What Is Stock Loss?
Stock loss is inventory that's gone missing from your records without a sale to explain it — different from stock that's simply been counted or entered incorrectly.
Direct answer
Stock loss is inventory that's gone missing from your records without a sale to explain it — the item isn't on the shelf, and there's no corresponding revenue for it either. This is different from stock that's simply been counted or entered incorrectly, which is a records problem, not a loss.
What causes stock loss
- Theft — by customers or staff
- Damage — breakage, spoilage, water or heat damage, never logged as a write-off
- Counting errors that happen at the point of loss, not just at review time
- Recording mistakes — a sale given away, discounted to zero, or processed incorrectly and never corrected
Shrinkage: the specific subset caused by theft, damage, and error
"Shrinkage" is the more precise accounting term for stock loss caused specifically by theft, damage, or administrative error — as opposed to stock loss from, say, a large one-off write-off you already know the cause of. In everyday shop conversation, "stock loss" and "shrinkage" are usually used to mean the same thing, and this page treats them together rather than as separate concepts requiring separate explanations.
Disappeared stock vs. incorrectly recorded stock
These look identical on the surface — your count is off — but they're different problems with different fixes. If a full, careful physical recount consistently confirms the shortfall, it's likely genuine loss. If the "loss" changes depending on who counts or how carefully, it's more likely a recording or process issue. The stock accuracy diagnostic walks through how to tell these apart in more detail.
Practical prevention steps
- Limit who can edit stock quantities, and know who has that access
- Log damaged or spoiled items as a loss immediately, rather than letting them quietly disappear from the count
- Do physical counts often enough to catch a pattern early, not just once a year
- Review discounted or zero-value sales for patterns