Inventory Planning for D2C Brands: How to Grow Without Locking Up All Your Cash

For most D2C brands, inventory is the single biggest use of cash. Too little, and you lose sales. Too much, and your money sits in a warehouse instead of funding growth.

How much cash is sitting in your stock?

Numbers in the examples below are illustrative.

A brand’s monthly product cost of goods sold is ₹10 lakh.

• Holding 90 days of stock: ₹10 lakh × 3 = ₹30 lakh tied up
• Holding 45 days of stock: ₹10 lakh × 1.5 = ₹15 lakh tied up

Cutting stock from 90 to 45 days frees ₹15 lakh, without selling a single extra unit.

Four tools for smarter inventory

1. Days of cover

How many days your current stock will last at today’s sales rate. Track it for every important SKU.

2. Reorder point

The stock level at which you place a new order.

Reorder point = Daily sales × (Supplier lead time + Safety stock days)

A SKU sells 40 units a day. Supplier lead time is 20 days, and you keep 10 days of safety stock. Reorder point = 40 × (20 + 10) = 1,200 units.

3. Safety stock

A buffer for demand spikes or supplier delays. Keep more for fast-moving hero products, less for slow sellers.

4. ABC classification

Rank SKUs by contribution:

• A items: Your top sellers. Never let them run out.
• B items: Steady sellers. Review regularly.
• C items: Slow movers. Keep stock lean, and consider discontinuing.

Six ways to reduce cash tied up in stock

1. Order more often in smaller batches, even at a slightly higher unit cost.
2. Negotiate minimum order quantities with suppliers.
3. Negotiate payment terms, so you pay after you sell, not before.
4. Review aged stock monthly, and clear it before it becomes dead stock.
5. Use pre-orders for new launches to test demand first.
6. Cut SKUs that don’t earn their shelf space.

FAQs

How many days of inventory should a D2C brand hold?

It depends on lead times, seasonality, and product type. Start from your supplier lead time plus a safety buffer, then refine.

Is it cheaper to order in bulk?

Unit cost may be lower, but the cash tied up and risk of unsold stock can outweigh the saving. Compare both.

What is dead stock?

Stock that hasn’t sold for a long period and is unlikely to sell at full price. It’s cash you’ve already spent with no return.