Inventory Shrinkage Cost Calculator
Discover how much money you’re losing to inventory shrinkage.
With the industry average for 3PL inventory shrinkage at 2-4%, most fulfillment providers treat lost inventory as “normal.” Use this calculator to see what this “typical” loss means in real dollars.
Simply enter your average order value and annual quantity inventoried to see how much money you’re losing on lost inventory at industry-average rates.
That’s why Red Stag guarantees zero shrinkage.
If we lose even a single product, we’ll pay you for the wholesale cost. No questions asked.
This calculator shows only the direct cost of lost inventory at retail prices.
The true cost to your business is even higher when you factor in the other warehouse-related costs of those lost products,
lost sales and stockouts, customer disappointment, and operational headaches.
Inventory Shrinkage Cost Calculator
Calculate the true cost of inventory loss to your business
True cost impact of inventory shrinkage
Hard costs
- Lost retail value of products
- Inbound shipping and handling expenses
- Warehouse storage fees paid on lost items
- Labor costs for receiving and processing
Soft costs
- Lost sales opportunities and revenue
- Increased stockout risks
- Higher insurance premiums
- Brand reputation damage
- Additional security measures required
- Increased administrative overhead
- Customer service resources for issues
- Time spent investigating discrepancies
Why accuracy matters
The total financial impact of inventory shrinkage typically far exceeds the simple wholesale value of lost items. Working with a 3PL that maintains strict inventory controls and offers concrete shrinkage guarantees can significantly reduce these costs.
Beyond the numbers:
What shrinkage really means for your business
Why traditional 3PLs accept
inventory loss
Most 3PLs build shrinkage allowances into their contracts because implementing strict inventory controls is expensive. Rather than invest in proper systems and training, they treat lost inventory as inevitable and pass the cost on to you. The investments required to prevent shrinkage are substantial:
Sophisticated tracking systems and security audits
Comprehensive staff training and accountability measures
Multiple verification points throughout the fulfillment process
Questions your 3PL
should answer
Most 3PLs won’t volunteer information about their shrinkage policies. Ask direct questions about their inventory protection measures and compensation policies. Their answers—or lack thereof—will tell you everything about how seriously they take inventory protection:
What specific systems prevent inventory loss?
How quickly do you investigate and resolve discrepancies?
What’s your process for compensating clients when items go missing?
The hidden business impact
Shrinkage creates operational challenges that ripple throughout your business. When inventory counts don’t match reality, your entire supply chain suffers. You’ll struggle to make timely restocking decisions, forecast accurately using historical data, and maintain healthy relationships with manufacturers when rushed reorders become the norm. Perhaps worst of all, your team’s focus gets diverted from growth initiatives to constantly managing inventory issues.
The zero shrinkage difference
At Red Stag, we built our entire operation around protecting your inventory. While other 3PLs accept loss as inevitable, we guarantee zero shrinkage—and back it with our wallet. If we lose your inventory, we pay you the wholesale cost. This isn’t just a marketing promise. It’s a fundamental commitment that shapes everything from our warehouse design to our hiring practices.
Zero shrinkage. Zero mispicks. Fast check-ins.
Or we pay. Guaranteed.
2-day receiving
On-time shipments
Zero shrinkage
Pick & pack accuracy
