How to Build an Open-to-Buy Plan for an Omnichannel Brand

An open-to-buy plan is an important tool for managing inventory and budgeting in retail businesses.

1. Why an Open-to-Buy Plan Matters When Inventory Is Shared Across Channels

1.1 What an Open-to-Buy Plan Actually Controls

An open-to-buy plan sets the stock buying budget for a set period. First, it works out how much stock must arrive to meet forecast sales and the target closing stock level. Then, it subtracts orders the business has already placed. The result shows what the business can still order within its stock plan—not how much cash it has in the bank.

In a single-store business, a buyer may compare last year’s sales with current stock and schedule the next delivery. By contrast, a brand that sells through many channels faces more demands on the same stock. For example, a wholesale order can reduce the units a Shopify customer can buy without changing the total stock in the building. An Amazon FBA transfer may move inventory out of a central warehouse without creating a new company-wide purchase. Also, a container booked three months ago may already cover demand that looks new in the latest sales plan.

The open-to-buy plan makes these events visible within a consistent purchasing budget. It works well for fashion lines, seasonal sports gear, furniture, and other goods where early or heavy buying ties up cash and leads to price cuts.

1.2 Where Open-to-Buy Planning Stops—and Other Planning Begins

Open-to-buy answers a financial question: how much additional merchandise should the business commit to receiving? However, it cannot pick the right sizes, choose a vendor, or set the exact reorder amount for each SKU on its own. Instead, reorder points, safety stock, product mix plans, allocation rules, and sales forecasts fill those gaps.

Consider a business with a $60,000 remaining buying budget. That number does not establish whether the next order should contain 600 jackets or 4,000 accessories. The answer depends on sales speed, margins, lead times, size ranges, and service goals. So use OTB as a spending guide alongside those day-to-day tools, not in place of them.

A tiny brand with one product and fast supplier deliveries may not need a separate OTB process. However, the need grows when many buyers, product groups, sites, and advance orders make informal buying risky.

2. The Open-to-Buy Plan Formula: Retail Value, Cost, and Committed Orders

2.1 Calculate Gross Merchandise Receipts Before Available OTB

First, use this standard retail-value formula:

Gross required receipts at retail = Planned retail sales + Planned markdowns + Target ending inventory at retail − Beginning inventory at retail

This formula tracks stock flow, not cash flow. In this version, forecast sales show the retail value of stock that customers will buy. Planned price cuts reduce the retail value of stock under the chosen accounting method. Finally, target ending stock shows how much the buyer wants to keep after the month ends.

Next, subtract the orders the business has already placed:

Remaining uncommitted OTB = Gross required receipts − Committed receipts scheduled for the period

For example, a buyer may place an order in September that will arrive in November. Count that order as a November receipt. If the warehouse has received part of it, subtract only the amount still due. The approach aligns with Shopify’s explanation of open-to-buy planning, which distinguishes inventory requirements from existing orders.

2.2 Calculate a Cost-Based Open-to-Buy Budget Without Mixing Valuations

Finance and buying teams usually need a cost-based view because suppliers bill the cost of goods, not the prices customers might pay. When the business values all stock at cost, use this formula:

Required receipts at cost = Forecast cost of goods sold + Planned inventory losses at cost + Target ending inventory at cost − Beginning inventory at cost

After that, subtract the cost of stock already on order. For example, take $175,000 in forecast COGS, $5,000 in expected stock losses, a $210,000 closing stock target, and $230,000 in opening stock. Required receipts equal $160,000. If $105,000 is already due from suppliers, uncommitted OTB is $55,000.

However, do not add a $10,000 sale-price cut to the cost formula just because the store lowered a price. Markdowns at retail and inventory write-downs at cost are different events. If accounting rules require a cost write-down, record it as its own clear change.

2.3 Understand Retail OTB, Cost OTB, and Unit OTB

Planning basis	What is measured	Most useful for	Common mistake
Retail OTB	Expected selling-price value	Merchandise category budgets and markdown planning	Comparing retail dollars with supplier costs
Cost OTB	Merchandise inventory cost	Purchasing investment and finance reviews	Ignoring freight, duties, or valuation assumptions
Unit OTB	Physical units	Quantity and capacity planning	Assuming all units have the same cost

A simple retail-to-cost estimate is cost OTB = retail OTB × (1 − gross margin rate), provided the margin and valuation bases are compatible. At a 40% margin, $100,000 of retail OTB implies approximately $60,000 at cost. A 40% markup on cost is not the same as a 40% gross margin.

As a result, many teams keep both retail and cost plans: merchandising manages assortment value, finance manages investment, and operations checks unit requirements. Make one version the main approval guide so two teams do not approve different orders against the same need.

3. Build Reliable Inputs Before You Build an Open-to-Buy Spreadsheet

3.1 Reconcile Sellable Stock, Owned Stock, and Reserved Stock

A sound open-to-buy plan starts with a stock balance that means the same thing to every team. For example, stock on the shelf, stock in the accounts, and stock ready to sell often show different totals. Quality checks, customer holds, damaged goods, and goods in transit cause many of these gaps.

For a company-wide buying budget, first count the value of stock the business owns on the plan date. Then track the units the team can promise to customers. If a buyer holds 300 units for a wholesale order, those units may still count as opening stock. Yet the hold reduces what the team can sell elsewhere. Subtracting those units from opening stock and then counting the wholesale sale again makes the buying need look too high.

Warehouse counts and adjustment records must agree with the inventory ledger. When a brand needs more dependable location-level movements, XoroWMS warehouse management is one example of software built around receiving, stock tracking, and omnichannel fulfillment. Regardless of the system, buyers should resolve stock gaps before they approve more orders.

3.2 Normalize Forecasts Across Shopify, Amazon, Retail, and Wholesale

Start by pulling demand by SKU, product group, channel, and planned ship period. Next, compare past sales with promotions, launches, and firm wholesale orders. Convert forecasts to the same cost or retail basis as the model; a $100 wholesale order and a $100 direct-to-consumer order may consume different quantities or deliver different margins.

Then check for demand that appears twice. For instance, one wholesale order might arrive through EDI, show up in an ERP order list, and sit in the sales team’s forecast. It is still one customer requirement. In the same way, one Shopify order shipped from a store should still count as one sale.

Shopify’s Xorosoft ERP app listing describes synchronization of orders, inventory, refunds, and fulfillment-related information. These links can feed the plan with useful data. Still, the team must separate firm orders, expected demand, and stock transfers.

3.3 Capture Purchase Commitments and Financial Constraints

For each supplier order, record units still due, cost, expected arrival date, destination, and units received so far. Also include freight and duty costs when they form part of stock value. Track vendor minimums, case sizes, and fees for changing orders.

Meanwhile, finance should maintain a separate cash and vendor-payment plan. A buyer may have $80,000 of uncommitted OTB but insufficient liquidity to fund an immediate deposit. Likewise, a healthy cash balance does not justify buying stock above the agreed target. These are two different controls and both matter.

4. How to Build an Open-to-Buy Plan in Eight Operating Steps

4.1 Set the Planning Horizon and Category Ownership

Start with a rolling six-month view and give each month its own receipt budget. Add weekly reviews during seasonal peaks or major promotions. Assign each category to a responsible buyer and define who approves its budget. Apparel may need collection-level planning, while furniture might be grouped by category and supplier lead time.

Also use the same fiscal calendar across teams. Some retailers use a 4-5-4 calendar to keep retail weeks comparable across periods. The plan must look far enough ahead to show orders buyers need to place now for delivery months later, even when next week’s sales look steady.

4.2 Assemble the Opening Inventory Position

Take the reconciled ending inventory from the previous period and use it as the new period’s beginning balance. Separate locations for operational visibility, but do not add the same transferred stock to both warehouses. Confirm what is owned, what is on consignment, and what remains in transit under the relevant ownership terms.

Before buyers act, flag stock they cannot use for new orders: customer holds, blocked goods, expired items, or products set aside for another market. These flags change where stock can go, even if they do not change its book value.

4.3 Forecast Channel Demand Without Double Counting

First, forecast each channel. Then combine the results. Shopify sales may rise after a campaign. Amazon demand may depend on search and stock levels. Store sales follow foot traffic, while wholesale relies more on order schedules. The forecast should describe when inventory will ship, not simply when a purchase order was entered.

Use firm orders first. Then estimate demand not yet covered by an order. If the base forecast already includes a wholesale order, replace that estimate with the firm order or add only the extra amount. This avoids artificial demand spikes that distort the open-to-buy plan.

4.4 Establish Target Ending Inventory by Category

Next, work backward from future sales and vendor lead times. A category with a long replenishment cycle may require more forward coverage than one with reliable weekly deliveries. For seasonal goods, buyers should also check the risk of price cuts if stock remains after the peak.

Weeks of supply, service goals, shelf display needs, and future promotions all help. However, one stock target rarely fits every product. A high-margin accessory with stable demand may justify a different stock policy from a short-season fashion collection.

4.5 Calculate Required Receipts and Remaining Open-to-Buy

Apply the appropriate OTB formula for each category and month. At cost, add expected COGS, inventory losses, and desired ending stock, then subtract beginning stock. Then compare the result with deliveries suppliers have already promised.

For example, if the plan needs $140,000 in receipts and suppliers already owe $115,000, available OTB is $25,000. If commitments exceed the requirement, show the negative balance rather than hiding it. A negative number calls for a review; it does not give the buyer permission to cancel a firm contract.

4.6 Translate the Budget Into Purchase Recommendations

Next, move from dollars to actual products. Use SKU forecasts, reorder points, weeks of stock, vendor minimums, pack sizes, and approved suppliers. A $25,000 OTB budget cannot tell buyers which SKUs to choose. Instead, they must weigh product needs and the cost of a stockout.

Evaluate supplier lead times against the planned receipt month. An order entered in November may arrive in January. If the vendor cannot deliver in November, that order cannot cover November demand. So record the arrival month and payment schedule in separate fields.

4.7 Review Exceptions Before Approving Supplier Orders

Next, have buying, finance, and warehouse teams review the same proposed receipts. Finance tests working-capital exposure. Operations checks warehouse capacity, inventory allocation, and receiving timing. Purchasing checks supplier reliability, terms, and minimum quantities. Sales explains unusual promotions or wholesale commitments.

Approval rules must cover the amount and the reason for any override. For example, a buyer may approve orders within the category OTB cap but need a manager’s sign-off to go over it for a launch. Record the reason for each override so future reviews can distinguish justified decisions from repeated forecast errors.

4.8 Close the Loop With Actual Sales and Receipts

At month-end, compare the forecast with actual net sales, shipped orders, stock losses, supplier receipts, and closing stock. Then carry forward the stock value from the accounts, not last month’s old forecast. Move delayed purchase orders into their new expected arrival periods, and remove canceled commitments.

Do not rewrite historical forecasts to make them match actual results. Instead, keep both versions so the team can see whether the gap came from sales, late deliveries, bad data, or buyer choices. This review is what turns an open-to-buy plan from a spreadsheet exercise into an operating discipline.

5. A Six-Month Open-to-Buy Plan Example for a Growing Omnichannel Brand

5.1 Start With Channel-Level Demand at Inventory Cost

Consider a fictional U.S. consumer goods brand that sells through Shopify, Amazon, stores, and wholesale. It owns stock in a primary distribution center, replenishes an Amazon FBA location, and reserves some quantities for confirmed wholesale orders. For this example, the team sets its main buying budget at cost.

For the first month, forecast COGS by channel is as follows:

Channel	Forecast merchandise cost
Shopify direct-to-consumer	$80,000
Amazon	$50,000
Physical retail	$25,000
Wholesale	$35,000
Total forecast COGS	$190,000

Importantly, these figures show stock cost, not sales revenue. Cost-based forecasts matter because a $100 item sold through a wholesale account may generate different revenue from the same unit sold directly, yet both remove the same inventory cost. So value stock the same way across channels, and do not count a wholesale shipment twice when it appears in both orders and forecasts.

5.2 Work From Gross Receipts to Remaining Buying Capacity

Now assume opening stock totals $240,000 at cost. The brand expects $5,000 in inventory losses and targets $210,000 of ending inventory. It already has $105,000 of outstanding purchase orders due to arrive in this month.

Monthly cost-based OTB calculation	Amount
Beginning inventory	$240,000
Forecast COGS	$190,000
Planned inventory losses	$5,000
Target ending inventory	$210,000
Gross required receipts	$165,000
Committed incoming receipts	$105,000
Remaining uncommitted OTB	$60,000

Therefore, required receipts equal $190,000 + $5,000 + $210,000 − $240,000 = $165,000. After deducting $105,000 in committed arrivals, the open-to-buy plan allows $60,000 in additional planned receipts. However, the buyer does not have to pay a $60,000 deposit at once. Finance must still check payment dates, freight costs, and available cash.

5.3 Carry the Plan Forward Without Breaking Inventory Continuity

Each month, the rolling model uses last month’s planned closing stock as its opening balance. Each month also carries its own demand forecast and supplier commitments. Below is a sample plan. Each figure shows thousands of U.S. dollars at stock cost:

Metric ($000)	M1	M2	M3	M4	M5	M6
Beginning inventory	240	210	200	210	230	220
Forecast COGS	190	180	210	220	195	205
Planned inventory losses	5	4	5	5	4	5
Target ending inventory	210	200	210	230	220	240
Required receipts	165	174	225	245	189	230
Committed receipts	105	130	180	210	135	150
Remaining OTB	60	44	45	35	54	80

The M4 requirement, for instance, is 220 + 5 + 230 − 210 = $245,000. Once $210,000 of committed supplier receipts is considered, only $35,000 remains uncommitted. These changes do not prove good or bad results. Instead, they show how demand, stock targets, and supplier orders shape buying capacity.

If Shopify demand in M1 rises by an additional $16,000 at cost while the ending target stays unchanged, gross required receipts would rise from $165,000 to $181,000. If existing orders stay the same, remaining OTB would rise to $76,000. Even then, the team must check whether suppliers can deliver on time. A recalculated budget cannot solve a lead-time problem by itself.

6. Adapt Open-to-Buy Planning to Each Channel Without Fragmenting the Budget

6.1 Shopify and Direct-to-Consumer Sales Need Fast Forecast Updates

Direct-to-consumer campaigns can change demand within days. So use net shipped sales, sellable stock, returns, discounts, and upcoming promotions instead of repeating last month’s growth rate. When Shopify shares stock with wholesale, use channel-specific demand inputs but one consolidated inventory valuation.

A promotion may increase predicted unit demand yet reduce average selling price. As a result, the retail OTB and margin plan may change even when the cost of needed receipts stays the same. Track both when merchandising decisions depend on promotion economics.

6.2 Amazon, FBA, and Store Transfers Require Location Discipline

First, separate Amazon FBA stock from products in the main warehouse. Next, track inbound units, sellable FBA stock, damaged units, and customer holds. A move between owned warehouses does not normally increase total company purchases. However, it changes what each site can sell.

Likewise, stores may request emergency replenishment even when the brand’s aggregate stock is sufficient. Assess transfers before placing new company-wide orders. In addition, connected commerce and warehouse integrations can make order and stock feeds easier to reconcile, but the team must define which system owns each inventory status.

6.3 Wholesale and EDI Demand Need Firm-Order Separation

Wholesale demand often arrives in larger orders with strict delivery promises. A large retailer may book units well before the scheduled ship date, and the supplier may reserve inventory for that account. Record these holds against sellable stock. Then count the shipment as demand in the right period.

If a confirmed EDI order replaces an earlier wholesale forecast, do not add the whole order on top of the original demand estimate. Instead, keep firm orders, likely orders, and early sales leads in separate groups. A high-volume account with a penalty for late delivery may justify a different safety-stock or allocation policy, but that decision should be visible to finance rather than buried inside a sales spreadsheet.

7. Protect the Open-to-Buy Budget Against Returns, Delays, and Inventory Losses

7.1 Forecast Return Disposition Instead of Assuming Every Return Is Resellable

Returns can change net demand, especially online. The National Retail Federation’s 2025 Retail Returns Landscape estimated that 19.3% of online sales would be returned during 2025. That industry estimate is context, not a recommended returns assumption for every brand or a measured 2026 outcome.

For the buying plan, group returns by what happens next: resale, quality check, repair, clearance, or disposal. However, a refund does not put a unit back on the shelf. Estimate when each unit can sell again. Otherwise, the buying plan may count stock that will never return.

7.2 Model Delivery Variability and Real Purchase Commitments

A supplier order is not the same as stock on hand. Therefore, keep arrival dates current and compare vendor promises with past delivery results. A delayed shipment moves its planned receipt into another period, which can temporarily create a shortfall even when the six-month total order quantity is sufficient.

If the vendor cannot change an order, keep it in committed receipts even when the new OTB turns negative. Buyers can investigate alternatives such as later delivery, a different warehouse destination, or a revised assortment, but should not conceal an overcommitted period merely to make a budget look healthy.

7.3 Distinguish Purchasing Capacity From Cash Availability

Open-to-buy tracks the flow of stock. By contrast, cash forecasts track payments and customer money coming in. The two timelines rarely match perfectly. Suppliers may require deposits months before the goods arrive, while a wholesale customer may pay after shipment.

For that reason, review OTB with bills due, credit lines, inbound freight, import duties, and cash targets. A healthy buying budget cannot replace treasury review. Likewise, cash in the bank does not justify more buying when stock rooms are already full.

8. Keep the Open-to-Buy Plan Current With the Right Review Rhythm

8.1 Use Monthly Budgets With Weekly Exception Reviews

Monthly buying budgets set a useful rhythm for most product groups. Keep weekly exception reviews for sudden demand shifts, promotional launches, stockouts, supplier delays, or a large wholesale commitment. The goal is to spot issues in time to change orders, not to rebuild every forecast each day.

Choose a cutoff for actual sales and receipts so teams do not report different results for the same period. Archive each approved plan version and show changes in assumptions. Otherwise, managers cannot tell a better forecast from numbers that someone changed after the month ended.

8.2 Track Metrics That Explain Why the Buying Budget Changed

Track forecast accuracy and bias along with late receipts, differences in closing stock, and on-time vendor delivery. Inventory turnover—cost of goods sold divided by average inventory at cost—helps show whether merchandise investment is producing sales at a reasonable pace. Also review sell-through and weeks of stock for each product group.

An open-to-buy plan should also track override reasons. A buyer who exceeds OTB for a strategic launch may have a valid case. A buyer who exceeds it each month because the team posts receipts late faces a process issue. These are different problems requiring different solutions.

8.3 Build Two Scenarios Before the Next Major Buying Commitment

Before major buys, test both high-demand and low-demand cases. First, ask what happens if a campaign succeeds but the vendor cannot send more stock. Then ask how much extra stock remains if sales drop and firm supplier orders cannot change.

Show how each case changes needed receipts, closing stock, profit margins, and cash needs. Scenario planning is most useful when it identifies a decision that can still be made, such as splitting a purchase order, postponing one delivery, or reallocating available stock before buying more.

9. Apply the Open-to-Buy Plan Differently Across Product Industries

9.1 Apparel and Sporting Goods Need Seasonal Buying Boundaries

Fashion and sports brands often order their product mix before peak season. Their open-to-buy plan should separate core replenishable items from seasonal collections with limited selling windows. For fashion, size and color availability matters as much as total category value. For example, a buyer can stay within budget and still lose sales when only the wrong sizes remain.

Likewise, sports gear demand can shift with events, seasons, and weather. Buyers should monitor sell-through early enough to redirect remaining purchasing capacity instead of waiting until end-of-season markdowns are inevitable.

9.2 Furniture, Food, Wholesale, and Manufacturing Need Additional Controls

Furniture buyers must consider long lead times, bulky storage requirements, and the cost of moving slow stock. Even an affordable order can fill the warehouse beyond its space limit. Food businesses need shelf-life and lot-level controls; a financial budget cannot justify inventory that will expire before sale.

For wholesale, confirmed orders and customer allocations matter more than broad retail sell-through alone. Manufacturers need component planning and production schedules, not just finished-goods purchasing budgets. In these sectors, OTB sets the buying budget. Meanwhile, reorder rules, material plans, and daily stock systems guide each item.

10. Open-to-Buy Planning Mistakes That Distort Purchasing Decisions

10.1 Counting the Same Demand or Inventory More Than Once

Often, the most costly errors come from how teams count stock, not from the math. A wholesale order appears in both the forecast and EDI feed. One system counts a transfer at the new site while another still counts it in transit. A planner adds an open supplier order to opening stock and then subtracts it again from available OTB. As a result, the budget changes even though real demand has not.

Set clear rules for how transfers, customer holds, and receipts enter the plan. Reconcile those rules regularly with accounting and warehouse reports.

10.2 Treating Every Positive OTB Balance as Permission to Spend

Positive OTB shows room in the buying plan, not a promise of cash, storage space, or supplier stock. Buyers must still evaluate order economics and timing. Sometimes moving stock between sites makes more sense than buying more. Sometimes a delayed shipment requires a temporary substitution rather than an additional large order.

On the other hand, negative OTB also needs a careful review. It may reflect overbuying, but it may also result from an intentional inventory build or receipt-period mismatch. Investigate before adjusting firm supplier commitments.

10.3 Using One Demand Rule for Every Category

Applying one sales growth rate to apparel, furniture, food, and spare parts creates a false sense of accuracy. Historical velocity, promotional sensitivity, margin, lead time, and stockout consequences differ. Keep one total buying budget, but set forecasts and stock goals that fit each product group.

The practical test is whether the plan helps a buyer make a better order decision. If it only produces a monthly number that nobody can translate into assortments or supplier commitments, the operating process is incomplete.

11. Choose the Right System for Maintaining an Open-to-Buy Plan

11.1 When a Spreadsheet Remains the Best Tool

For a brand with few product groups, one warehouse, and a modest number of orders, a spreadsheet may be enough. It lets the team control formulas and inputs without a costly setup. However, someone must refresh data, save approved versions, check formulas, and own the plan. Even a simple model can work well when the inputs are trusted and purchasing approvals are disciplined.

11.2 When Specialist Planning Software Adds Value

Specialist stock planning tools can offer category forecasts, reorder advice, and budget views without changing every business system. For example, Inventory Planner’s open-to-buy documentation describes planning by category, supplier, warehouse, retail value, cost, or units.

Before buying, check whether the tool receives correct stock levels, open orders, returns, and sales feeds. Strong forecasting built on delayed inventory data can still produce weak buying recommendations.

11.3 When Integrated ERP Becomes Worth Evaluating

An ERP becomes useful when the main issue is keeping buying, stock, finance, and shipping teams in sync—not just predicting sales. XoroONE is an example of a cloud ERP platform connecting several of these workflows for inventory-driven businesses. So test whether real customer orders, supplier receipts, warehouse events, and accounting figures can support one buying review.

However, do not assume every ERP has a built-in OTB screen or each planning feature. During a software review, test the same real cases the spreadsheet handles: a partial vendor receipt, a wholesale reservation, an Amazon transfer, a returned unit that fails inspection, and an over-budget purchase approval. Ask how exceptions are logged and which team owns forecast assumptions.

12. Make the Open-to-Buy Plan Part of the Next Purchasing Decision

A useful open-to-buy plan does not need the most complex spreadsheet. It is the one buyers actually consult before committing inventory capital. Start with checked stock, channel sales forecasts, practical closing stock goals, and vendor orders in their real arrival months. Review the numbers alongside cash availability and supplier constraints.

After that, check the plan against results. Compare forecasts with sales, fix arrival dates, explain unusual orders, and use real opening stock balances. If manual checks keep slowing decisions, see whether connecting stock, buying, warehouses, and finance would help.

For an inventory-driven business evaluating that next step, contact Xorosoft to discuss the existing workflow and the operational requirements a connected system would need to support.