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Advanced · Course 4: Omnichannel Inventory · Lesson 1 of 5

Deciding which stock a retailer's own store network can share with its online channel

Level: AdvancedTime: 50 minutesOrder used: A (the T-shirt, reused as stock inside Fairway Stores' own store network and online channel)Tool: Omnichannel inventory decision tool
For a retail buyer who already manages Fairway Stores' own purchase orders and now needs to decide how much of the store network's own stock the online channel is allowed to sell against. No previous lesson in this course is required. Figures are teaching figures.
RetailerFairway Stores (department-store chain, own stores and online channel)
FactoryDelta Garments
Buyer/brandNorthline Apparel (wholesale supplier to Fairway Stores)
ProductFairway Stores' own T-shirt, bought from Northline Apparel, Order A's own construction
Order size15,000 pieces, landed at USD 3.70, shop price USD 19.90
Business modelMake to Order purchase from Northline Apparel, sold across two channels once landed
02Opening

This page teaches a retail buyer how to decide which part of a store network's own stock the online channel is allowed to sell against

This page teaches how to decide which part of a retailer's own stock, already sitting inside its store network, the online channel may show as available and sell, for a retail buyer who has already received the purchase order and now has to plan how that stock is used across two channels at once. This lesson mainly teaches a decision: which units join a shared pool, and which stay reserved for the shop floor alone. This lesson starts once stock has already landed in Fairway Stores' own stores.

A retailer that treats every unit sitting in every store as automatically available to the online channel can sell the same last piece to two different customers at once, one walking into the shop and one clicking "buy" online, and then has to cancel one of the two sales. A retailer that goes the other way, keeping the online channel walled off from store stock entirely, ties up cash in stock that sits unsold on a shelf in one city while a customer in another city is turned away online with nothing to buy.

03Before you start

You need: to know Fairway Stores' own total stock position for a style across every store, and roughly how each store's own local sales pattern behaves. No specific earlier lesson in this course is required.

By the end of this lesson you can:

  • state why a retailer's total store-network stock is not automatically available to its online channel;
  • separate a style's own stock into a shareable pool and store-committed stock that stays reserved;
  • calculate the size of a shareable pool from a store's own stock and its own expected local sales;
  • decide, for a stated store and stock count, how much of that store's own stock the online channel may draw from.

Not covered here: the rule that decides whether a specific online order is fulfilled from a store's own shelf (Lesson 4.2), protecting the shareable pool once online demand is running (Lesson 4.3), and choosing between a nearby store and a central warehouse for a specific order (Lesson 4.4).

04Key terms

Words you will meet in this lesson

TermMeaning
Shared inventory poolThe part of a retailer's own store stock that is shown as available and sold through both the store and its online channel.
Store-committed stockStock physically in a store that the store needs to protect its own local sales, and that is not shared with the online channel.
Online channelA retailer's own route to sell to a customer through its website or app, rather than through a physical shop.
StockoutA situation where a store or a channel has no units of an item left to sell, though demand for it still exists.
Make to Order (MTO)Production starts only after a specific buyer confirms a specific order.
05Teaching
The rule

A retailer's own store-network stock splits into a shareable pool the online channel can sell against, and store-committed stock the online channel must never touch

Not every unit a retailer holds in its stores is available to every channel at once. A retailer's own total stock for a style, once landed, splits into two parts: a shared inventory pool, which both the store and the online channel may sell against, and store-committed stock, which the store keeps back to protect its own local, walk-in sales. Sharing the whole total with the online channel risks a stockout at the shop counter that the store never saw coming; sharing none of it leaves the online channel showing "out of stock" while unsold stock still sits on a shelf across town.

Whole store stock sharedOnline sells against 100%Shop floor risks a stockoutStock split deliberatelyShared pool online may sellStore-committed stock kept back
Sharing all store stock with the online channel is not the same decision as sharing a deliberate part of it. Both approaches start from the same total stock, but only one protects the shop floor from a surprise stockout.
What you meet in real life

How a retailer splits shared pool from store-committed stock differs by market, business model and how fast a store's own local sales move

What can differThe shapes you meetWhy it matters
Export vs. domestic online customerAn export-facing online channel, shipping to customers outside Fairway Stores' own home market, may draw from a wider set of stores than a domestic online order, which a nearby store can fulfil fasterThe size of a sensible shared pool depends on how far the resulting shipment has to travel, not only on how much stock a store holds
Make to Order vs. Make to Stock purchase behind the stockA Make to Order purchase, like Fairway Stores' own order from Northline Apparel, arrives once and is not easily topped up mid-season; a Make to Stock line can be reordered, which allows a larger shared pool since a stockout is easier to correctA retailer sharing MTO stock has to be more cautious with its shared pool than one sharing a reorderable MTS line
A fast-selling store vs. a slow-selling storeA high-footfall flagship store may sell through its own stock quickly on the shop floor alone, needing a smaller shared pool; a slower store can safely share a larger share of its own stockApplying one shared-pool percentage to every store regardless of its own sales pattern under-protects the fast store and over-restricts the slow one
A single style vs. a whole assortmentA single style, such as Fairway Stores' own T-shirt, is split store by store; a full assortment repeats the same split hundreds of times across many styles at onceThe method scales the same way, but a retailer with a full assortment needs a rule it can apply quickly, not a one-off manual judgement per style
Product familiesThe same shared-pool split applies whether the stock is apparel, socks and hosiery, knit-to-garment, terry and towels, or home textiles and beddingA retailer new to omnichannel selling often starts with one product family, such as apparel, before extending the same split to others
The case we follow

Fairway Stores decides how much of its 15,000-piece T-shirt order the online channel may sell against, store by store

Fairway Stores buys 15,000 pieces of its own T-shirt from Northline Apparel, made to order at Delta Garments, landed at USD 3.70 per piece and priced at USD 19.90 in the shop. Once the stock lands across Fairway Stores' own stores, its buyer has to decide, store by store, how much of each store's own share of that stock the online channel may show as available. A flagship store receiving 1,200 pieces sells briskly on its own shop floor; a smaller store receiving 300 pieces sells more slowly and has more spare stock to offer online without risking its own shelf.

The buyer needs a repeatable way to size the shared pool, not a separate judgement call for every one of Fairway Stores' own stores every season.

The worked number

The flagship store shares 200 of its 1,200 pieces online; the smaller store shares 120 of its 300 pieces

Flagship store: 1,200 pieces received, expected local shop-floor sales 1,000 pieces over the season
Shareable pool = stock on hand − expected local sales = 1,200 − 1,000 = 200 pieces (about 17% of stock)
Smaller store: 300 pieces received, expected local shop-floor sales 180 pieces over the season
Shareable pool = 300 − 180 = 120 pieces (40% of stock)

The worked number shows why one fixed percentage does not fit every store: the flagship store, selling faster on its own shop floor, can only safely share about 17% of its stock with the online channel, while the smaller, slower-selling store can share 40% of the same style without risking a shop-floor stockout. Both figures come from the same method, subtracting each store's own expected local sales from its own stock on hand.

Flagship store: 1,200 pieces, 200 shareable (17%)Store-committed 1,000Shared 200Smaller store: 300 pieces, 120 shareable (40%)Committed 180Shared 120
The smaller store shares a larger share of its own stock, 40% against 17%, though it holds fewer pieces overall. A store's own selling speed decides the shareable percentage, not the size of its stock alone.
The method

Four steps to size a store's own shareable pool

  1. State the store's own stock on hand for the style, from the actual count already delivered to that store.
  2. Estimate that store's own expected local shop-floor sales for the remaining part of the season, from its own past selling pattern.
  3. Subtract expected local sales from stock on hand to get the shareable pool available to the online channel.
  4. Repeat store by store, since a flagship store and a smaller store rarely share the same percentage even when selling the same style.
The trap

A common mistake is applying one fixed shared-pool percentage to every store regardless of how fast each one actually sells

A common mistake is setting a single shared-pool percentage, such as "20% of every store's stock goes online," and applying it to every store in the network without checking each store's own actual selling speed. This flattens the fast-selling flagship store and the slow-selling smaller store into the same rule, which under-protects the flagship store's own shop floor and leaves the smaller store's own spare stock sitting unshared when it could safely be sold online. The cost shows up as a stockout at the flagship counter and unsold stock gathering markdown risk at the smaller store, both avoidable with a store-by-store calculation.

06In plain words

A retailer's stock sitting inside its stores is not automatically available to its online shop. Part of it has to stay on the shelf so walk-in customers are not turned away, and only the rest can be shown as available online. On Fairway Stores' own T-shirt, a fast-selling flagship store can only safely share about 17% of its stock, while a slower-selling smaller store can share 40% of the same style. Working out the shareable share store by store, from each store's own stock and its own expected sales, avoids both a stockout on the shop floor and stock sitting unsold and unshared elsewhere.

07Quick check
  • Total store-network stock is not the same figure as the stock available to the online channel.
  • The shareable pool equals stock on hand minus expected local shop-floor sales, worked out store by store.
  • A fast-selling store needs a smaller shared-pool percentage than a slow-selling store, even for the same style.
  • One fixed shared-pool percentage applied to every store under-protects fast stores and under-shares slow ones.
  • Make to Order stock needs a more cautious shared pool than a reorderable Make to Stock line, since it cannot easily be topped up.
  • An export-facing online order may draw from a wider set of stores than a domestic order a nearby store can fulfil faster.
08Workplace scenario

Fairway Stores' online team asks to raise the flagship store's shareable pool from 200 to 500 pieces ahead of a promotion

A colleague on Fairway Stores' own online team asks the buyer to raise the flagship store's shareable pool for the T-shirt from 200 to 500 pieces, to support a two-week online promotion. The facts in front of the buyer:

  • The flagship store's own stock on hand is 1,200 pieces; expected local shop-floor sales for the rest of the season are 1,000 pieces.
  • Raising the shareable pool to 500 pieces would leave only 700 pieces for the shop floor, 300 short of the store's own expected local sales.
  • The promotion is expected to run for two weeks, not the full remaining season.

The request from the buyer's own inbox:

Fairway Stores, internal request. "Can we raise the flagship store's online share to 500 pieces for the two-week T-shirt promotion? Online demand is expected to be strong."

Should the buyer approve the request to raise the shareable pool to 500 pieces for the flagship store? Decide before you open the decision.

Show decision

No, not at the full 500 pieces; the flagship store's own expected shop-floor sales of 1,000 pieces would be put at risk.

Two facts decide this. First, this lesson's own rule states that the shareable pool is stock on hand minus expected local sales, and 1,200 − 1,000 leaves only 200 pieces without risking the shop floor; raising it to 500 removes 300 pieces the flagship store's own shop floor is expected to need. Second, the promotion only runs two weeks, so a smaller, temporary increase, checked against how much of the 1,000-piece shop-floor expectation falls inside those two weeks, is the safer approach than a flat jump to 500 for the whole season.

Refusing any increase at all would also be wrong; a short, calculated increase during the promotion window may still be sensible. The point is that the number 500 was not checked against the flagship store's own expected shop-floor sales before being proposed.

09What it costs

A shareable pool set too high at the flagship store risks a stockout worth more than the extra online sales it was meant to capture

Extra shareable pool requested: 500 − 200 = 300 pieces taken from the shop floor's own expected 1,000 pieces
If those 300 pieces are actually needed on the shop floor and are sold online instead:
Lost shop-floor sales at shop price: 300 × 19.90 = USD 5,970 at risk
Compare with the shop's own gross margin per piece on the same style:
Margin per piece = 19.90 − 3.70 = 16.20
Margin at risk if 300 pieces are turned away as a shop-floor stockout: 300 × 16.20 = USD 4,860

The USD 4,860 figure is not a certainty, since not every expected shop-floor sale would necessarily be lost; some customers may simply wait or choose another style. It is, however, the scale of risk being weighed against the promotion's expected gain, which is why the shareable pool needs checking before it is raised, not adjusted after a stockout is already reported.

10Working template

Omnichannel inventory decision tool: size each store's own shareable pool from its stock on hand and its expected local sales

Use the T21-C04 Omnichannel inventory decision tool. For Fairway Stores' own T-shirt, enter each store's own stock on hand and its own expected local shop-floor sales for the remaining season; the sheet calculates the shareable pool available to the online channel and flags a request that would cut into a store's own expected shop-floor sales.

[Download the Omnichannel inventory decision tool](../../templates/T21-C04-omnichannel-inventory-decision-tool.xlsx)

Download the Omnichannel inventory decision tool (Excel)

11Check yourself

1. Why is a retailer's total store-network stock not automatically available to its online channel?

2. A store holds 800 pieces of a style and expects to sell 650 of them on its own shop floor this season. What is its shareable pool?

3. Why might a flagship store need a lower shared-pool percentage than a smaller, slower-selling store carrying the same style?

12Glossary
ENARFRTRMeaning
Shared inventory poolمجمع المخزون المشتركPool de stock partagéPaylaşılan stok havuzuThe part of a retailer's own store stock that is shown as available and sold through both the store and its online channel.
Store-committed stockمخزون مخصص للمتجرStock réservé au magasinMağazaya ayrılmış stokStock physically in a store that the store needs to protect its own local sales, and that is not shared with the online channel.
Online channelالقناة الإلكترونيةCanal en ligneÇevrimiçi kanalA retailer's own route to sell to a customer through its website or app, rather than through a physical shop.
Stockoutنفاد المخزونRupture de stockStok tükenmesiA situation where a store or a channel has no units of an item left to sell, though demand for it still exists.
Make to Order (MTO)الإنتاج حسب الطلبFabrication sur commande (MTO)Siparişe göre üretim (MTO)Production starts only after a specific buyer confirms a specific order.
13Next

Lesson 4.2: Setting rules for when a store fulfills an online order from its own shelf

You now know how to decide which stock a store network can share with the online channel. The next lesson turns that shared pool into a working rule: when a specific store is actually allowed to pick and ship an online order from its own shelf. Back to the course map

14Ladder

RecognizeName the difference between a store's own total stock and its shareable pool.
ConnectSee how a store's own selling speed changes the safe shared-pool percentage.
CompareTell store-committed stock apart from stock available to the online channel.
DecideJudge whether a proposed shared-pool increase puts a store's own expected sales at risk.