Inventory Shrinkage: Complete Guide to Causes, Calculation, and Prevention
Authored by
Chinh Nguyen
Last updated: August 7, 2025
The Hidden Cost of Disappearing Inventory: Understanding Shrinkage
Picture this: Your receiving team logs 500 units, but when fulfilling orders, only 475 can be found. This invisible drain is inventory shrinkage – the measurable loss that occurs between purchase from suppliers and point of sale to customers.
For retailers, wholesalers, and multichannel sellers, shrinkage silently erodes profit margins and disrupts inventory accuracy. While some loss is inevitable, excessive shrinkage devastates your bottom line.
This guide explains what is inventory shrinkage, identifies causes, demonstrates how to calculate inventory shrinkage, covers accounting practices, and outlines prevention strategies. We'll explore how accounting and inventory software can detect discrepancies and how automation tools like Finale provide safeguards.
Understanding and controlling inventory shrinkage is essential for maintaining healthy inventory turnover ratio and maximizing profitability.
What Is Inventory Shrinkage? Definition & Meaning
Inventory shrinkage refers to the loss of inventory that occurs when the actual physical count of products is less than the recorded amount in your inventory management system. To define inventory shrinkage simply: it's the difference between what your records say you should have and what you actually have on your shelves.
What is inventory shrinkage in practical terms? It represents lost profits and affects your bottom line directly. Unlike planned markdowns or obsolete inventory, shrinkage represents unplanned, often unexpected losses.
Inventory shrinkage meaning for businesses includes:
- Lost revenue from items that can't be sold
- Inaccurate inventory records leading to stockouts
- Higher operational costs to compensate for losses
- Potential increases in security expenses
The what is shrinkage in inventory question arises when businesses experience unexplained inventory discrepancies. These losses typically stem from employee theft, shoplifting, vendor fraud, and administrative errors. While some level of shrinkage is considered normal (typically 1-2% of sales), excessive shrinkage requires immediate attention.
Terminology: Inventory shrinkage measures the difference between recorded and actual physical inventory, helping identify potential theft, damage, or inventory valuation methods issues that affect profitability.
Why Shrinkage Matters to Retail, Wholesale, and Multichannel Brands
The financial impact of retail inventory shrinkage is substantial. According to the National Retail Federation, inventory shrinkage costs retailers an average of 1.44% of sales annually, translating to nearly $100 billion in industry losses. Even a seemingly small 1% increase in shrinkage can reduce gross margins by 10-30% depending on your business model.
For multichannel sellers, the complexity compounds quickly:
- Amazon FBA businesses face "lost in warehouse" claims requiring timely reconciliation
- Shopify merchants must account for damaged inventory across multiple fulfillment locations
- Businesses using 3PLs struggle with mis-picked items that vanish without generating revenue
These discrepancies create a dangerous ripple effect. When physical inventory doesn't match system counts, your accounting and inventory software becomes unreliable, affecting reordering, marketing allocation, and pricing decisions.
The impact is particularly severe for businesses with tight margins or seasonal products. Missing inventory can prevent purchasing high-demand merchandise, potentially sacrificing significant revenue. Without proper inventory valuation methods, these losses become invisible until it's too late to correct them.
Top Causes of Inventory Shrinkage in Modern Workflows
Understanding the root causes of inventory shrinkage helps businesses develop targeted prevention strategies. Modern commerce environments face unique challenges that traditional retail-only operations didn't encounter. Here are the primary culprits behind missing inventory:
- Employee theft – From warehouse pilferage to point-of-sale manipulation
- Vendor fraud – Short shipments, quality substitutions, or invoice discrepancies
- Shipping damage – Products damaged in transit between facilities or to customers
- Administrative error – Incorrect data entry, missing scans, or processing mistakes
- Marketplace reconciliation gaps – Discrepancies between platform records and actual inventory
- Returns abuse – Customers returning counterfeit items or different products than purchased
What common events could result in inventory shrinkage in today's multi-channel operations? For warehouse operations, items might be picked incorrectly but marked as fulfilled in your system. In 3PL partnerships, inventory can be miscounted during receiving or damaged during storage without proper documentation. With Amazon FBA, reconciliation issues frequently occur when Amazon's count differs from your shipment records.
Technology-related causes have introduced new shrinkage scenarios. Mis-scanned barcodes can create phantom inventory that exists in your system but not physically. Duplicate Advanced Shipping Notice (ASN) receipts might double-count incoming inventory. Mis-labeled lot numbers can cause entire batches to become untraceable in your inventory records.
These discrepancies create shrinkage inventory situations that progressively worsen within your general ledger. Without proper inventory valuation methods and reconciliation processes, these errors compound over time, creating significant cost of sales variances that harm your bottom line and distort financial reporting.
How to Calculate Inventory Shrinkage Rate & Percentage
Inventory shrinkage represents the difference between your recorded inventory (book value) and what actually exists in your warehouse (physical count). Calculating this metric helps businesses identify issues and minimize losses.
The Inventory Shrinkage Formula
The standard inventory shrinkage formula is:
Shrinkage Value = Book Inventory Value – Physical Inventory Value
To express this as a percentage:
Shrinkage Percentage = (Shrinkage Value ÷ Book Inventory Value) × 100
For example, if your records show $100,000 of inventory but a physical count reveals only $97,000:
Shrinkage Value = $100,000 – $97,000 = $3,000 Shrinkage Percentage = ($3,000 ÷ $100,000) × 100 = 3%
This percentage works alongside your inventory turnover ratio to gauge inventory management efficiency.
Recording Shrinkage
Inventory shrinkage is recorded when physical counts reveal fewer items than your perpetual inventory system shows. This requires adjusting both inventory assets and recording an expense.
Most retailers aim for an acceptable inventory shrinkage percentage under 2%, while e-commerce businesses typically target under 1%. Track shrinkage by warehouse to identify problem areas.
When making adjustments, your average cost method will affect how shrinkage impacts weighted-average cost layers and COGS calculations.
Industry Benchmarks & Real-World Examples
Understanding what constitutes an acceptable inventory shrinkage percentage varies significantly across retail segments and business models.
Retail vs. E-commerce Shrinkage Comparisons
Brick-and-mortar apparel retailers typically experience higher shrinkage rates (1.5-2.5%) due to shoplifting, employee theft, and merchandising errors. In contrast, supplement brands using Amazon FBA generally see lower overall shrinkage (0.5-1.2%) but face more inventory lost during transit or within fulfillment centers.
Inventory shrinkage examples in physical retail often involve:
- Theft (both external and internal)
- Administrative errors in receiving
- Damage during handling
While e-commerce operations typically struggle with:
- Shipping damage
- Warehouse picking errors
- Returns processing mistakes
According to National Retail Federation data, the average retail shrinkage rate across all sectors is approximately 1.4%, representing nearly $100 billion in annual losses. IHL Group reports that specialty retailers experience about 30% higher shrinkage than general merchandise stores.
For small businesses, comparing your shrinkage against these benchmarks helps identify when operational controls need review. What matters most is tracking trends by location to pinpoint specific problem areas requiring intervention.
Recording Inventory Shrinkage in QuickBooks Online or Xero
Properly documenting inventory shrinkage in your accounting system creates visibility into loss patterns and maintains accurate financial records. Here's how to record these discrepancies in popular accounting platforms:
Basic Journal Entry Structure
The fundamental inventory shrinkage journal entry follows this structure:
DEBIT: Cost of Goods Sold - Shrinkage $500
CREDIT: Inventory Asset $500
This entry reduces your inventory asset value while categorizing the loss as a cost of doing business.
When to Record Shrinkage
Inventory shrinkage is recorded when discrepancies are confirmed through:
- Physical cycle counts showing fewer items than your system records
- FBA or 3PL reconciliation reports revealing lost items
- Discovery of damaged inventory that cannot be sold
- Theft incidents or unexplained inventory disappearance
Platform-Specific Implementation
In QuickBooks Online:
- Use the Journal Entry feature
- Create a dedicated COGS-Shrinkage expense account
- Add variance codes in the description field
In Xero:
- Navigate to Accounting → Advanced → Journal Entries
- Create shrinkage-specific tracking categories
For proper inventory shrinkage accounting, avoid burying losses in generic adjustment accounts. Instead, create visibility by using dedicated shrinkage expense accounts and maintaining documentation that ties to physical counts.
For more guidance, review our complete guide to inventory journal entries.
Prevention & Control Strategies: People, Process, Technology
Effective inventory shrinkage control requires a comprehensive approach that combines human oversight, standardized procedures, and technological solutions. When these three elements work together, businesses can significantly reduce inventory loss.
The Three Pillars of Loss Prevention
Physical Security Measures Start with the basics: controlled access to inventory areas, employee bag checks, and surveillance systems. While sometimes uncomfortable to implement, these fundamental controls establish accountability and deter opportunistic theft.
Process Improvements
Implementing regular cycle counting based on ABC segmentation provides targeted oversight where it matters most. High-value "A" items might be counted weekly, while lower-value "C" items quarterly. This approach balances thoroughness with practicality.
Standard operating procedures should include:
- Clear receiving protocols with blind counts
- Documented disposal procedures for damaged goods
- Variance investigation thresholds and escalation paths
- Regular reconciliation between physical inventory and accounting and inventory software records
Technology Solutions
Modern technology offers powerful tools to combat shrinkage:
- Barcode scanning eliminates manual entry errors and creates digital audit trails
- RFID gates can detect unauthorized merchandise movement
- Real-time alerts flag unusual inventory movements or suspicious patterns
The most effective systems integrate physical tracking with your inventory and accounting software for small business, creating a closed loop where discrepancies are immediately visible and actionable.
When prevention strategies are properly implemented, many businesses can reduce their shrinkage rates from industry averages (1.5-3%) to under 0.5% – a significant improvement that directly impacts profitability.
Ongoing Monitoring & KPIs
Effective inventory shrinkage management requires continuous monitoring through well-defined Key Performance Indicators (KPIs) that identify problems early and measure control effectiveness.
Essential Shrinkage KPIs to Track
- Shrinkage rate by SKU: Calculate percentage of lost inventory for each product to identify high-risk items
- Dollar variance by warehouse: Measure financial impact across storage locations to pinpoint problem facilities
- Lost units by channel: Track discrepancies across retail, ecommerce, and wholesale channels
These metrics should be integrated into dashboard systems and aligned with monthly accounting close procedures, ensuring proper reflection in financial statements and cash flow forecasting.
For businesses using QuickBooks Online or Xero, leveraging their Class/Tracking features allows for more granular reporting on shrinkage patterns and prepares your data for integration with robust inventory management solutions.
When analyzing shrinkage impact, consider how it compounds with landed cost factors like freight and duties. Even small shrinkage percentages can significantly erode profit margins when combined with these additional costs. A comprehensive analysis of both direct losses and their financial implications provides the clearest picture of shrinkage's true business impact.
Case Studies: Retail vs. Multichannel E-Commerce
Real-world examples demonstrate effective inventory control across different business models:
Retail Chain Success:
- Specialty boutique reduced inventory shrinkage from 4.2% to 1.8% with bi-weekly cycle counts
- Discovered 62% of missing items disappeared during transfers, not theft
- Implemented reconciliation protocols saving $42,000 in previously lost inventory
- Monthly closing time cut from 7 to 3 days
E-Commerce Challenge:
- Seller using Shopify and Amazon discovered 3.4% inventory discrepancies
- Automated reports revealed Amazon wasn't crediting returned items properly
- Exception reports flagged missing units before impacting reorder decisions
These inventory shrinkage examples demonstrate how physical theft dominates retail concerns while e-commerce businesses struggle with third-party reconciliation. Both scenarios highlight why integrated accounting and inventory software with inventory journal entries capabilities is essential for accurate financial management.
How Finale Inventory Helps Minimize Shrinkage & Automate Adjustments
Inventory shrinkage represents a significant challenge for growing businesses, eroding profits through a combination of administrative errors, theft, damage, and vendor discrepancies. Finale Inventory provides a comprehensive solution designed specifically to combat these issues with automation and real-time visibility.
Barcode-Driven Accuracy that Eliminates Manual Errors
Manual spreadsheets create blind spots that lead to escalating inventory shrinkage. Finale's barcode scanning technology transforms this process by validating every inventory movement.
"It's allowed us to become way better about keeping inventory in stock, made purchasing in time from overseas much easier. It's virtually eliminated shipping errors.
For the first time in 20 years of running an inventory based business I TRUST what my inventory management system tells me I have in stock."
The mobile scanning application enables your team to perform accurate receiving, transfers, and cycle counts without the data entry errors that plague manual systems. When variances are detected, the system automatically generates the appropriate inventory shrinkage journal entry with detailed reason codes – eliminating the need for manual calculations or adjustments.
Real-Time Cost Management Prevents COGS Surprises
One of the most challenging aspects of managing shrinkage is understanding its financial impact. Finale's weighted-average cost engine updates valuations instantly whenever inventory changes occur, providing accurate financial data at all times.
This real-time approach means that when an inventory shrinkage journal entry posts, you won't experience unexpected COGS spikes that throw off your financial reporting. The system maintains a continuous record of costs per SKU and location, ensuring you always have accurate margin calculations.
Cycle Counting Strategy with ABC Classification
Rather than disruptive annual counts, Finale supports a strategic approach to how to record inventory shrinkage through scheduled cycle counts:
- Configure ABC inventory classification based on value and velocity
- Set automated counting schedules (A items weekly, B monthly, C quarterly)
- Use mobile scanners to count inventory in minutes rather than days
- Capture variance with reason codes that automatically update accounting systems
- Review shrinkage trends through detailed reports by location, SKU, and reason
"Finale is a cost effective way to control our inventory. Through their wireless barcode scanning system, we have increased both productivity and accuracy. Using the scanner's "guided picking" feature, order picking is a breeze and easy for old and new employees to understand as the scanner determines the most efficient picking order and guides them to the correct standard bin where each product is located. The Finale team is always very helpful and understanding whenever I have issues."
Automated QuickBooks/Xero Integration
Finale seamlessly creates the correct journal entry for inventory shrinkage and syncs it with your accounting system. These entries are:
- Automatically generated based on actual system-detected variances
- Tagged with channel/warehouse classes for KPI tracking
- Consolidated daily or weekly to avoid transaction overload
- Complete with detailed audit trails for financial accountability
This automation eliminates manual journal entry creation while maintaining detailed financial records that satisfy auditors and stakeholders.
Preventing Vendor-Related Shrinkage
Many causes of inventory shrinkage originate with vendor transactions. Finale's 3-way match workflow (PO → Receipt → Supplier Bill) automatically flags variances in:
- Quantity discrepancies between ordered and received items
- Price differences between quoted and invoiced amounts
- Missing or unauthorized charges
These controls ensure you only pay for what you receive, eliminating a common source of inventory shrinkage.
"Before finding Finale Inventory, we were having major inventory control issues. Managing inventory at our 10 warehouses was a challenge but Finale Inventory's simple, easy to use platform was quickly able to solve all of our inventory control issues. They are a big reason why we continue to move up the list of America's top 500 growing companies."
Complete Financial Visibility
Beyond shrinkage control, Finale provides landed-cost allocation and real-time costing features that give you complete financial visibility. These capabilities complement your inventory valuation methods and provide the foundation for accurate cost of goods sold formula calculations.
As a cloud-based platform designed for businesses shipping between 500 and 100,000 orders monthly across channels like Amazon, Shopify, and Walmart, Finale scales with your growth while maintaining inventory accuracy across multiple warehouses and 3PLs.
Ready to eliminate inventory shrinkage and gain complete financial control? Schedule a demo today or explore our free trial to see how Finale can transform your inventory management.
Conclusion
Understanding inventory shrinkage—its definition, causes, inventory shrinkage formula, and prevention—is critical for protecting your bottom line. Uncontrolled shrinkage directly erodes profit margins that you've worked hard to establish.
You now have the knowledge to calculate inventory shrinkage accurately, recognize when percentages exceed acceptable industry thresholds, and create proper inventory shrinkage journal entries in QuickBooks Online or Xero. This financial visibility keeps your accounting records aligned with physical reality.
The key takeaway is that layered inventory shrinkage control combined with continuous monitoring through relevant KPIs transforms shrinkage from an unpredictable expense into a manageable business metric. Prevention is always more cost-effective than absorption.
Integrated solutions like Finale Inventory automate counting, costing, and accounting processes so your finance and operations teams stay perfectly aligned. This creates a single source of truth that builds confidence in your inventory data.
Consider exploring accounting and inventory software options and Finale's resources to keep your shrinkage consistently below industry benchmarks. With the right systems in place, you can convert what was once inventory loss into healthier profitability analysis and stronger margins.
Frequently Asked Questions
Inventory shrinkage refers to the loss of inventory that occurs when the actual physical count of products is less than the recorded amount in your accounting records. This discrepancy represents lost merchandise and directly impacts your bottom line. Shrinkage occurs in virtually all inventory-based businesses and can result from theft, damage, administrative errors, vendor fraud, or operational inefficiencies. For multichannel sellers using accounting and inventory software, accurately tracking and accounting for this loss is essential for maintaining financial accuracy and developing effective prevention strategies.
The three main causes of inventory shrinkage are theft, administrative errors, and damage/spoilage. Theft includes both internal (employee) and external (shoplifting) sources, which account for approximately 75% of all shrinkage according to industry studies. Administrative errors encompass mistakes in receiving, data entry, miscounting during inventory checks, or system glitches that create phantom inventory. Damage and spoilage result from improper handling, accidents, environmental conditions, or products exceeding their shelf life. For businesses with multiple warehouses or 3PLs, tracking these causes with proper inventory valuation methods is crucial for implementing targeted prevention strategies.
Fixing inventory shrinkage requires a comprehensive approach that combines prevention and accurate tracking. Implement regular cycle counts instead of relying solely on annual inventories to catch discrepancies earlier. Use barcode scanning technology to minimize human error during receiving, shipping, and counting processes. Install proper security measures and surveillance systems to deter theft. Train employees on proper handling procedures to reduce damage. Implement strict purchasing controls with three-way matching (PO, receiving documents, and supplier invoices) to prevent vendor fraud. Finally, utilize inventory management software that integrates with your accounting system to maintain real-time accuracy and automatically record shrinkage-related adjustments.
Loss is a broader financial concept that encompasses any reduction in assets, including intentional write-offs, while shrinkage specifically refers to the unplanned reduction in physical inventory. Loss might be expected and budgeted for (like planned obsolescence or clearance markdowns), while shrinkage is always unintended. From an accounting perspective, known losses are typically recorded directly as expenses with corresponding inventory journal entries, while shrinkage is discovered through physical counts that don't match system records. Both impact profitability, but shrinkage indicates operational issues or potential theft that requires investigation and process improvements.
Theft accounts for approximately 65-75% of all inventory shrinkage across industries, according to the National Retail Federation. This breaks down into roughly 33% from employee theft (internal) and 35-40% from shoplifting and organized retail crime (external). The remaining 25-35% of shrinkage comes from administrative errors, vendor fraud, and damage/spoilage. For e-commerce businesses, the distribution can vary significantly, with higher percentages of administrative errors due to complex multichannel operations and 3PL handling. Understanding these percentages helps businesses allocate their prevention resources appropriately across security, training, and system improvements.
Acceptable inventory shrinkage levels vary by industry but typically range from 0.5% to 2% of total inventory value. According to the Warehousing Education and Research Council (WERC), world-class operations maintain shrinkage below 0.2% of inventory value. Retail typically experiences higher rates (1-2%) than wholesale distribution (0.3-0.7%). For multichannel e-commerce businesses, rates should be benchmarked against similar operations rather than brick-and-mortar standards. The key is tracking your shrinkage rate over time and implementing controls to reduce it, as every 0.1% improvement directly impacts your cost of goods sold formula and profitability.
Shrinkage directly erodes profitability by increasing the cost of goods sold without corresponding revenue. For a business with a 30% gross margin, each $1,000 of shrinkage requires approximately $3,333 in additional sales to offset the loss. Beyond the immediate financial impact, shrinkage creates inventory inaccuracies that lead to stockouts, overselling, and poor customer experiences. It distorts financial reporting, undermines profitability analysis by channel or product, and can trigger compliance issues with lenders or investors. High shrinkage rates often indicate operational inefficiencies or security problems that, when addressed, can improve overall business performance beyond just reducing the direct cost of lost inventory.
Alternative terms for inventory shrinkage include inventory loss, inventory variance, inventory discrepancy, stock loss, and inventory leakage. In accounting contexts, it's sometimes referred to as inventory adjustment, inventory write-off, or inventory shortage. Retail environments often use the term "retail shrink." In warehouse operations, terms like "unexplained loss" or "unaccounted inventory reduction" may be used. The concept remains the same regardless of terminology—it represents the difference between the inventory quantity recorded in your system and what's physically present. For accounting purposes, these losses directly impact your cost of sales calculations.
Shrinkage in retail is calculated using the shrinkage rate formula: Shrinkage Rate (%) = (Value of Missing Inventory ÷ Total Inventory Value) × 100. To determine the value of missing inventory, use the formula: Missing Inventory = Recorded Inventory Value − Physical Inventory Value. For example, if your system shows $100,000 of inventory but your physical count finds only $98,500, your shrinkage is $1,500 with a shrinkage rate of 1.5%. Retailers often calculate this at the department, category, or SKU level to identify problem areas. Advanced inventory systems can automatically calculate beginning inventory formula values and current quantities to streamline this process.
Retailers in the United States lose approximately $94.5 billion annually to inventory shrinkage, according to recent National Retail Federation data. This represents roughly 1.4% of retail sales nationwide. For individual businesses, shrinkage typically accounts for 1-2% of revenue, though this varies significantly by industry and operational maturity. E-commerce businesses using multiple fulfillment centers face unique challenges—a 0.5% discrepancy across four warehouses and Amazon FBA can represent tens of thousands in lost profit for mid-sized sellers. For businesses in the $2M-$50M revenue range, annual shrinkage costs often range from $10,000 to $750,000, highlighting the importance of effective inventory control systems.
Common events causing inventory shrinkage include employee theft (pilferage, consuming products, or deliberate miscount), shoplifting, organized retail crime, administrative errors (incorrect data entry, scanning errors), vendor fraud (short shipments, overbilling), damage during handling, spoilage of perishable goods, misplaced inventory, return fraud, and processing errors. In e-commerce operations, additional causes include pick-pack errors, mislabeling, lost packages in transit, 3PL discrepancies, and Amazon FBA reconciliation issues. Any business with physical inventory experiences some level of shrinkage, but implementing proper inventory costing methods and control systems significantly reduces these occurrences and their financial impact.
To record inventory shrinkage in accounting, create a journal entry that debits an expense account (Cost of Goods Sold or Inventory Shrinkage Expense) and credits the Inventory asset account for the value of the missing items. For example, if $1,000 of inventory is missing, the entry would be:
Dr. Inventory Shrinkage Expense $1,000 Cr. Inventory $1,000
For businesses using perpetual inventory systems integrated with QuickBooks or Xero, modern inventory management software can automate these adjustments with appropriate reason codes (theft, damage, error) to maintain accurate inventory and accounting software for small business records. These adjustments should be documented with cycle count results or other evidence to satisfy audit requirements.
The formula for calculating inventory shrinkage has two components:
- Shrinkage Amount ($) = Recorded Inventory Value – Physical Inventory Value
- Shrinkage Rate (%) = (Shrinkage Amount ÷ Total Recorded Inventory Value) × 100
For example, if your inventory system shows $200,000 in merchandise but your physical count yields only $196,000, your shrinkage amount is $4,000 with a shrinkage rate of 2%. For businesses tracking inventory across multiple locations, these calculations should be performed at both the warehouse and aggregate levels to identify location-specific issues. Advanced inventory systems can automatically calculate these metrics after barcode-scanned cycle counts, providing real-time visibility into shrinkage trends.
Technology significantly reduces inventory shrinkage through several mechanisms. Barcode scanning systems minimize receiving and counting errors by eliminating manual data entry. Inventory management software provides real-time visibility into stock levels and movements, making discrepancies immediately apparent. Automated cycle count scheduling ensures regular verification of high-value or high-risk items. Three-way matching functionality prevents vendor fraud by comparing purchase orders, receiving documents, and supplier invoices. Security technologies like RFID tags and surveillance systems deter theft. For multichannel sellers, systems that integrate with both marketplace platforms and accounting software maintain accurate inventory journal entries across all sales channels, ensuring discrepancies are quickly identified and addressed.
Retail industries with high-value, easily concealable merchandise experience the highest shrinkage rates, typically ranging from 2-3%. These include pharmacies, jewelry stores, clothing retailers, electronics stores, and cosmetics retailers. Convenience stores and liquor stores also face above-average shrinkage rates of 1.5-2.5%. In contrast, industrial suppliers, automotive parts distributors, and wholesale operations typically maintain lower shrinkage rates (0.3-0.8%) due to controlled access environments and B2B transaction patterns. For e-commerce businesses, rates vary significantly based on fulfillment model, with those using multiple 3PLs facing higher reconciliation challenges than those with in-house fulfillment. Understanding industry benchmarks helps businesses evaluate their performance and set appropriate reduction targets.
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