Most founders reorder based on gut feel or fear. Both are expensive. Learn the data-driven system that stops over-ordering and cash crunches.
Here’s how most DTC founders decide when to reorder inventory:
“Inventory looks low. Better order more.”
Or worse:
“We stocked out last time. Order double just in case.”
If either one sounds familiar, you’re not alone. But both approaches are quietly bleeding your business dry.
I’ve worked with brands doing $2M, $5M, even $15M in revenue, and the reorder process looks the same almost everywhere. Someone glances at a dashboard, gets nervous, and fires off a PO. There’s no formula. No trigger point. No system. Just gut instinct and leftover anxiety from the last time they ran out of their best seller.
The result? Cash trapped in inventory that won’t sell for months. Or worse, a stockout right before your biggest campaign because you were trying to be “conservative.” Neither outcome is a strategy. Both are expensive.
Let’s fix it. I’m going to walk you through a simple, repeatable system that tells you exactly when to reorder and how much to order. No spreadsheet heroics required.
The 4 Inputs You Actually Need
Before you can calculate when to reorder, you need four pieces of data. Not twelve. Not a complex dashboard with fifty metrics. Four.
1. Sell-Through Rate (How fast you actually sell)
Pull the last 90 days of unit sales for each SKU. Divide by 90. That’s your average daily sell-through rate. Not your best day. Not your worst. The real, boring average.
Why 90 days? Because 30 days can be skewed by a single promo or TikTok spike. And 180 days dilutes seasonal patterns. Ninety gives you a clean, usable number.
If a product moved 4,500 units in the last 90 days, your daily sell-through rate is 50 units per day. Simple. Write it down.
2. Lead Time (The full picture, not just production)
This is where most founders underestimate by two to four weeks. Lead time is not just how long it takes to make your product. It’s the full timeline from the moment you submit a purchase order to the moment inventory is received, checked in, and available to ship from your warehouse.
That means production time, shipping transit, customs clearance, drayage, warehouse receiving, and a buffer for the inevitable delay. If your supplier says “four weeks” and you plan around four weeks, you are already behind. We’ve seen this trip up brands during BFCM when a two-week port delay turned a good plan into a stockout nightmare.
Be honest with yourself. Document the real lead time, not the optimistic one.
3. Cash Position (Can you actually afford this order?)
Here is something supply chain people don’t say enough: your reorder decision is a financial decision. If your cash-on-hand can’t support the purchase order AND your next 60 days of operating expenses (ads, payroll, rent), you need to rethink the order size.
Finance has to be in this conversation. Not after the PO is placed. Before. The best inventory plan in the world is worthless if it bankrupts you. This is the core of what we call the MOVE DTC Flywheel™: marketing, operations, and finance have to talk to each other. When they don’t, somebody bleeds cash.
4. Demand Forecast (What’s coming, not just what happened)
Sell-through rate tells you the past. But what does the next 60 to 90 days look like?
Is marketing running a major campaign? Did you just get featured by an influencer? Is a seasonal peak approaching? Are you about to launch on a new retail channel?
Your demand forecast should factor in planned marketing activity, seasonal trends, and any known events that could spike or suppress demand. If marketing is planning a 30% off site-wide sale next month and nobody told supply chain, you are going to stockout. Guaranteed.
This is why we built our NPD and inventory planning approach around cross-functional alignment from day one.
The Reorder Point Formula
Now we put the inputs together. Here is the formula:Reorder Point = (Average Daily Sales × Lead Time in Days) + Safety Stock
Reorder Point = (Average Daily Sales × Lead Time in Days) + Safety Stock
Safety stock is your buffer for variability. It accounts for demand spikes, supplier delays, and the general chaos of running a DTC brand. A common starting point for safety stock is 20-30% of your lead time demand, but adjust based on your risk tolerance and SKU importance.
Example:
- Average daily sales: 50 units
- Lead time: 45 days
- Safety stock: 500 units
Reorder Point = (50 × 45) + 500 = 2,750 units
When your inventory hits 2,750 units, it is time to place the next purchase order. Not when it “feels low.” Not when you remember to check. When the number says go.
Set an alert in your inventory management system. If you don’t have one, a weekly spreadsheet check works. The point is removing emotion from the equation.
How Much to Order
Knowing when to order is half the battle. The other half is knowing how much.
Order Quantity = (Target Days of Coverage × Daily Sell-Through Rate) − Current Inventory
Your target days of coverage depends on your lead time plus a buffer. If lead time is 45 days, you might target 60 days of coverage to give yourself breathing room.
Example:
- Target coverage: 60 days
- Daily sell-through rate: 50 units
- Current inventory: 500 units
Order Quantity = (60 × 50) − 500 = 2,500 units
Now, here’s where the MOQ trap gets founders in trouble. Your supplier has a minimum order quantity of 5,000 units. Your formula says 2,500. Do not order 5,000 just because the supplier says so.
This is a negotiation, not a mandate. Push back on MOQs. Ask about split shipments. Explore whether a slightly higher per-unit cost on a smaller order saves you more in carrying costs and cash preservation. We cover this exact scenario in our guide to launching products with a supply chain mindset, including how to vet backup suppliers so you are never locked into one vendor’s terms.
The $150K Panic Order (A Real Story)
I once worked with a brand that stocked out on their hero SKU during a promo. It cost them roughly $20K in lost revenue. Painful, but recoverable.
What happened next cost them six figures.
The founder panicked. Ordered six months of inventory in a single PO to “make sure it never happens again.” That decision locked up $150K in cash sitting on warehouse shelves.
Six months later, they couldn’t run ads. They couldn’t invest in new product development. They couldn’t hire. All because $150K was trapped in inventory they wouldn’t sell for months.
The stockout cost $20K. The panic order cost $150K in trapped capital and at least that much in missed growth opportunity.
Fear is the most expensive supply chain planner you will ever hire. Replace it with a formula. Replace it with a system. That’s what separates brands that scale from brands that stall.
Your Weekend Audit (20 Minutes)
You can start implementing this system this weekend. Block 20 minutes and work through these four steps:
- Calculate your sell-through rate. Pull the last 90 days of sales for your top 5 SKUs. Divide by 90. Write down the daily rate.
- Document your real lead time. Not what your supplier promised. The actual time from PO submission to warehouse-ready inventory. Include every step.
- Calculate your reorder points. Use the formula above. Set alerts or calendar reminders for each SKU.
- Check where you stand right now. Are you above or below each reorder point? If you are below, it is time to act. If you are above, you have breathing room to plan properly.
That’s it. Twenty minutes. No software required. Just data and a calculator.
If you want to go deeper, check out the free resources and guides we have built specifically for DTC founders tackling inventory planning.
What’s Next
Next week, I’m breaking down how one brand freed up $120K in trapped cash without selling a single extra unit. No new revenue. No price increases. Just smarter inventory management.
If that sounds like money you could use, join our next workshop or reach out to our team at sales@movesupplychain.com. We only take on 5 new clients per month because we believe in doing this right, not fast.The Flywheel Connection
Until next time,
— Lara
Want to Go Deeper?
I break down the exact reorder point formula, walk through real numbers, and show you how to stop panic-ordering inventory that traps your cash for months. This is the 20-minute system that replaces gut feel with data.
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