E-commerce Safety Stock

Safety stock is extra inventory kept on hand to prevent stockouts during unexpected demand spikes or delays in the supply chain. It acts as a buffer against uncertainties like fluctuating customer demand or supply chain disruptions. The goal of safety stock is to ensure that an ecommerce business can continue fulfilling customer orders even during unforeseen circumstances.

For ecommerce businesses, calculating the right level of safety stock is a crucial part of ecommerce inventory management. Too little safety stock could lead to lost sales and customer dissatisfaction, while too much could result in overstocking, leading to increased storage costs and potential wastage. A good safety stock strategy involves balancing the cost of holding extra inventory with the risk of running out of stock. Effective inventory management, demand forecasting, and supplier relationships all play key roles in determining the optimal level of safety stock for an ecommerce business.

Read our in-depth article about ecommerce satety stock.