Shopify ABC analysis groups products by their contribution to revenue: A products contribute the largest share, followed by B and C. Use the grade to prioritize attention and replenishment, but not as a standalone markdown rule. Shopify notes that its grade calculation uses retail-price revenue and does not factor product cost.
What ABC analysis measures
ABC analysis ranks products by their relative contribution to a result. Shopify describes its product analysis broadly as:
- A grade: products contributing around 80% of revenue;
- B grade: the next roughly 15%;
- C grade: the remaining roughly 5%.
These are portfolio shares, not universal product performance targets.
What the Shopify grade excludes
Shopify notes that revenue in the ABC report is based on retail price and excludes discounts, and that product cost does not determine the grade. Therefore:
- an A product is not automatically the most profitable;
- a C product is not automatically unprofitable;
- the grade does not directly measure stock cover;
- the grade does not prove a product should be discounted.
Use grades for attention allocation
ABC is useful for deciding where operational attention matters most.
For A products, avoid stockouts, monitor replenishment, and protect customer experience. For C products, question repeated replenishment and the cost of carrying breadth. For B products, watch movement toward A or C.
Combine grade with inventory state
Create a matrix:
| Healthy pace | Weak pace | |
|---|---|---|
| A grade | Protect availability | Investigate urgently; high revenue relevance changed |
| B grade | Monitor and replenish deliberately | Review merchandising and stock cover |
| C grade | Keep if strategically useful | Consider exit or reduced buying |
Then add gross margin, inventory value, season, and product role. A C-grade accessory may support an A-grade hero product and still belong in the assortment.
Avoid automatic C-grade clearance
C means low revenue contribution relative to the portfolio. It can include new launches, niche products, necessary size coverage, and strategic add-ons. Use the grade to open a review.
Connect ABC to buying
The most durable value comes from changing future inventory decisions. Reduce reorder quantities for persistent weak C products, protect availability for profitable A products, and review supplier terms or assortment breadth where inventory value remains trapped.
Frequently asked questions
Should I discontinue every C-grade Shopify product?
No. Review strategic role, margin, newness, seasonality, inventory value, and whether it supports other products. C is a revenue-contribution classification, not a deletion instruction.
Does Shopify ABC analysis include product cost?
Shopify states that product cost does not factor into an item's grade and that the report's revenue uses retail price while excluding discounts.
Can a product move between grades?
Yes. Grades reflect performance over the report's data period and portfolio. Changes in sales or assortment can move a product between categories.
Sources and further reading
Product interfaces and documentation change. Sources were checked on July 22, 2026.
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