Future of Commerce Blog

5 Reasons Your Stock Levels Are Inaccurate (And How to Fix It)


Stitch is a retail operations management platform for brands seeking visibility into their inventory and operations.

Inaccurate stock levels are a common and costly challenge that almost every retailer has faced at some point. And if your inventory data is inaccurate, that has a ripple effect on the rest of your business. Plus, it can be difficult to identify the source of the problem.

Establishing inventory management processes can help you stay on top of stock control, but there is no cure-all. Below, we’ll take a look at five of the most common causes for inaccurate stock levels and the steps you can take to counter those issues.

Multi-Warehouse Management Challenges

Warehouse management is essential to maintaining clean inventory data. If you have multiple warehouses, the challenge of maintaining accurate stock levels is even more prominent. Inventory is more spread out, and so is the data associated with it. Remote workers, different time zones, and updates that aren’t circulated to the entire team are all reasons why the data may have some inaccuracies.

But there are measures you can take to combat inaccurate stock levels. We’ve rounded up a bunch of ideas here, plus a few quick ones below:

  • Organization: Ever stepped foot in a disorganized warehouse? It can be chaotic and lack processes that create accountability and cross-checking.
  • Barcodes: Using barcodes in your warehouse reduces the risk of inaccuracies due to human error. This ensures that every move your products make are recorded instantly, and you get a quick understanding of which warehouses have what products and how many. 
  • Warehouse management system: Implementing a warehouse management system for your retail business is a huge step to keeping data clean. Find one that integrates with your inventory management and accounting software to sync and share data across all your systems and tools.

For more ideas, check out our in-depth guide to warehouse management >


According to the National Retail Federation, shrinkage cost U.S. retailers almost $50 billion in 2016, and costs related to shrinkage are increasing. But shrinkage is an overarching issue that could have a variety of root causes. One of the most common, the NRF found, is theft, which occurs in two ways:

External Theft

External theft/shoplifting is the No. 1 cause and a more costly source of theft. Retailers are losing almost $800 per shoplifting incident in 2017, double the previous year. The NRF suspects this could be due to “decriminalization and the increase in the felony threshold in many states.”

Internal Theft

As unfortunate as it is, dishonest employees contribute to 30% of shrinkage. Though it’s less prominent than external threats, inside jobs are more costly per incident, costing retailers upwards of $1,900 each time. The NRF found that apparel retailers especially are at risk: “Both the rates of shoplifting (41.0%) and employee theft (35.5%) were higher than the overall average.”

How to Prevent Theft

For both types of theft, retailers can consider the following tips to reduce the risk of shoplifting:

  • Know which signs to look for and train your employees on the same. Shoplifting comes in many forms: They may switch prices with other products or return stolen items in exchange for cash or store credit, to name a couple.
  • Mind your product displays. Arrange your merchandise in such a way that it’s obvious if an item is missing. This may scare off potential thieves, as well as help you and your staff identify a stolen product more easily.
  • Greet your customers and establish a personal connection. If you look them in the eye, are proactive in customer service, and provide personalized attention, they may be less likely to try the five-finger-discount. They’ll know you’re aware of their presence.
  • Install mirrors and signs. These will provide added visibility for your staff on the floor, plus a warning sign to shoplifters that you’re on alert.
  • Go full-on surveillance mode. If you have the resources, take security an extra step with security cameras. Even if they’re not fully operating, the sight of a camera alone could deter thieves. Depending on your location and products, a security guard at the front door could also be a valuable security step.
  • Review your employee screening process. Are you doing your due diligence to make sure your employees don’t have a history of theft? Check references to make sure there are no red flags.
  • Get coverage. While not a preventative measure, it’s a good idea to ensure crime and theft are included in your business insurance.

Human Error

As much as we try, nobody’s perfect, right? That counts for data collection and management too. In one survey that we conducted, over 75% of retailers said the most frequent cause of an inventory issue was from human error and manual processes.

If you don’t have technology in place to automate and validate your data, manual data management could make your business vulnerable to a lot of potential data hiccups. To name a few:

  • Typos or the slip of a hand when entering/adjusting data
  • Unreported product damage
  • Labeling and ID mistakes
  • Multiple data handlers who aren’t in sync or don’t communicate with one another
  • Administrative and paperwork slip-ups (the NRF found that approximately 20% of shrinkage is because of this)
  • Antiquated inventory tracking systems that require manual input and updates


At the end of the day, the best way to reduce human error being the cause for inaccurate inventory data is to reduce the need for human data management. Incorporate inventory, warehouse, accounting and other tools into your business. Identify tools that sync with one another to create further levels of security in terms of data accuracy.

It can be intimidating to switch over to a new inventory management system. Evergreen, CO-based fine jewelry retailer Daniel Diamonds knows the challenge. The retailer has been in business for more than two decades. Their original inventory tracking processes were much more manual than what they have in place today. As a result, their stock levels weren’t always accurate. Now, with proper inventory management processes in place, their data is far more reliable.

Ineffective Physical Counts, Audits or Cycle Counts

Physical counts, audits, cycle counts, and other spot checks on inventory levels are essential to maintaining accuracy and identifying problems before they get out of hand or cost you too much money. But if you rely on just one of those approaches, you’re making yourself more vulnerable to data discrepancies.

Carolyn Moneymaker, distribution center manager at United By Blue, oversees the company’s stock levels and data. “To combat inaccurate stock, the best thing to do is to count and reconcile inventory constantly, through cycle counts and full physicals,” she says. That, paired with an approach to finding out why inventory data issues occur in the first place, helps the brand stay on top of stock control.

Implementing inventory management software can make these counts and audits easier and more accurate, too. Streetwear brand Young & Reckless decreased their margin of error in inventory counts by 35% after they adopted an IMS that could handle their growing needs.

Lack of Processes or Automations

There are still many retailers that don’t have established systems or workflows for their inventory tracking. This could be because they’re using manual tracking methods or because they haven’t been able to invest the time needed to put these processes into place. And when you’re manually tracking stock, there are little or no automations available to help you increase efficiency and accuracy.

Haphazard processes also mean that everyone could be doing the same tasks in a different way, which can often muddle your data. To alleviate inaccurate stock count issues related to the absence of workflows, your first step would be to audit your existing systems. Where are the inaccuracies and inefficiencies? Why are they happening, and how can you prevent them from happening? That will help you develop a list of requirements for an inventory management software solution. Then, identify and implement an inventory management software that suits your unique business needs.

Inventory Data Centralized

Up next: Find out how to choose the right inventory management software for your retail biz >

Ellie Kulick

Ellie is an experienced Marketing Communications and Content Specialist based out of San Francisco, CA. Passionate about technology and health, she is constantly looking for new challenges in effective communication and creative content development to help businesses grow and engage with current and prospective customers.

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