There are many terms for inventory shrinkage: warehouse shrinkage, product shrinkage, loss of product. They all amount to the same thing — your merchandise is missing from the warehouse shelves.
For businesses that sell physical things, some amount of shrinkage is unavoidable. At point of sale, stores can experience retail shrinkage from breakage and shoplifting. ECommerce businesses experience inventory shrinkage when items are damaged on warehouse shelves or disappear during shipping or receiving.
It’s important to understand your shrinkage rate because it affects your bottom line. Here’s everything you need to know to calculate and prevent inventory shrinkage.
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