Reorder point formula for small online shops (with safety stock examples)

Updated October 27, 2026 · SellerSheetKit Guides

Running out of a best seller is one of the most expensive mistakes a small shop can make. You lose the sales you would have made while waiting for stock, listings can lose momentum, and buyers who wanted the item today go somewhere else. Over-ordering is a problem too: cash ends up sitting on a shelf instead of in your account. A reorder point is the simple number that sits between those two problems. It tells you, for each product or material, exactly how low stock can get before you place the next order.

This guide covers the standard formula, two easy ways to set safety stock, worked examples for a maker and a reseller, how often to count, and the mistakes that make reorder points unreliable.

The reorder point formula

Reorder point = Average daily usage × Lead time (days) + Safety stock

Each piece means something specific:

Average daily usage is how many units you sell (or, for materials, consume) per day. Take a recent period that reflects normal demand — for example, units sold in the last 30 days divided by 30.
Lead time is the number of days from the moment you place an order to the moment that stock is counted, shelved, and ready to sell. That includes supplier processing or production time, transit, and any receiving time — not just the shipping estimate.
Safety stock is a buffer that covers you when demand runs higher than average or the delivery runs late.

The first part (usage × lead time) is the stock you expect to sell while you wait for the new order. Safety stock is what keeps you selling if the wait or the demand is worse than expected. When your available stock falls to the reorder point, you order.

Two simple ways to set safety stock

Large companies use statistical models for this. A small shop rarely needs them. Either of these methods is a reasonable start.

Method 1: buffer days

Safety stock = Average daily usage × Buffer days

Pick a number of buffer days based on your own history: how late has this supplier actually been? If deliveries that should take 12 days have sometimes taken 17, five buffer days is a sensible starting point. This method is easy to explain and easy to adjust.

Method 2: max minus average

Safety stock = (Max daily usage × Max lead time) − (Average daily usage × Average lead time)

This version plans for a bad day and a slow delivery happening at the same time. It is more conservative, so it produces bigger buffers. It suits items where a stockout is costly — a hero product, or a component that stops production of several products — and is often overkill for slow, low-value items.

Worked example 1: a candle maker

A maker sells soy candles in 8 oz jars. Jars come from one supplier, and running out of jars stops production entirely.

Candles sold in the last 30 days: 90, so average usage is 3 jars per day.
Typical lead time for jars: 12 days from order to arrival.
Slowest delivery in the past year: 17 days. Busiest single day: 6 candles.

Step	Method 1 (buffer days)	Method 2 (max − average)
Lead-time demand	3 × 12 = 36	3 × 12 = 36
Safety stock	3 × 5 = 15	(6 × 17) − 36 = 66
Reorder point	51 jars	102 jars

Method 2 roughly doubles the buffer. If jars are cheap and easy to store, the maker might accept that in exchange for never halting production. If storage space is tight, Method 1 is probably enough. The same calculation applies to every other material — wax, wicks, labels — each with its own usage rate and lead time.

Worked example 2: a reseller importing stock

A reseller sells phone stands sourced from an overseas factory.

Units sold in the last 30 days: 420, so average usage is 14 per day.
Lead time: about 25 days of production plus 10 days of freight and receiving = 35 days.
Buffer: 10 days, because freight has slipped before.

Reorder point = 14 × 35 + 14 × 10 = 490 + 140 = 630 units.

With 900 units available today, the reseller has about (900 − 630) ÷ 14 ≈ 19 days before the order needs to go in. That "days until reorder" number is often more useful day to day than the reorder point itself, because it tells you when to start getting quotes.

If the stock ships into a marketplace fulfillment center rather than your own shelf, add the time it takes for inventory to be received and available to sell there. Use what you have seen on recent shipments.

The reorder point tells you when to order, not how much. A common simple approach is to order enough to cover a set number of days — say 60 days × 14 = 840 units — and then adjust for supplier minimums, price breaks, cash, and storage.

Use available stock, not just what is on the shelf

Compare your reorder point against inventory position, not raw shelf count:

Inventory position = On hand + On order − Committed to unshipped orders

If you forget stock that is already on order, you will double-order. If you forget units already promised to customers, you will reorder too late. Units that are damaged or set aside for returns inspection should not count as available either.

How often to count inventory

A reorder point only works if your stock numbers are right. Most small shops do well with a tiered routine:

Fast movers and critical materials: quick count weekly, or whenever the system says you are close to the reorder point.
Everything else: a monthly count, or rotate through sections so each item is counted at least once a month (often called cycle counting).
Full physical count: at least once a year at year end. You need an ending inventory figure for the COGS formula anyway.

When a count does not match your records, fix the record and note why. Repeated gaps on the same item usually point to a process problem — unrecorded samples, breakage, or orders shipped without being logged.

Review the reorder points themselves monthly, and before any known busy period. Usage and lead times both drift.

Common reorder point mistakes

Using shipping time as lead time. Supplier processing, production, customs, and your own receiving time all count.
Calculating usage over a period when you were out of stock. Days with zero stock show zero sales, which understates real demand. Leave those days out of the average.
Setting it once and never updating. A reorder point based on last spring's sales will be wrong in December.
Ignoring seasonality. If a product sells twice as fast in Q4, raise its reorder point ahead of Q4, not after you run out.
One number across multiple channels. If you sell the same stock on Etsy, Shopify, and Amazon, add the usage from every channel together.
Forgetting materials and packaging. A maker can have plenty of finished-goods inputs and still stop shipping because the mailers ran out.
Treating safety stock as spare stock. If you dip into safety stock regularly, your average usage or lead time is wrong — recalculate.

Putting it together

For each item, record average daily usage, lead time, buffer days, and the resulting reorder point. Update usage monthly, compare inventory position to the reorder point every time you count, and order when you hit it. Combined with accurate unit costs and a clear view of returns that come back into stock, it turns reordering from guesswork into a quick weekly check.

More seller guides

SellerSheetKit is not affiliated with Etsy, Shopify, or Amazon. Fee figures are summarized from official sources on the date above and can change; verify against your seller account. Educational content only — not tax, legal, or accounting advice.