ABC analysis
ABC analysis classifies inventory into three tiers by value or sales contribution, applying the Pareto (80/20) principle. A items are the ~20% of SKUs driving ~80% of value and get the tightest controls; B items are moderate; C items are the many low-value SKUs managed loosely. It focuses planning effort where it matters most.
How it works
Rank every SKU by annual sales value, then split the ranked list into tiers:
Annual sales value = unit cost × annual units sold
A items are the top ~20% of SKUs driving ~80% of value, B items are the next band, and C items are the long tail of low-value SKUs. The cut points are a judgment call, but the Pareto pattern is the guide.
Why it matters
ABC analysis tells you where to spend your limited planning attention. Your A items get tight reorder points, frequent review, and the most safety stock; C items can be managed loosely with simple rules. For a Shopify store with hundreds of SKUs, this focus stops you over-managing trivial products while under-watching the ones that pay the bills.
Track this automatically
Logistified calculates and monitors metrics like this across your whole Shopify catalog and turns them into reorder alerts and purchase orders.