How to calculate reorder point for an online store

How do you calculate it, step by step?

Multiply average daily sales by lead time in days, then add safety stock. You need three inputs per product, and each one comes from your own records.

1. Find average daily sales. Take units sold over a recent stretch and divide by the number of days the item was in stock. Days with no stock sell nothing, so leaving them in understates demand.
2. Find the lead time in days. Count from the day you place the order to the day the units are counted into stock, not to the day the supplier ships. Your own receiving time belongs in the number.
3. Multiply them. Average daily sales times lead time is the lead time demand.
4. Add safety stock. The next section gives a rule that needs no statistics.
5. Write the total down as the reorder point. When the count reaches it, order.

A reorder point is the count at which you place an order. It is not the quantity you order, and the two are set separately. The order quantity depends on minimum order sizes, cash and shelf space.

What do worked examples look like?

Each one multiplies daily sales by lead time, then adds safety stock, as the table below shows. The three examples use invented numbers, so treat them as examples and not as benchmarks for any product. The seasonal example has two rows because the same product needs a different number in a busy month. Safety stock here is average daily sales times safety days, where safety days is the longest delay you have seen from your supplier.

Examples with invented numbers, not data from any store. Formula as in the Shopify reorder point guide, checked 2026-11-05.

Read example A first. Six units a day for seven days is 42 units of demand, and three safety days add 18, so the reorder point is 60. Order when the count reaches 60 and the units still on the shelf cover the wait plus a three day delay.

The seasonal rows show why one number all year is a mistake. In an ordinary week the gift sets sell 3 a day and the reorder point is 54. In holiday weeks they sell 12 a day, so the same fourteen day wait eats 168 units and the reorder point is 216. A seller who keeps 54 through December runs out in four to five days of busy selling. Raise the number before the season starts, then lower it after.

Example C is the long lead time case. At 2 a day and 45 days, the lead time demand is 90 units. This supplier has run 15 days late once, which gives 30 units of safety stock and a reorder point of 120. A long wait magnifies any error in your sales rate: if the item really sells 3 a day, lead time demand is 135 units, which is 45 more than the table shows. A missed reorder also costs more here, because the next delivery is at least 45 days away. Check the number against your cash, because 120 units on the shelf is 60 days of sales.

How do you set safety stock without years of data?

Use safety days: the longest delay you have seen from the supplier, with a floor of two or three days, multiplied by average daily sales. You need your supplier's order history, which is a list of promised dates against arrival dates, and a few weeks of sales. You do not need a standard deviation.

1. List your last orders from this supplier with the promised and actual arrival days. Take the worst gap. That is the delay.
2. If you have fewer than three orders, use three days for a local supplier and a week or more for an overseas one. These are starting guesses, so mark them as guesses.
3. Multiply the delay by average daily sales. That is safety stock.
4. For a new product with no sales, borrow the daily rate of a similar item and recalculate after two weeks of real sales.

Cross-check the result. ShipBob says that for most businesses, about half of what you use during the reorder lead time is a sufficient amount of safety stock (ShipBob safety stock guide, checked 2026-11-05). In example A, half of 42 is 21 against the 18 above. In example C, half of 90 is 45 against 30. Both sit below that rule of thumb, C by more, so you may want more cover if a stockout would be costly.

The other common formula is the worst case method: maximum daily sales times maximum lead time, minus the averages. It is simple, and it works for a steady item with a short wait. It can swell the number for a seasonal item or a flash sale, because one very good day sets the maximum. Use it as a ceiling to compare against, and keep safety days as your default.

How often should you revise a reorder point?

Revise it when something changes, and check it on a schedule even if nothing seems to have. Shopify advises recalculating whenever major changes occur and names no interval (Shopify reorder point guide, checked 2026-11-05). The schedule below is our own practice, and no source sets it.

• Once a month for your fastest sellers, using the last four weeks of in-stock days.
• Before each season and again when it ends, as in example B.
• After a late delivery, because the worst delay on record just grew.
• When you change supplier, price, listing or ad spend, since each moves daily sales or lead time.
• Each quarter for slow items, which rarely move.

Why does the reorder point differ for each warehouse?

Each warehouse sells at its own rate, and an order you place for one site does not help another until the units arrive there. So the right number is the one for that site's own sales and its own lead time. The table below splits example A across two warehouses, using the same 7 day lead time and 3 safety days.

Invented numbers for illustration. The two reorder points add up to 60, the same as the single number for the whole product in example A.

If you hold one number for both sites, it fits one of them badly. At 40, the West warehouse alerts when it holds 20 days of its own sales, which is early. At 20, the East warehouse alerts at 5 days of its own sales, which is later than its 7 day wait. Lead time can also differ, for example when one site receives from a closer supplier.

What does GoatLabels do with a reorder point?

On the Pro plan, GoatLabels stores one reorder point per product and tests it against each warehouse count. When a warehouse count reaches the number, you get an alert by email, in the dashboard or on Telegram once a chat is linked, once for each dip. Pro is $40 a month, checked 2026-11-05; see plans and pricing. The Operations hub is not on Free.