The Stocky Shutdown Exposes a Hidden Profitability Crisis for Product Brands

On August 31, Shopify is sunsetting Stocky, a free inventory tool used by over 120,000 merchants. For most sellers of physical products and goods, there is no native replacement decided, and retailers will be left scrambling with Shopify’s condensed features. Furthermore,  Shopify has confirmed that current Stocky user data will not automatically migrate to its native system.

Stocky’s closure, while undoubtedly creating chaos and forcing merchants into a time crunch, is really exposing an inventory problem that's been waiting on the sidelines. Stocky provided purchase order management, supplier tracking, and demand forecasting, none of which will exist in Shopify's basic admin.

This gap will be most noticeable for brands that assemble, bundle or manufacture products as Stocky is used to track components and raw materials. Without a replacement for this feature, merchants are flying blind with no visibility on their true cost of goods sold (COGS).

Inventory has always been a point of vulnerability for SMBs to tackle and requires its own dedicated software. The shutdown makes the need for a reliable and integrated tool more visible.

What Merchants Need to Address the Gap

Many multimillion-dollar product brands still don't know their true product costs, current stock position, or whether the orders they're shipping are profitable. In fact, many marketing teams routinely optimize for return on ad spend (ROAS) while overlooking true COGS. This leaves small cost increases to quietly erase margins with no one catching it.

Merchants should prioritize finding the right system for their business that helps provide real-time inventory across channels, revealing the exact cost and amount of inventory a business has at any given time. SMBs can often uncover these numbers during onboarding of a cloud software and find that they have been selling at a loss for months without realizing it. The math only becomes clear when inventory and operations data are connected. Ensuring a small or midsized business adopts the correct system for their brand helps uncover a scaling problem. Traditional tools that helped the brand get to that million-dollar revenue total often can't tell it if the next $1 million will be profitable.

There's also an emerging consequence beyond internal operations. The world of AI commerce now prioritizes products with real-time stock data. AI-powered discovery tools are increasingly unable to surface or fulfill products from brands whose inventory feeds aren't live and accurate. Inventory visibility has now become a lifeline for small brands to stay relevant and machine visible.

Framework for Success

Retailers can use this time to prepare their operations and turn the disruption into a strategic upgrade.

First, businesses should audit what they already have. Before migrating to another inventory tool, conduct a count of raw materials and component inventory count, without assuming your current records are accurate. Brands should be aware of landed cost per SKU, including materials, labor, and overhead.

Businesses should then evaluate alternatives by business model, not brand. For example, retailers tracking finished goods have fundamentally different inventory needs than those that assemble, bundle or manufacture. The replacement tool should match the complexity of the operation. Key criteria for brands to assess include real-time stock tracking, bill of materials support, multichannel order sync, and integration with existing tools (not ripping and replacing the whole stack).

For brands selling across Shopify, Amazon.com, B2B wholesale, and physical retail simultaneously, the inventory matrix becomes too complex for any single-channel tool to manage. Mapped supplier lead times are equally important as they give brands instant clarity on what they can promise customers when a demand spike hits.

Additionally, retailers should use the transition to establish a profitability baseline. This is a rare forcing function to finally connect inventory data to actual margin data. This will ensure brands know, SKU by SKU, whether they're making money or losing money.

An Opportunity for Better Inventory

Instead of viewing August 31 as a disruption, brands should treat this closure as a deadline to level up their inventory game, emerging with something more valuable than a Stocky replacement.

Inventory management has evolved from a back-office function into the forefront of sustainable growth for product businesses. If SMBs take this time to gain a real understanding of their operations, the proper technology implemented will help serve their business, not the other way around.

Riikka Soderlund is the COO of Katana, a provider of inventory management software for product businesses.