What is inventory? Definition, types and examples for a small shop

Published 8 October 2026 · 3 min read

Inventory is everything a business holds in order to sell it: the goods on the shelf, the goods on their way from the supplier, and the materials it needs to make or pack them. For a small shop it is usually the biggest thing its cash is tied up in. Here is what the word means, the kinds of inventory a shop holds, how it is valued, and what managing it involves.

Inventory definition, in one sentence

Inventory is the goods and materials a business owns and means to sell, or to turn into something it sells. In Bangla it is মজুদ পণ্য or মজুদ মাল, and in everyday shop talk it is simply “stock”. A book-keeper may say “merchandise inventory” for goods a shop buys and sells as they are, without changing them.

The kinds of inventory

Textbooks usually name three for a maker: raw materials, work in progress and finished goods. A tailoring business has all three: the fabric, the half-stitched kameez, and the finished one waiting for a buyer.

A shop that buys and sells usually holds finished goods, plus two kinds that are easy to forget: packing materials, like poly bags, boxes and tape, which run out at the worst moment, and goods in transit, already paid for but not yet on the shelf.

What counts, and what does not

The products you hold to sell count, and so do the ones you have paid for that are still on their way. The rack they hang on, the phone you take orders on and the sewing machine do not: those are equipment, not inventory. A parcel that has gone out with the courier has left your inventory, even though the money for it has not arrived yet.

How inventory is valued

At what it cost you, not at what you will sell it for. That cost includes getting the goods to you: a kurti bought for ৳600 with ৳50 of transport on each piece is ৳650 of inventory. Valuing stock at its selling price counts profit you have not made yet.

An example from a small online shop

A clothing Page has 120 kurtis in four sizes that cost ৳650 each landed, 40 panjabis at ৳900, a lot of 60 scarves on its way from the wholesaler at ৳150 each, and ৳3,000 of poly bags and tape. Its inventory is ৳78,000 + ৳36,000 + ৳9,000 + ৳3,000 = ৳1,26,000. That is the cash the shop has on its shelves instead of in its bKash account.

What inventory management means

Inventory management is keeping the right amount of each thing: knowing what you have, taking each sale off the count, buying more before the fast sellers run out, and not buying more of what does not sell. Done well, customers rarely hear “sold out” and cash does not sit on the shelf for months.

Our guides on keeping stock records, inventory control methods and inventory turnover go through each part with examples.

Sells Pilot keeps a shop’s inventory for it: a count for every size, taken off the moment something sells on Messenger, Instagram, your shop website or the counter, the buying price of each delivery, and a reorder page that shows what is nearly gone and how fast it has been selling.