The verdict in three sentences
Stock-outs and dead stock both cost money, but in opposite ways: one loses sales (~7 %), the other freezes capital (~15 %). An inventory app with an automatic reorder point and low-stock alerts attacks the first problem, ABC analysis attacks the second. As a 2026 order of magnitude, a Lagos small business pays the tool back in 2 to 4 months.
The two money leaks
A shop often watches its revenue and never its stock. Yet the losses hide on both sides of the shelf.
| Problem | Typical cost (est. 2026) | Cause | App fix |
|---|---|---|---|
| Stock-out on A item | 7 % of sales lost | No alert threshold | Auto reorder point |
| Dead stock | 15 % of capital frozen | Gut-feel buying | ABC analysis + turnover |
| Expiry | 2-5 % of value | No FEFO | Short-date alert |
| Counting error | 3-6 % variance | Manual entry | Barcode / scan |
| Theft / shrinkage | 1-3 % of revenue | No tracking | Cycle counting |
Reorder point and ABC analysis
Reorder point = (average daily sales × supplier lead time) + safety stock. ABC analysis ranks items: the A items (20 % of products, 80 % of revenue) deserve tight alerts, C items can be ordered in bulk and rarely.
| Setting | Formula / rule | Measured effect |
|---|---|---|
| Reorder point | daily use × lead + safety | -50 % stock-outs (est.) |
| Class A | 20 % SKUs / 80 % revenue | Daily monitoring |
| Class B | 30 % SKUs / 15 % revenue | Weekly monitoring |
| Class C | 50 % SKUs / 5 % revenue | Bulk ordering |
| Barcode vs manual | 3 s scan vs 20 s entry | -85 % inventory time |
| App ROI | cost 1.2-2.5 M FCFA | payback 2-4 months |
Mini case study
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Grace runs a hardware shop in Lagos with 1,200 SKUs and 18,000,000 FCFA of stock. Dead stock is 15 %, i.e. 2,700,000 FCFA frozen. After three months of ABC analysis, she clears half the dead stock (1,350,000 FCFA recovered) and cuts stock-outs on her 240 A items. Lost sales drop from 7 % to 3 %; on monthly revenue of 9,000,000 FCFA that recovers 360,000 FCFA/month. The app, at 1,800,000 FCFA, pays back in under 4 months.
FAQ
Do I need a barcode scanner to start? No — you can begin with manual entry, but scanning cuts inventory time roughly fivefold (3 seconds versus 20 per item) and reduces counting errors from 3-6 % to under 1 %.
How much does the app cost in 2026? A mobile inventory app with alerts, ABC and turnover reports falls, as an order of magnitude, between 1,200,000 and 2,500,000 FCFA, excluding scanner hardware.
How does the low-stock alert work? As soon as an item drops below its calculated reorder point, the app pushes a notification and offers a pre-filled supplier order, cutting stock-outs by about 50 %.
Is ABC analysis useful for a small shop? Yes: even with 300 SKUs, separating the 60 products that make 80 % of revenue lets you focus cash where it counts and free up dead capital.
Does it work without a permanent connection? Yes — entry and alerts run locally and sync when the network returns, which suits Lagos outages.
Let's talk about your project. We'll audit your stock and calibrate your reorder points together. WhatsApp +221 77 596 93 33.
Mohamed Bah
Fondateur, Kolonell
Passionate about digital and entrepreneurship in Africa, Mohamed has been helping Sénégalese businesses with their digital transformation since 2020. Founder of Kolonell, he believes every SME deserves a professional and accessible online présence.
