What is Inventory Reporting? 9 Types of Inventory Reports

Inventory reports help you keep products in stock, cash flow healthy, and customers happy. Here are nine reports to create today.

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 are losing money. 

In the United States, retailers hold $1.35 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.

To improve inventory management in your store, this guide explains the different types of inventory reports you can gather and how to create accurate reports. 

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 show details including how much product you can sell now, inventory in transit, and what inventory you need. 

Importance of inventory reporting

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 

Categorizing inventory

Two popular ways retailers categorize inventory is by 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. 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’ pockets—it also improves customer satisfaction and loyalty. 

Imagine going into a store with a particular item in mind, only to find out 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 pick up 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 would allow you to sell that item anyway and fulfill stock from another retail location based on your fulfillment strategy or surface inventory available at other retail locations, allow customers to pick up at another location. 

Types of inventory reporting

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

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. 

Pro tip: 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.

Stocky, the free inventory management app for Shopify, shows your stock on hand report.

Shrinkage report

Inventory shrinkage is a term used to describe what has happened when your store has fewer items in stock than recorded. The National Retail Security Survey found that shrinkage accounts for 1.6% of a retailer’s bottom line, costing the industry $112.1 billion yearly. Shrink 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:

• Best sellers
• 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. 

Find each product’s sell-through rate in Shopify analytics.

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 being in your inventory, they have value. Your inventory valuation report reflects the total cost of inventory and its potential profits per sale. 

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, 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 with multiple retail locations, work with third-party logistics 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. It's in the middle of the road: not the most important, but still worth having on-hand. 
• C grade: Worst performing inventory. These products account for the remaining 5% of your revenue. It’s slow-moving and potentially obsolete. Deprioritize these products and focus on selling them, even if it’s at a heavy discount, to make room for more A players.

Shopify creates an ABC analysis report to spotlight valuable inventory.

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

How to create an inventory report

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). 

“When selling numerous small items, it's difficult to keep track of what's available and how much of it,” says Justyna Sylwia, owner, Isle Wilde. “Having a system that does inventory for you allows you to focus on the more creative parts of running a business.”

2. Build 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 timeframe. 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) 2023 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

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 seems hard at first. But there are many stockroom layout examples you can experiment with in your store. Retailers will also make tweaks like keeping their best sellers 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? Set 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.

Manage inventory reporting at your store

Inventory reports are essential for the success of any retail or ecommerce store. Low-volume small stores can get away with manual inventory reporting. To maintain accuracy in reports, they can monitor stock levels and update them often enough in an Excel spreadsheet. 

However, you'll need a POS system that can grow with your business if you want to scale. POS inventory reports provide an overview of inventory performance, location, shrinkage, valuation, and more. You'll be able to easily determine and automate what products to order, what promotions to run, and how to keep your company profitable (and your customers happy).

Shopify POS comes with tools to help you control and manage your inventory across multiple store locations, your online store, and warehouse. Forecast demand, set low-stock alerts, create purchase orders, know which items are selling or sitting on shelves, count inventory, and more.

Inventory reporting FAQ

What is meant by an inventory report?

An inventory report is a summary of the amount of stock you have at a given time. It can be electronic or physical and includes details such as how much product is available for sale, inventory for delivery, and inventory needed.

How should inventory be reported?

Inventory reporting typically includes:

• Inventory on hand
• Shrinkage report
• Top sales by product
• ABC analysis
• Stock reorders
• Cost of goods sold
• Inventory valuation
• Inventory levels by location

What to include in an inventory report?

The contents of a stock report depend on the type of report being created. Generally, it includes metrics like product name, price, location, quantity, inventory status, sell-through rate, sales, and duration (how long you’ve had the stock).

What is the best way to record inventory?

Automated inventory management systems are the best way to record inventory. These systems automatically update inventory levels based on incoming and outgoing products, providing an accurate picture of stock levels.

What are the 4 main steps in inventory management?

The four main steps in inventory management are:

• Inventory planning: Setting goals, researching the market, and analyzing current inventory levels.
• Inventory procurement: Purchasing, storing, and controlling inventory.
• Inventory control: Managing inventory levels to ensure the right amount is available for sale.
• Inventory reporting: Tracking and reporting on inventory levels, including sales and usage data.