What Is Service Level? The Simple Guide for E-commerce Sellers

Service level is the percentage of time you have stock available when customers want to buy. That's it. A 95% service level means you can fulfill orders immediately 95% of the time. The other 5%? You're out of stock.

Now here's what most sellers get wrong: they think higher is always better. It's not. Let me explain why.

Why 99% Service Level Can Kill Your Business

Going from 95% to 99% service level sounds like a small jump. But it can double or triple your required safety stock.

Here's a real example: To maintain 95% availability, you might need 50 units of safety stock. To hit 99%, you suddenly need 150 units. That's 100 units of extra inventory—dead money sitting in your warehouse—for just 4% better availability.

Multiply that across your entire catalog. If you have 200 SKUs, that difference could mean €50,000 in extra inventory. Can you really afford to have €50,000 collecting dust for a marginal improvement in availability?

The Service Level Formula That Actually Matters

The basic math: Higher Service Level = More Safety Stock = More Cash Tied Up

Each percentage point up costs exponentially more:

• 90% service level = moderate safety stock
• 95% service level = 50% more safety stock
• 99% service level = 200% more safety stock
• 99.9% service level = 400% more safety stock

The curve goes vertical after 95%. That's why most successful e-commerce businesses operate between 92-96% service level. It's the sweet spot between availability and profitability.

Different Products Need Different Service Levels

Your bestseller that drives 30% of revenue? Run it at 97% service level. That slow-moving variant in an unpopular color? 85% is fine.

The practical approach:

• Top sellers (A-items): 95-97% service level
• Regular sellers (B-items): 90-93% service level
• Slow movers (C-items): 85-90% service level

This strategy keeps your cash working where it matters most. You're protecting availability on products that actually drive revenue while accepting occasional stockouts on items that barely move.

Service Level by Channel

Amazon demands near-perfect availability. Drop below 95% and watch your ranking crater. Bol.com is similar—stockouts directly hurt your performance metrics.

Your own website is more forgiving. You can run 90% service level and use "notify me" buttons for stockouts. No penalties, just temporary unavailability.

This is why smart sellers set different service levels per channel. Amazon gets 97%, your website gets 92%. Same product, different availability strategies based on the real cost of stockouts.

How to Find Your Service Level Sweet Spot

Start at 95% for everything. Run this for three months and measure:

• How often are you actually stocking out?
• What's the real impact when you do?
• How much safety stock are you carrying?

Then adjust. Products that never stock out? Lower to 92%. Products constantly running out despite 95% target? Maybe they need 97%. Or maybe you need better forecasting.

The key insight: service level isn't about perfection. It's about profitable availability. Every business has a different optimal level based on margins, carrying costs, and customer expectations.

What Stockpilot Does Differently

Stockpilot automatically calculates service levels per SKU and per channel. It knows your Amazon inventory needs 97% availability while your B2B channel can run at 90%. The system adjusts safety stock accordingly, keeping your capital efficient.

The AI learns from your actual sales patterns, not theoretical formulas. It sees that specific SKU always spikes on Tuesdays and adjusts. It notices your supplier is consistently late and buffers accordingly. Real patterns, real adjustments, real profitability.

The Bottom Line

Service level is a tool, not a target. The goal isn't 100% availability—it's maximum profitability. Sometimes that means accepting stockouts. Sometimes that means carrying extra buffer. The art is knowing the difference.

Most e-commerce businesses find their sweet spot around 94-95% overall service level. High enough to keep customers happy and algorithms satisfied, low enough to keep working capital reasonable.

Stop chasing perfect availability. Start chasing profitable availability.

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