Reorder Point

What Is a Reorder Point?

A reorder point, often shortened to ROP, is a trigger. When the quantity on hand for a SKU drops to that number, it is time to order more. Setting it correctly means new stock lands just as the old stock gets low, without running out and without overbuying.

Each SKU usually has its own reorder point because sales speed and supplier lead times differ across products.

How It Works

The standard formula is average daily sales multiplied by lead time in days, plus safety stock. Lead time should include the full journey, from placing the order through production, shipping and receiving at the warehouse.

For example, a skincare brand sells 20 units of a cleanser per day. Its manufacturer needs 25 days to produce and deliver, and the brand keeps 200 units of safety stock. The reorder point is 20 times 25, which is 500, plus 200, for a total of 700 units. When stock falls to 700, the brand places the next order.

Reorder points should be reviewed regularly, especially when sales trends shift, a new channel launches or supplier lead times change.

• Reorder point = daily sales x lead time + safety stock.
• Include receiving time in the lead time.
• Recalculate when demand or lead times change.

Why It Matters for Ecommerce Brands

A reorder point turns inventory planning into a routine rather than a guess. It helps avoid stockouts on bestsellers, which can stall growth, and avoids overstock, which ties up cash and adds storage fees.

Accurate reorder points depend on accurate inventory data. If the warehouse count is off, the trigger fires too early or too late, so good inventory records and reliable receiving matter just as much as the formula.