I'm putting my online clothing store on the market in a couple months and the thing I'm dreading most is the inventory count. We sell across Shopify and a little Amazon FBA, and honestly the stock numbers are a bit of a mess right now (returns not always logged, a few SKUs with phantom quantities). Buyers obviously want to know exactly what they're getting. Do I just hire a third-party counting service? How do you handle the discrepancy between what the system says and what's actually on the shelf without scaring off buyers? Any tips appreciated.
Inventory
How do I handle inventory stock counts when selling an online clothing store?
Do it before you list. A phantom SKU during diligence looks like either incompetence or fraud, and neither prices well.
We used a counting service for our sale last year. Cost around $2k for ~1500 SKUs, took two days. Best money I spent — the buyer's accountant basically accepted their report as gospel and we skipped a whole back-and-forthh.
lol 'phantom quantities' is a very polite way to say you've been losing track since 2021
Also — anything under a certain value, just write it off and take it out of the count entirely. Nobody wants to audit 400 single socks and damaged returns. Cleaner bookks, fewer questions.
How big is your catalog? Because if you're under like 500 SKUs, hiring a service feels like overkill. Could just do it in a weekend with a laptop and a scanner app.
Be careful about the Amazon FBA side specifically. Your FBA inventory is a separate beast from your warehouse and the numbers there can drift badly. Make sure you pull the FBA inventory report and reconcile it against what you physically counted — mismatch between those two will tank buyer confidence fast. Also worth noting: if there are SKUs that only exist in one channel, document that clearly, otherwise the buyer will assume you double-counted.
Yeah, FBA is where our count had the most surprises. We had about 200 units sitting in Amazon that the Shopify system had no idea about.
Honest question, how bad is bad? Because if the discrepancy is 2% nobody cares. If it's 20% you have a real problem and you need to fix the process before you even think about selling
Catalog is about 800 active SKUs plus another 300 dead ones I should probably purge first. Discrepancy is maybe 4-5% last I checked, but that was months ago.
4-5% is honestly fine and pretty normal for for apparel. Just tighten it up to under 2% before you go to market and you'll be fine.
Purge the 300 dead SKUs first. It'll make the count way easier and honestly the buyer will appreciate a cleaner catalog. Nothing worse than walking into diligence and seeing 1100 SKUs where a third haven't sold in two years.
800 active SKUs and a 4-5% drift is not the crisis you think it is. You should see some of the books I've been handed during acquisitions. I once bought a store where the inventory sheet was literally a Google doc last edited in 2022.
Also pull your return rate by SKU. If a specific style has a 40% return rate, that's arguably more important to a buyer than whether you have 12 or 14 of them in stock.
Counterpoint to the write-it-all-off advice: don't write off stuff that's actually valuable just because it's annoying to count. We almost wrote off a couple hundred units of a slow-moving but high-margin item and it would've basically been a gift to the buyer. Count everything, then decide.
Just be upfront about your methodology whatever you do. Buyers can forgive a discrepancy, they can't forgive finding out you hid one.