Fulfillment Lexicon

Shrinkage

Shrinkage is inventory lost to theft, damage, miscounts, or administrative errors, measured as the gap between recorded and actual stock.

Topic: Inventory Planning Entry INV-257

Why it matters for ecommerce brands

3PL contracts usually set an allowed shrinkage rate and the reimbursement value for losses above it.

Common questions

What causes inventory shrinkage in ecommerce?
Common causes are receiving errors, mis-picks, damage, theft, lost inbound shipments, and returns that were never restocked. Many of these are record errors rather than physical loss, which is why reconciliation matters.

Cite this entry

"Shrinkage." Fulfillment Lexicon, last reviewed October 16, 2026. https://fulfillment.wiki/glossary/shrinkage/

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