IFO vs LIFO: Inventory Valuation Methods for Shopify Stores

How you value your inventory affects your taxes, profit margins, and business decisions. Here's what you need to know.

What Is FIFO?

First In, First Out means selling the oldest inventory first. Best for perishable or trend-sensitive products.

What Is LIFO?

Last In, First Out means selling the newest inventory first. Can reduce taxes in inflationary periods but isn't allowed in many countries.

Which Should Shopify Stores Use?

FIFO is the standard for most ecommerce stores because:

• Reduces waste from expired/outdated products
• Accepted globally (IFRS doesn't allow LIFO)
• More accurate profit reporting
• Better reflects actual product flow

How to Implement FIFO in Shopify

1. Track receiving dates on all inventory
2. Fulfill orders from oldest stock first
3. Use inventory management apps that support FIFO
4. Regular cycle counts to verify accuracy

PODesk tracks receiving dates to support FIFO inventory management.