How to manage stock in a shop: a simple 8-step system

Stock is cash sitting on your shelves. When the stock in your books does not match the stock in the shop, you either lose sales (“sorry, it’s finished”) or lock money in goods that nobody buys. The good news: keeping stock right does not need a big system — it needs a few habits followed every day.

Here is a simple system that works for a kirana, stationery, mobile, hardware or garment shop.

Why stock goes wrong

Before fixing it, it helps to know where the gap comes from. In most shops it is one of these:

• Sales made in a hurry and never entered.
• Purchases entered days later, or not at all.
• Returns, damaged pieces and free samples nobody writes down.
• The same item saved under two or three names (“Reynolds pen”, “pen blue”, “ball pen”).
• No one has counted the shelf in months.

Each step below closes one of these gaps.

Step 1: Make one clean item list

Every item gets one entry with:

• A clear name — brand, size and colour where it matters (Classmate notebook 172 pages, not copy).
• The unit you sell in: piece, box, kg, metre.
• A barcode or short code, so you can scan or search it quickly.
• A category, the purchase price and the sale price.
• The HSN code and GST rate, if you are GST registered.

Variants that sell separately — sizes of a shirt, colours of a phone cover — should be separate items, otherwise you never know which one is finished.

Step 2: Count your opening stock once, properly

Pick a quiet day or close an hour early. Count shelf by shelf or almirah by almirah, with one person counting and another writing. Then work out the value: quantity × purchase price.

This count is your starting point. From now on, the books should change only through a bill, a purchase or a written adjustment.

Step 3: Every sale and purchase goes through the books

This is the step that decides everything.

• Every sale gets a bill — even a cash sale of ₹20. A quick billing screen or a barcode scan makes this easy at a busy counter (see barcode billing).
• Enter purchases the day the goods arrive, from the supplier’s bill, with the quantities you actually received.
• Returns go in as returns, not as a new purchase or a cut in the price.
• Damaged or expired pieces are written off with a reason, so you can see how much you lose to breakage each month.

Step 4: Count a little every week

Counting the whole shop every week is impossible; counting nothing for a year is how gaps grow. The middle path is cycle counting:

• Fast sellers — the small group of items that brings most of your sales — count every week.
• Regular items — count once a month.
• Slow items — count once in three months.

When a count does not match, look for the reason the same day. Say the books show 40 registers and the shelf has 31: 9 × ₹45 = ₹405 is missing. Was a sale not billed? A purchase entered twice? A carton still in the godown? Fix the cause, then correct the stock.

Step 5: Set a minimum level for fast sellers

For every fast seller, decide the quantity below which you reorder. A simple way: daily sales × days the supplier takes to deliver, plus a few days extra. An item that sells 12 a day from a supplier who takes 3 days needs reordering at about 36 + a safety margin. Our guide on low stock and the reorder point works this out step by step.

Step 6: First in, first out

For anything with an expiry date — food, medicines, cosmetics, batteries — put new stock behind old stock and sell the older batch first. Note batch numbers and expiry dates when goods come in, so you can see what expires this month.

Step 7: Find dead stock every month

Make a list of items that have not sold in 90 days and the money stuck in them. If ₹18,000 is lying in such goods, selling it at 10% below cost brings back ₹16,200 that can buy items that do sell. Other options: return to the supplier, bundle with a fast seller, or stop reordering.

Step 8: Know where everything is kept

Stock that cannot be found is as good as no stock. Number your almirahs, racks and boxes, and keep a list of what is where — or put a QR label on each, as in our guide to finding items in the godown with QR labels.

A 15-minute daily routine

1. Before opening: check the low stock list and call suppliers.
2. When goods arrive: enter the purchase from the bill and put new stock behind old.
3. During the day: bill every sale.
4. Before closing: count five fast sellers and compare with the books.
5. Once a week: look at the dead stock list.

In ApnaInventory, every bill lowers stock and every purchase raises it through a stock ledger that is never edited, stock counts can be done on a phone by scanning barcodes, and the low stock and dead stock lists build themselves from your sales.

FAQ

How often should I count the whole shop?

Once a year at least — many shops do it before the financial year ends. With weekly cycle counts of fast sellers, the yearly count becomes quick and has few surprises.

My count never matches. Where do I start?

Start with five fast sellers. Count them every evening for a week and compare with the bills. The pattern — always short in the evening, short after a delivery — usually points to the cause.

Is a notebook or Excel enough?

For a few dozen items, it can work if you update it every day. Beyond that, a billing app saves time because stock changes by itself when you bill.

Do I need stock records for GST?

Yes. A GST-registered business must keep an account of its stock of goods, and these accounts may be kept electronically with a proper backup.

Sources

• What accounts a GST-registered business must keep (including stock of goods) and electronic records — CBIC flyer on accounts and records

Checked on 2 November 2026.