Inventory architecture options on Shopify Plus

All-native stack for simple to mid-complex operations

• Components:

  • Shopify locations and stock tracking.

  • Shipping profiles and simple routing.

  • Shopify Flow for automation and alerts.

  • Optional light apps for bundles or preorders.

• Pros:

  • Low TCO, fast to deploy, minimal integration risk.

• Cons:

  • Limited PO/receiving, no lot/serial, constrained picking/packing logic.

Native plus specialized apps for targeted gaps

• Components:

  • Apps for bundles/BOMs, scanning, PO/receiving, backorder/preorder, and forecasting.

  • Flow + webhooks to orchestrate handoffs.

• Pros:

  • Incremental capability with low overhead; keep Shopify as sellable availability layer.

• Cons:

  • Multiple apps to reconcile; ensure apps respect multi-location and don’t conflict.

ERP/WMS-centered architecture and data ownership

• Components:

  • ERP as financial and inventory ledger; WMS for warehouse execution.

  • Shopify as sales/channel layer; ERP/WMS publishes available-to-sell to Shopify.

• Pros:

  • Strong compliance, POs, landed cost, lot/serial, advanced allocation.

• Cons:

  • Higher cost and complexity; longer implementation; requires governance.

3PL, dropship, and marketplace integration patterns

• 3PL:

  • Use fulfillment services integration; sync inventory via webhooks/APIs.

  • Maintain virtual buffers in Shopify to absorb sync latency.

• Dropship:

  • Route via tags or rules; reserve stock on vendor confirmation; confirm fulfillments via API.

• Marketplaces:

  • Feed channel-specific ATP; apply channel reservations to avoid oversell.

Choosing a source of truth for inventory

• Shopify as source of truth when:

  • Single or few warehouses, minimal compliance needs.

  • You prioritize speed of change and simplicity.

• ERP/WMS as source of truth when:

  • You need perpetual inventory, lot/serial, QA, multi-facility optimization.

• Hybrid:

  • ERP owns physical stock; Shopify owns sellable ATP by channel. ERP publishes ATP to Shopify with channel holds and buffers.

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Multi-location and order routing at scale

Modeling locations: warehouses, stores, 3PLs, virtual buffers

• Physical locations: DCs, stores, 3PL nodes; each with its own inventory levels.

• Virtual locations:

  • Safety buffer: a hidden location holding un-sellable reserve.

  • Channel holds: separate location for wholesale or marketplace ATP.

  • In-transit: track stock moving between sites to avoid double-selling.

Shipping profiles, delivery promises, and SLAs

• Define profiles by product class and region to control which locations can fulfill which orders.

• Tie delivery promises to location capabilities and carrier SLAs; avoid promising from out-of-region nodes.

• For Plus, adjust checkout and shipping logic using Functions and tags to enforce SLA-driven routing.

Channel- and region-based allocation rules

• Prioritize nearest in-stock location that meets SLA and cost thresholds.

• Use buffers for high-velocity SKUs and flash sales.

• Reserve inventory per channel:

  • Allocate fixed quantities per channel.

  • Or compute ATP per channel = physical on-hand − safety stock − cross-channel reservations.

Split shipments, partial fulfillments, and exceptions

• Allow splits when it improves promise dates or reduces cost.

• Define exception playbooks:

  • OOS at pick: auto-reroute to secondary node; notify customer if promise changes.

  • Damaged at pick: decrement stock, create RTV, reroute remaining.

Returns, RTV, and return-to-stock workflows

• Standardize disposition codes:

  • A (sellable), B (refurb), Q (quarantine), D (discard), RTV (vendor).

• Automate return-to-stock:

  • On check-in, adjust location-level quantity and trigger QA if needed.

• RTV:

  • Track vendor authorization, quantities, and credits; decrement stock when shipped back.

Catalog complexity: variants, bundles, and kits

High-SKU catalogs and variant considerations

• Keep variant count per product within platform limits; split into families if needed.

• Normalize attributes (size, color, material) to avoid duplicate SKUs and search issues.

• Use unique, immutable SKUs; avoid encoding logic that will change over time.

Kitting and bundling strategies on Shopify

• Static bundles:

  • Pre-assembled SKU; inventory tracked as a single item.

• Dynamic bundles:

  • Availability equals the minimum available component across locations.

  • Use an app or external service to manage component decrements on order.

• Pack sizes/multipacks:

  • Treat as separate SKUs; manage BOM to decrement components proportionally.

BOMs and component-level availability

• Availability rule for a bundle:

  • Bundle ATP per location = min(component ATP per location ÷ required qty).

• Ensure BOM changes are versioned; update forecasting and cost rolls when components change.

Subscriptions, preorders, and availability logic

• Subscriptions:

  • Reserve future cycles by forecasting consumption and setting channel holds.

• Preorders:

  • Enable continue selling with caps; message dates via metafields.

  • Tie to inbound POs and auto-reduce commitments on delays.

• Backorders:

  • Allow controlled oversell with limits; auto-route earliest-arriving inventory.

Inbound, replenishment, and forecasting

Reorder points and safety stock formulas

• Reorder point (ROP):

  • ROP = (average daily demand × lead time in days) + safety stock.

• Safety stock (service-level approach):

  • Safety stock ≈ Z × σd × √LT

  • Where Z = service factor (e.g., 1.64 for ~95%), σd = demand std. dev., LT = lead time in days.

• Example:

  • Avg daily demand = 20, LT = 15 days, σd = 8, Z = 1.64

  • Safety stock ≈ 1.64 × 8 × √15 ≈ 1.64 × 8 × 3.87 ≈ 50.7

  • ROP ≈ (20 × 15) + 51 ≈ 351 units

Purchase order workflows and approvals

• Create PO with vendor, items, expected dates, and price/terms.

• Approvals:

  • Auto-approve below budget thresholds; require dual approval for large buys.

• Receiving:

  • Use ASNs; scan to receive against PO; over/short/damage recorded with reasons.

Vendor lead times, constraints, and SLAs

• Track historical lead time and variance per vendor/SKU.

• Penalize unreliable vendors with higher safety stock and smaller POs.

• Capture SLAs in vendor records: on-time %, fill rate, defect rate.

Inter-warehouse transfers and distribution planning

• Deploy push and pull logic:

  • Push initial allocations on inbound; pull replenishment based on min/max.

• Transfer workflow:

  • Create transfer, pick/pack/ship, in-transit tracking, receive and reconcile.

• Use regional demand weighting to stage inventory near customers.

Seasonality and promotion-driven demand

• Adjust forecasts using seasonal indices and promo uplifts.

• For drops and flash sales:

  • Increase buffers, tighten promises, pre-position stock, and rate-limit backorders.

Controls for regulated or complex products

Lot, serial, and expiry handling options

• Not native in Shopify; manage via ERP/WMS or specialized apps.

• Workarounds:

  • Encode lot as a secondary identifier in a WMS; fulfill with lot selection rules.

  • For small volumes, represent lots as child variants (not scalable).

QA holds, quarantine, and disposition codes

• On receiving, assign QA status:

  • Pending inspection → Quarantine → Approved to sell or RTV.

• Maintain disposition codes and prevent sell-through from non-sellable bins.

Cycle counts, barcodes, and scanning best practices

• Prioritize ABC classes for cycle count frequency.

• Use GS1-compliant barcodes; store in barcode fields and print labels by location.

• Enforce scan-to-pick and scan-to-pack to reduce mis-picks and shrink.

Traceability and recall preparedness

• Keep lot-to-order linkage in ERP/WMS.

• Maintain recall playbooks:

  • Identify affected orders, stop-sell, notify customers, and track returns/credits.

B2B and omnichannel inventory on Plus

POS allocation, store pickup, and ship-from-store

• Treat stores as locations with distinct ATP.

• Pickup:

  • Enforce store-level ATP and cutoff times; auto-cancel if not picked in SLA.

• Ship-from-store:

  • Route orders to stores with surplus; set pack/ship windows to meet promises.

B2B price lists, MOQs, and account-based allocation

• Use B2B on Shopify for company accounts, price lists, and payment terms.

• Control inventory for key accounts:

  • Reserve quantities per account in a virtual location.

  • Apply MOQs and case-pack rules via Flow and Functions.

Marketplace and social channel reservations

• Publish channel-specific ATP with buffers.

• For high-latency channels, reduce published ATP or update more frequently to prevent oversell.

Wholesale and DTC inventory coexistence

• Separate ATP per channel using virtual locations and rules.

• During peak DTC periods, temporarily tighten wholesale allocation or lead times.

Automation and extensibility

Shopify Flow playbooks for low-stock and back-in-stock

• Low stock alert:

  • Trigger: Inventory quantity changed below threshold.

  • Actions: Notify ops, create PO task, update metafield for storefront badge.

• Back-in-stock:

  • Trigger: Inventory rises above zero.

  • Actions: Notify subscribers, re-enable ads, remove OOS badges.

Webhooks and Admin/Inventory APIs for real-time sync

• Key webhooks:

  • inventory_levels/update, products/update, orders/create, fulfillments/create, returns/create.

• API objects to use:

  • InventoryItem, InventoryLevel, Location, FulfillmentOrder, Product/Variant.

• Pattern:

  • Consume webhooks → enqueue → process with retries → update ERP/WMS and Shopify via GraphQL for efficiency.

Analytics and ShopifyQL alerts for exceptions

• Build notebooks for:

  • OOS rate by SKU/channel, negative ATP, unfulfillable orders, and aging inventory.

• Alert on:

  • Promise breaches, pick failures, late POs, and cycle count variances.

Error handling, retries, and idempotency

• Use message queues with exponential backoff for 429 and 5xx responses.

• Make mutations idempotent:

  • Include unique operation keys; store webhook delivery IDs to avoid replays.

• Safeguards:

  • Cap maximum adjustment per event; reconcile nightly with authoritative counts.

Scale, performance, and governance

SKU, location, and order volume scale considerations

• Plan for high-SKU catalogs:

  • Batch updates via bulk operations; avoid per-variant chatty writes.

• Locations:

  • Keep under practical limits; archive stale locations; use virtual locations sparingly.

• Orders:

  • Use asynchronous fulfillment creation; offload heavy logic to workers.

API rate limits and queueing strategies

• Prefer GraphQL for fewer round trips and bulk operations for mass updates.

• Throttle by token; shard workloads; implement dead-letter queues for poison messages.

Permissions, approvals, and audit trails

• Restrict inventory adjustments to specific roles; require notes and reasons.

• Approvals:

  • Dual control for large POs, transfers, and channel allocation changes.

• Audit:

  • Export inventory history and adjustment logs; reconcile with ERP nightly.

Data quality, reconciliation, and monitoring

• Daily checks:

  • Negative inventory, mismatched SKUs, unassigned locations, orphaned variants.

• Weekly:

  • Cycle count variance analysis, returns processing lag, aging stock review.

• Monthly:

  • ATP vs physical reconciliation; COGS alignment with finance.

Implementation roadmap and KPIs

Migration and cutover checklist

• Discovery:

  • Catalog/SKU normalization, location modeling, channel rules, compliance needs.

• Build:

  • Dev store sandbox; Flow automations; webhook integrations; mapping for SKUs, locations, and BOMs.

• Data load:

  • Products/variants, costs, barcodes, initial counts by location.

• Parallel run:

  • Dual-run with legacy; compare ATP and fulfillments; fix deltas.

• Cutover:

  • Freeze window, delta import, DNS/app toggles, rollback plan.

• Post-go-live:

  • Hypercare, daily reconciliation, performance tuning.

Sandboxing, UAT, and go-live plan

• Sandbox:

  • Mirror locations and shipping profiles; use test orders and returns.

• UAT:

  • Edge cases: split shipments, backorders, bundles, partial receipts, returns.

• Go-live:

  • Staggered channel activation; enable most constrained channels last.

Change management and training

• Train on scanning, adjustments, transfers, and exception handling.

• Publish SOPs and quick-reference guides; simulate incidents monthly.

KPI dashboard: fill rate, turns, aging, stockouts

• Core KPIs:

  • Fill rate (%) = fulfilled lines ÷ total lines.

  • Stock turns = COGS ÷ average inventory.

  • Days on hand = average inventory ÷ average daily COGS.

  • OOS rate (%) = OOS sessions or unfillable lines ÷ total.

  • Forecast accuracy (MAPE) and PO on-time rate.

ROI model and continuous improvement cadence

• Value drivers:

  • Higher fill rate, reduced stockouts, lower carrying cost, fewer expedites, labor savings from automation.

• Cadence:

  • Monthly S&OP review; quarterly network and buffer tuning; annual system audit.

FAQs

What are the key differences in inventory management between Shopify and Shopify Plus?

• Plus offers higher API throughput, B2B features, Shopify Functions, and advanced analytics tools. Core inventory entities and features remain the same. Plus enables scale and extensibility rather than adding lot/serial or WMS-level functions.

Can Shopify Plus handle lot or serial tracking natively, and what are the workarounds?

• No native lot/serial. Use an ERP/WMS or specialized app to assign and choose lots at pick/pack, store lot-to-order links, and control expiry. For very small volumes, lots can be modeled as variants, but this does not scale.

How do I allocate inventory across online, POS, and marketplace channels?

• Use location-based ATP and virtual locations for channel holds. Publish channel-specific ATP with buffers. Apply Flow rules to protect store ATP for pickup and set marketplace reserves to offset sync latency.

What practical limits exist for SKUs, locations, and order volume on Shopify Plus?

• Shopify supports large catalogs and many locations, but practical limits apply. Keep variants per product within platform caps, limit active locations to what you can govern, and use bulk APIs, queues, and GraphQL to handle high order volumes reliably.

Should Shopify or my ERP be the source of truth for inventory and why?

• Choose Shopify for simplicity and speed in lighter operations. Choose ERP/WMS for compliance, lot/serial, complex POs, and finance-grade costing. Many brands run hybrid: ERP owns physical stock; Shopify holds sellable ATP by channel.

How can I automate low-stock, back-in-stock, and purchase order workflows?

• Use Flow to trigger alerts and tasks on inventory thresholds and restocks. Pair with webhooks and APIs to create POs, update storefront messaging, notify subscribers, and adjust channel ATP automatically.

How do bundles and kits affect availability and forecasting on Shopify Plus?

• For dynamic bundles, availability equals the minimum component ATP divided by required quantities. Forecasting must roll demand down to components using the BOM. Use an app or ERP to manage component decrements and accurate forecasting.

What’s the best way to integrate a 3PL or WMS with Shopify Plus?

• Connect via fulfillment services, webhooks, and GraphQL APIs. The 3PL/WMS updates inventory levels by location, acknowledges and creates fulfillments, and reports tracking. Add virtual buffers to absorb sync latency and implement retries and idempotency in your integration.