How Shopify merchants use Days of Inventory (DOH)
DOH translates stock levels into time, helping you decide if you are close to stockouts or sitting on months of capital.
Formula
DOH = (Average Inventory / COGS) × 365
Reveals how many days of sales current inventory supports; lower DOH indicates faster cycling.
What matters in practice
- Spots SKUs with excessive coverage compared to lead times.
- Target DOH depends on category and risk tolerance.
- Monthly DOH (using 30 days) is useful for identifying short-term trends.
Why it matters
Common merchant pain points
- • Struggling to see how stock levels translate into time.
- • Distorted planning from using revenue instead of COGS.
Native Shopify limitations
- • Shopify reports do not emphasize time-based coverage in replenishment.
- • No native flagging of 'cash-trap' SKUs with high DOH.
Benchmarks and reference points
Typical ecommerce targets range from 30 to 90 days.
DOH above 120 days is often flagged as problematic for capital efficiency.
How to apply this in practice
Step 1
Find Daily COGS
Divide your total COGS from the last 30 days by 30.
Step 2
Audit Current Value
Find the total cost value of your current on-hand inventory.
Step 3
Determine Coverage
Divide current value by daily COGS to see exactly how many days of 'runway' you have left.
Examples
Pre-Holiday Stocking
A merchant intentionally increases DOH to 120 days in October to ensure they don't sell out during BFCM.
Cash Flow Crisis
To free up cash, a brand reduces DOH from 90 to 45 by running a temporary promotion on slow-movers.
Frequently asked questions
Related resources
Related guides
- Inventory Turnover Improvement Shopify
- Dead Stock Reduction for Shopify Brands: Turn Shelf Sitters into Cash
Understand what dead stock really costs your Shopify brand - in carrying costs, cash lockup, and margin erosion - and how to prevent it using better forecasting, OTB, and reporting. Includes identification methods, liquidation strategies, and a prevention checklist.
Related calculators
Related glossary terms
- Reorder Point (ROP)
Reorder point is the inventory level at which a new purchase order should be placed so that replenishment arrives before existing stock is depleted.
- Safety Stock
Safety stock is the extra inventory held above expected demand to reduce the risk of stockouts caused by variability in demand or lead times.
- Inventory Turnover
Inventory turnover measures how many times a company sells and replaces its inventory over a given period, typically a year.