Is the ABC analysis report accurate enough to base reorder decisions on?

The ABC grade is accurate for ranking past sales, but it is not enough on its own to base reorder decisions on. It ignores stock on hand, lead time, open purchase orders, and profit. Use ABC to set reorder policy per grade, and a reorder report for the actual timing and quantity.

What the ABC grade actually measures

Shopify’s ABC analysis by product report ranks every product variant by its contribution to total sales over a chosen period, then assigns a grade:

• A: top variants contributing roughly 80% of sales
• B: next tier, about the following 15%
• C: remaining variants, the last 5%

You find it under Analytics > Reports > ABC analysis by product. It is available on the Shopify, Advanced, and Plus plans. The grade is useful because a stockout on an A variant hurts more than stockouts across several C variants, so A items should sit at the top of your reorder schedule.

Where the grade falls short for reorder decisions

The grade is a sales ranking, not an inventory plan. The gaps matter when you try to use it as a reorder trigger.

1. It does not look at stock on hand. An A variant with 200 units and an A variant with 5 units get the same grade. Only one needs reordering.
2. It does not know lead time. The grade cannot tell you that one supplier takes six weeks and another takes six days.
3. It does not account for open purchase orders. If stock is already on its way, the grade does not reflect that.
4. It looks backward. The grade reflects one past window. Products that are growing or declining are judged on old demand, and seasonal products can look like C items for most of the year and then sell out quickly in-season.
5. Stockouts drag down the grade. A product that was out of stock for part of the period sold fewer units because it was not available, not because demand was low. If you reorder based on that lower grade, you will under-order the products that just ran out.
6. It does not weight profit. A cheap, fast-moving product can be Grade A while a higher-priced, slower product lands in Grade C even though it earns more per sale.
7. Products near a cutoff are volatile. Variants sitting close to the A/B or B/C boundary can change grade with only a small movement in units sold.
8. The data can include noise. Archived and discontinued products sometimes show up in the report and should be filtered out before acting on the grades.

How to use the grade correctly

Use ABC to set the reorder policy for each grade. Use a reorder report to pull the trigger.

Policy by grade:

• A: highest safety stock, review weekly, never let it run out
• B: moderate safety stock, review every two weeks or monthly, watch for products moving up
• C: minimal safety stock, order on demand or in small batches, consider bundling or discontinuing

The actual reorder decision needs stock on hand, sales velocity, lead time, safety stock, and anything already on its way. Shopify’s ABC report does not combine these in one place.

This is where a dedicated reporting app like Report Pundit fills the gap. The Inventory Reorder Point report calculates when stock should be replenished, using sales velocity, lead time, and safety stock. The Inventory Replenishment report lists which products need reordering now, based on sell-through velocity, adjusted for stock already on its way, and broken down by location. Used alongside the ABC grade, these reports turn the ranking into an actionable reorder plan instead of a scoreboard.

Practical checks before you trust the grade

• Use a window long enough to smooth out noise. About 90 days works for most stores. For seasonal products, compare the same season last year.
• Filter out archived and discontinued items before you act on the grades.
• Check whether any A or B product had stockout days during the period. If so, the grade is understated.
• Compare two periods side by side so you can see which products are rising or falling.
• Schedule the report so grades refresh automatically instead of relying on a snapshot from months ago.