sold)
Note: If newer inventory (with a higher/lower cost) is used to complete sales, you will need to take this into account.
Example of FIFO Calculations
To gain a better understanding, let's consider the following T-shirt-selling Shopify store, which has inventory purchase data that looks like this:
DateFebruaryAprilAugustQuantity200150200Cost/T-Shirt$10$12$16COGS (FIFO)$2,000$1,800$3,200
Assume you sell 250 T-shirts (Total Inventory Sold) and want to work out your cost price using the FIFO method. As FIFO uses old stock first, the first 200 shirts will be sold from the oldest inventory, February, for $10 per T-shirt (Cost of Oldest Inventory). The remaining 50 T-shirts represent the newest inventory and will be taken from the purchase made in April at a cost of $12 per T-shirt (Cost of Newest Inventory).
The COGS will, therefore, be calculated as follows:
Total Inventory Sold = 250Cost of Oldest Inventory = (200 x $10) + (50 x $12)* = $2,600COGS (February-April) = $2,600 x 250 = $650,000* Cost of Newest Inventory
This will leave your ending inventory as follows:
COGS (April) = 100 x $12 = $1,200COGS (August) = 200 x $16 = $3,200
FIFO Inventory Management: A Must-Have for Shopify Sellers
Correctly managing your store's inventory will make adding products to Shopify collections easier because you'll be able to forecast inventory. You'll have an idea of your stock levels, the cost of stock, and how quickly your stock is being sold.
The FIFO method is a global go-to for inventory management systems, as it will help reduce obsolete products while compensating for the rising prices of goods.
Out-of-stockOut-of-Stock Products: Selling on Shopify TipsIt's not uncommon for Shopify merchants to sell out-of-stock products. In this article, we'll share a few tips on how to sell, hide, and manage out-of-stock items to keep your sales funnel flowing.
Benefits of Selling Out-of-Stock Products
Selling out-of-stock products can be an effective strategy for your online store. It can help you to:
Increase sales by making preorders available for your products.Retain sales because you have new stock coming soon and want to keep selling until it arrives.Improve order and inventory management because you order new stock based on your customer orders.
How Do You Sell Items if You're Out of Stock?
When you sell out of an item, customers can't buy it until you update your inventory levels to add new stock. This means that Shopify doesn't allow you to oversell by default. But there are ways to tweak your Shopify settings to oversell new and existing products.
1. Overselling New Products
When creating your product, tick the Track Inventory box under inventory. This is usually ticked by default. You'll notice another option to Continue selling when out of stock beneath that checkbox. When this box is ticked, the product will be available for overselling.
2. Overselling Existing Products
Existing products can be edited in bulk, allowing you to make a modification once and apply it to all existing products.
Navigate to Products > All Products.Choose all of the products.Select Edit products.Once the spreadsheet opens, click Add fields and select Continue selling when out of stock.Tick the checkboxes next to any products you want to keep selling after they've sold out.
How Do You Hide Out-of-Stock Items?
You can hide your products that are temporarily out of stock by:
Using automated collections.Hiding your out-of-stock products in your default catalog collection.Automatically hiding them by using apps, such as Egnition's Out-of-Stock Police or Bestsellers reSort.
1. How to Hide Out-of-Stock Products From Your Collections
You must activate inventory monitoring in your Shopify admin before you can hide out-of-stock products and variants from your collections. Inventory tracking automatically monitors the inventory level of each product you carry.
Steps:
Enable inventory tracking for your products.Change the automated collection conditions for each of your collections and include the following:For Products must match, select all conditions.For Inventory stock, select is greater than and enter 0.
This will make sure that your automated collections don't contain any out-of-stock goods and that those goods aren't visible to your consumers. After you receive inventory, any out-of-stock goods will reappear in your collections.
Pro Tip: If you set Products must match to any condition, this method for hiding out-of-stock products won't work.
» Learn how to hide out-of-stock variants on Shopify by following our step-by-step guide
2. How to Hide Out-of-Stock Products in Your Default Catalog Collection
Your store comes standard with a collection that displays all of your in-stock products at the URL {your-store}.myshopify.com/collections/all. It's easy to hide out-of-stock products in this collection.
Steps:
Take over your Catalog page by overriding it with your own automated collection.Set the collection's automated conditions to hide out-of-stock products.
3. How to Hide Out-of-Stock Products Using Out-of-Stock Police
Out-of-Stock Police provides intelligent ways of hiding out-of-stock products, saving you time and effort.
Push out-of-stock items to the bottom
The app organizes your collections by ensuring that out-of-stock products are never displayed as featured items.Tag out-of-stock products
Create rules for smart collections, build reports, and plan restock dates better by tagging out-of-stock items automatically.Instant notifications for Shopify inventory
Get notified via email when certain products reach low stock, are out of stock, or have just sold out.
Don't Unpublish Products to Hide Them
Although it may seem like a quick-fix solution, unpublishing out-of-stock products not only frustrates your customers with error pages but also negatively impacts your rankings and SEO.
Instead, you can follow strategies such as pushing out-of-stock items to the bottom of your collection, applying "sold out" badges to your products, or using automated collection rules. Doing so will simplify the process of managing your out-of-stock inventory in Shopify.
» Discover how to mark your products as "sold out" in Shopify
Out-of-stockTop Shopify Tips: How to Manage Out-of-Stock ItemsAs a business owner, it is important to keep track of your inventory. Not only is it necessary to ensure that you always have the products that your customers want, but also to avoid overstocking or understocking your products. A good inventory management system will help you keep track of your stock levels and ensure that you are never caught off guard.
4 Best Tips to Improve Your Shopify Inventory Management
Shopify provides several options for managing inventory, and here we'll cover the best practices for implementing them.
1. Deprioritize Out-of-Stock Items
When products sell out, it's important to move them to the end of the collections section of your store. This ensures that your customers can still see them but that they're not as prominently featured as products that are currently available for purchase. Additionally, by moving the sold-out products to the end of the respective collection, it will be easier for customers to find the products that are available for purchase.
2. Use a Custom CSS "Sold Out" Badge
When a product is sold out, you can use the custom CSS tag "sold out" to indicate this in your Shopify store. You can use this tag to change the text color, background color, or font size of the text to indicate that the product is no longer available. You can also use this tag to create a custom message that will appear when someone tries to purchase a sold-out product.
Although this is not everyone's cup of tea, those Shopify owners that have CSS coding skills or have a developer on hand can simply add a customized script to any product listing. Failing this, some Shopify themes will have built-in badges that can be turned on and off in the product's settings. Be sure to check this out before committing to using a custom script.
3. Make Use of Alternative Product Apps
In addition to "sold out" badges, store owners can make use of third-party apps that can add related product sections to Shopify product pages. This allows for more flexibility and organization on the product pages and can help increase sales by providing more information to shoppers.
There are several options in the Shopify App Store, the best of them being Bestsellers reSort and Out-of-Stock Police.
Automatically push your out-of-stock items in real time.Get alerts sent to your inbox or the app when products are running low or out.Avoid losing organic traffic by hiding out-of-stock items in a strategic manner.
4. Turn on Back-in-Stock and Preorder Notifications
To combat out-of-stock products, shop owners can also use back-in-stock and preorder notifications, both of which can be turned on in Shopify to help store owners manage their inventory. Back-in-stock notifications notify customers when a product they are interested in becomes available again, while preorder notifications allow customers to reserve a product before it becomes available.
For back-in-stock notifications, you'll have to use a custom alert app, while for preorder notifications, you can use Shopify's in-house settings. To do this, tick the Continue selling when out of stock box in the product's Inventory section. By doing so, you will still be able to continue selling the product when out of stock. The only difference is that the order will be completed when your store once again has the product available in its inventory.
» Discover the simplest way to add a Shopify back-in-stock notification form
Don't Take Your Products off the Market
Unpublishing products that have sold out may seem like a quick fix, but it actually hurts your SEO and rankings and frustrates your customers by sending them to error pages.
It is, therefore, preferable to use methods such as pushing out-of-stock items to the bottom of your collection, applying "sold out" badges to your products, or implementing automated collection rules to simplify your out-of-stock inventory management.
» Learn how to mark a product as "sold out" in Shopify
Learn more about Egnition's Out-of-Stock Police and how it can help you improve your out-of-stock inventory management:
Out-of-stockShopify Store's Growth: Why Back-in-Stock Emails Are ImportantKeeping your customers updated about product availability is an integral part of your store's growth because it helps foster customer loyalty and increase sales.
Sending Shopify email alerts for when products are back in stock is a good strategy to cover this aspect of your store management. Below, we'll look into some specific reasons why back-in-stock emails are critical to the growth of your Shopify business, complete with some concrete examples you can try in your store too.
» Want to try back-in-stock alerts? Here's how to notify your customers
5 Benefits of Shopify Back-in-Stock Email Notifications
Back-in-stock email notifications are essential to the expansion of your Shopify store because they help reduce the number of customers you can potentially lose due to product unavailability. When your customers receive back-in-stock emails, they're more likely to return to your store and make their purchases.
This will result in various benefits for your Shopify store, including the following:
1. Increasing Sales
Back-in-stock emails support sales growth in different ways. Apart from reminding your customers to come back and purchase the product once it's available again, these emails also foster a sense of urgency and scarcity that inspires your customers to act quickly. Back-in-stock alerts can also help you identify the products that are high in demand so you can restock accordingly and increase sales.
Example:Sending out back-in-stock emails to my customers proved fruitful for my own Shopify store. After notifying my customers about the availability of a well-liked product that was previously out of stock, I noticed an instant spike in sales as the result. This demonstrated strong demand for the product, and I was able to use this information to streamline my out-of-stock management and raise my store's overall efficiency.
2. Improving Customer Experience
By informing your customers about product availability, back-in-stock emails enhance the shopping experience at your store. Clients are more likely to feel valued and appreciated if they know you're making every effort to make a product available to them, so this practice can strengthen your relationship with clients and foster trust.
Example:Through client feedback, I was able to confirm that back-in-stock emails improved the customer experience at my store. After receiving a back-in-stock email, one of my customers reached out to express their appreciation for the quick update, sharing how happy they were with the notification. This interaction not only led to a sale but also to a devoted consumer who will probably shop at my store again in the future.
3. Boosting Customer Retention
Shopify email alerts for when a product is back in stock also help foster customer loyalty, prolonging your Shopify store's customer retention rate. By notifying customers about product availability, you demonstrate you continually value their business and are committed to meeting their needs. This helps reinforce the customer's decision to shop at your store.
Example:By checking customer comments, I found out that one regular customer was delighted with their back-in-stock notification because it allowed them to shop again at my store as they had previously done. This experience not only resulted in a sale but also a loyal customer who will likely keep purchasing my store's products.
4. Attracting New Customers
Back-in-stock emails can help bring in new clients by enhancing your brand's reputation and dependability. Prospective clients are more likely to trust your store and consider making a purchase when they see you're actively refilling popular items, so this approach can enhance sales leads and customer acquisition. What's more, this will give a favorable first impression of your store just as much as an appealing visual design.
Example:Reviewing sales data after sending out back-in-stock emails for a popular product helped me notice a surge of new customers purchasing that product. This meant not only that my store got new sales but also potential long-term customers.
5. Growing Your Email List
Finally, back-in-stock emails can help you expand your email database and gather additional client information to improve your store's future performance. When signing up for a back-in-stock notification, clients provide you with their email addresses, which you can leverage for upcoming marketing campaigns. This will also help you identify the products with high customer demand and use that information to better manage your inventory.
Example:After sending back-in-stock emails, I was able to determine exactly which product was most well-liked and focus my efforts on managing it. In addition to a rise in revenue, this strategy brought me new email sign-ups from customers who were drawn to the product, growing my email list for future marketing campaigns.
» Here's how to craft and automatically send out-of-stock emails
Streamline Your Stock Management With Egnition
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By informing your customers that a previously out-of-stock product is now available, back-in-stock emails can strengthen your store's growth strategy by boosting customer satisfaction, growing your email list, increasing sales, and improving customer retention.
To enhance your store's back-in-stock notification strategy, it's critical to streamline your stock management procedure first, which you can do with Egnition's Out-of-Stock Police. This app will help automate your stock management and provide real-time data insights for better decision-making, ensuring your inventory is constantly updated and your store is on the right growth track.
Out-of-stockFastest Way to Set up Pre-orders on Shopify in 2022A pre-order allows you to take a deposit for an out-of-stock or not yet available product and charge the remainder of the funds once the product is available. Therefore, communication with the customer is essential, because they have paid for a product in advance. Utilizing a back in stock notification form or setting up your email to automatically contact customers about out of stock items are effective ways to keep communication open.
By marking items as out of stock and allowing customers to pre-order, you ensure your customers receive their products as soon as possible and provide yourself with a forecast of your products' potential demand.
How to Enable Pre-Orders on Shopify
Pre-orders can become complicated, because different pre-order setups work for different users and their products. The simplest way to set up pre-orders on Shopify is by installing a pre-order app from the Shopify app store.
Shopify suggests the following:
PreProductPre-Order ManagerPurple Dot
Types of Pre-Orders
There are three main types of pre-orders you can choose from. These include:
Pay Now
Pay now is the most common type of pre-order. This will take your customer through the normal checkout process where you'll receive the pre-order funds immediately. This can be used to cover wholesale costs, but customer expectations and timely delivery are things to keep in mind.Pay Later
Pay later, as the name suggests, doesn't include any transfer of funds until the product is available. Pay later pre-orders can be used to indicate a product's potential demand, as well as for marketing purposes such as contact gathering. Crowdfunding
Crowdfunding is usually done through third-party apps such as Crowdfunder. This pre-order is similar to that of "pay now" in the way that funds are received immediately. This type of pre-order is ideal for startups who need to raise capital, but will require more traffic as customers will be reluctant to pay for something with no promised arrival date.
How to Authorize Pre-Order Payments
There are certain tips for selling out of stock items you can keep in mind. Signing off on pre-order payments before your customer has been notified that the product is unavailable can lead to inaccurate sales metrics.
Similarly, recording a sale once the product has been dispatched but not yet fully paid for could cause issues if the customer no longer has the remaining funds available.
To avoid this you can turn on manual payment authorization with the following steps:
From your Shopify Admin Dashboard, navigate to Settings > Payments.In the Payment Authorization section, select the Manually capture payment for orders box.
Shopify's authorization period is 7 days. If you wish to prolong this period, a third-party payment method will need to be used.
How to Add a Pre-Order Page Template on Shopify
Follow the below steps to add a pre-order page temple:
Log in to Shopify Admin Dashboard.Navigate to Themes > Action> Edit Code.Select Add a new template in the template section.Select product from the 'Create a new template for' box, name it pre-order, and select 'Create template'.Locate the code {% section 'product-template' %} and replace it with {% section 'product-pre-order-template' %}.To change the button text, replace addToCart: {{ 'products.product.add_to_cart' | t | json }}, with addToCart: {{ 'Pre-order' | json }}, Select Save.
Next, you'll need to add a corresponding section directory with the following steps:
Navigate to Sections > Add new section.Under the Create a new section called box, add 'product-pre-order-template' and select Create section.Delete all the code and replace it with all the code produced after completing step 7 above.In the new product-pre-order-template.liquid file you'll need to replace
<span data-add-to-cart-text>
{% unless current_variant.available %}
{{ 'products.product.sold_out' | t }}
{% else %}
{{ 'products.product.add_to_cart' | t }}
{% endunless %}
</span>
And replace it with
<span data-add-to-cart-text>
{{ 'Pre-order' | json | remove: '"' }}
</span>Select Save.
Lastly, you'll need to assign the new pre-order template to a product.
To do this:
Navigate from Shopify Admin > Products > All Products.Select the product that you wish to make available for pre-order.Locate the Themes templates section in the sidebar.From the drop-down menu, change product to product.pre-order.Click Save.
Conclusion
Setting up pre-orders on Shopify can be easily done with a third-party app and some simple code changes.
Giving your customers the option of pre-ordering can help boost sales, provide a financial forecast, help with future marketing, and aid in determining the demand for a product.