Smoke Shop Cycle Counting: The What, Why, and How

Even small smoke shops might handle a huge number of items — from cases of cigarettes and cigars to vape refills and pens. An accurate view of your smoke shop inventory is essential to keeping customers happy, reducing overhead, and boosting profits.

But that’s easier said than done. 

Even with a modern inventory management system, discrepancies can arise, leading to dead stock, decreased profits, and unhappy customers. You could do a physical inventory audit, but you might have to shut down the store while you do it. 

That’s where cycle counting comes to save the day. Regularly running a smoke shop cycle count helps spot and fix inventory problems before they get out of hand — and it’s significantly less time-consuming than a full inventory audit. 

The bottom line: the best time to optimize your inventory is now. 

In this guide, we’ll break down everything you need to know about smoke shop cycle counting:

• The basics of cycle counting
• Why it helps your business
• When to do your counts
• Step-by-step counting methods
• Practical tips for success

For even more tips on tobacco, cigar, and vape shop inventory management, read our free guide.

What Is Smoke Shop Cycle Counting

Smoke shop cycle counting is when you regularly count small groups of products to spot discrepancies and ensure your physical inventory matches what’s in your system. 

Sounds pretty similar to a physical inventory audit, right? Not exactly.

Unlike a physical inventory count that requires you to shut down the store and painstakingly count every single item, a cycle count notes just a small sample of your inventory and uses that information to identify and fix bigger problems.

These problems can take many forms, such as:

• Employees physically placing products in the wrong area in the storeroom
• Damaged and returned items showing up on your system
• Data entry errors
• Theft or missing inventory

There are three main methods retailers use to cycle count inventory.

1. ABC Cycle Counting

The ABC cycle counting method has you rank your products from A to C, with A being the highest earners and C the ones in lowest demand. You'll then count your best-selling items more often than slower-moving ones.

The ABC method aims to focus your efforts on the items that have the highest impact on your bottom line.

This method is based on the 80-20 principle: roughly 20% of your products will generate about 80% of your sales. For a practical example, in a smoke shop, premium cigars might make up just 20% of your inventory but account for most of your profit.

Here’s a breakdown of each category:

Group A: Your top performers

• Count these monthly
• Includes your highest-profit items
• Makes up about 20% of inventory but 80% of sales
• Example: Premium cigars, high-end vape devices

Group B: Mid-range items

• Count these every three months
• Includes products with steady sales
• Makes up about 10% of inventory and 15% of sales
• Example: Popular cigarette brands, mid-range pipes

Group C: Slower-moving items

• Count these once or twice yearly
• Includes your lowest-profit products
• Makes up about 50% of inventory but only 5% of sales
• Example: Rolling papers, budget lighters

The ABC method for cycle counting is probably the most commonly used in retail. However, it can also be the most complex without the right inventory management system.

To use the ABC method at your store, pull the sales and inventory reports from your smoke shop point of sale (POS) system to understand which products fall into which categories. 

Some POS systems, including Cigars POS, make this process significantly easier with features like auto ranking, which uses AI and sales data to rank bestselling products into categories from A to D.

ABC Cycle Counting: Pros and Cons

The advantage of ABC counting is that it helps you keep a close eye on your most high-impact items. If you specialize in selling products with high-profit margins, like vape pens, imported cigars, pipes, and other valuable items, this ensures you have an accurate count on those high earners.

On the other hand, if your business’ bread and butter is a mix of lower-value staples like packs of cigarettes or vape refills, this method may have you losing track of those items since you’ll count them less frequently.

Related Read: Inventory List for Tobacco Store Startup: 8 Top Products

2. Control Group

The control group method involves repeatedly counting a small group of products over a short time (e.g., two particular areas of your store, packs of cigarettes).

Control group cycle counting is excellent for finding discrepancies in the counting process itself. If you’ve never run regular inventory counts, it’s an effective method for getting you and your employees on the same page before doing inventory counts on a larger scale.

If you plan to use the control group method, start with an area of your storeroom where you have a clear idea of how many items you should have. 

Control Group Cycle Counting: Pros and Cons

Control group cycle counting isn’t necessarily the best or most efficient method for determining inventory accuracy. However, if you notice frequent inventory discrepancies and are unsure of the cause, the control group method is an excellent place to start.

Control group cycle counting is most valuable for finding mistakes in your counting processes.

For example, you might count the same types of items in your storeroom every day and compare the quantity to your daily sales reports. If you find errors, you keep doing daily counts, refining your processes until the errors disappear. You can then do this for other products or areas of the store

Start with products you know well. For example, choose items where you're confident about the quantity you should have in stock.

3. Random Sample

What do you do if there’s not as much variation in the value or types of items you carry at your smoke shop? That’s where the random sample cycle counting method comes in.

As the name implies, this technique chooses items to count at random. You then cycle between these items each day or every few days until you get a full count.

There are two categories of random sample cycle counting:

1. Diminished population counting: In this method, you count selected items, and then don’t count them again until you’ve counted everything.
2. Constant population counting: For this method, you count the same number of items each time, but not necessarily the same products. 
   
   

To implement random sample counting, start with a full inventory audit or look at a list of products on your inventory management system. Then, decide on a reasonable number of products you can count each day to do a full count within a year or six months.

Random Sample Cycle Counting: Pros and Cons

Random sample cycle counting is ideal for smoke shops that stock a large number of similar items. This ensures that you get a healthy idea of how all your products are being counted over time.

The randomness of this method is helpful because you might find an error in a certain product category that you otherwise have overlooked. Combined with the reports on your POS system, this could uncover surprising new trends or shifts in customer preferences.

Because the selection of items is completely random, it’s also an effective way to uncover employee theft, as they won’t know in advance which items are being counted.

Each method has its pros and cons, but the benefits are undeniable.

Benefits of Smoke Shop Cycle Counting

Regular inventory counting might seem painful at first, but it has significant benefits for your smoke shop business.

• Increases sales: When you have accurate inventory, you reduce the risk of stockouts and disappointing customers. Some estimates say accurate inventory can boost sales by 4 to 8%.
• Prevents shrinkage: Some shrinkage is inevitable, but the more frequently you count stock, the better chances you have to discover it early. 
• Saves time: Compared to a physical inventory count, smoke shop cycle counting can be done in short bursts, making it much more manageable and less disruptive to business.
• Improves efficiency: Once you spot errors in your inventory count, you can fix them. This will help you be more efficient in the future. 
• Informs marketing: If you identify slow-moving stock and bestsellers, you can make more informed decisions on what products to include in your promotions and marketing. 

The more accurate your inventory data is, the better business decisions you’ll make. Optimizing inventory will ultimately help you reduce overhead costs, improve the customer experience, and improve store performance. 

How Often Should You Cycle Count Smoke Shop Inventory?

How often you perform a cycle count will depend on what particular method you use. In general, you should aim to perform smoke shop cycle counting on a quarterly or monthly basis at a minimum. Some methods, like random sample counting, might happen daily or weekly. 

Other factors will influence how often you do a smoke shop cycle count.

• Number of products: How many products do you have, and how many can you reasonably count at a time? How many high-value items do you keep in stock at a given time? 
• Staff: How many staff you have working at a given time will in part determine how often you can do counts. You can’t sacrifice store security or customer service for frequent counts. Consider having more staff working during cycle count days.
• Peak hours: Schedule cycle counts outside of peak hours so employees aren’t forced to divide their attention between counting and customers. Use the reports on your POS system to determine peak hours and schedule counting times accordingly.

Regardless of exactly how often you do a smoke shop cycle count, it’s important to do it regularly, so it becomes a predictable part of your employee responsibilities and tasks. 

Important Note: Cycle counting isn’t a replacement for a full physical inventory count, which you should still do once every six months to a year. If your store is small enough, a monthly or quarterly physical count may still be a good idea to ensure the most accuracy.

How To Run a Smoke Shop Cycle Count

Implement a cycle count in your tobacco store by following these five steps.

• Select items: Select a specific section of your tobacco inventory to audit. This could be based on product type (e.g., cigars, cigarettes) or shelf location. Ensure that all sales and receiving activities are paused or noted to prevent errors in the count.

• Perform the count: Count your selected items by hand or using a mobile scanner, and record the quantities.

• Reconcile: Compare the recorded amounts against the inventory records in your POS system, noting any discrepancies.

• Adjust and report: Adjust inventory records accordingly, then investigate any errors to see if they’re due to theft, damage, or clerical errors. Generate inventory reports to find patterns and identify areas for improvement.
• Follow up: Schedule regular cycle counts and repeat the process to create an accurate inventory list and maintain compliance with tobacco laws and regulations.

While the exact process will vary based on your store and what cycle count process you use, this should give you a good starting point.

Smoke Shop Cycle Counting: 5 Best Practices

Performing regular inventory counts is essential for cutting overhead and improving the customer experience — but if done inconsistently or without the right tools, you might just be creating more work without the benefits.

Here are five best practices to follow when implementing smoke shop cycle counting.

1. Leverage Inventory Management Software

Managing inventory on paper or spreadsheets can lead to mistakes and waste time. Modern POS systems help you count faster and spot problems more easily. 

Here's how good inventory software helps your shop

• Real-time visibility: With a comprehensive POS system, your remaining inventory will be automatically updated when a sale is made.
• Understand the value of products: Auto ranking, reports, and similar features help you understand the true financial value of your products.
• Integrated receiving: Efficiently process incoming stock by matching it with existing purchase orders, streamlining how you update inventory records.
• Carton-pack tracking: Systems that can scan in a carton and track individual packs to reduce errors give you a more accurate view of inventory levels.
• Inventory count integration: Systems like Cigar POS also include tools specifically designed to simplify inventory counting, including scheduling, discrepancy identification, reconciliation functions, and reports.
• Reduced compliance risk: Having accurate inventory records helps you avoid incorrect tax calculations, improve regulatory reporting, and meet licensing requirements.

Inventory management software helps you identify products to count, make the process smoother, and help keep your inventory accurate in the future.

2. Use Mobile Scanners and Barcodes

Technology like label printers and mobile scanners can significantly speed up your cycle counting process, especially if you’re short-staffed. These tools also reduce the chance of human error from data entry mistakes.

For items like cigars that may not have an individual barcode, automatically create a barcode on your system and print it. That way, instead of counting or adding items to the system by hand, you can simply scan the barcode. 

Some POS systems support scanning barcodes from a mobile app on a smartphone or tablet, streamlining the process with minimal investment in new hardware.

3. Create a Consistent Schedule

Create a consistent schedule once you determine the type of cycle count you want to do. Running cycle counts sporadically defeats the purpose. So make inventory counts part of your daily or weekly schedule and stick to it.

The point of a cycle count is to break the process out into smaller, reasonable chunks. If you find that the cycle count is taking too much time, adjust your schedule accordingly.

Important Note: Before you start a cycle count, ensure all transactions are closed to avoid errors. Perform your smoke shop cycle count at the start or end of the day. 

4. Train Your Staff

Implementing a successful smoke shop cycle count requires the support of your staff. Ensure you train staff on counting procedures and do it on schedule. Counting is incredibly cumbersome when done by hand, so giving them tools like scanners or mobile apps to note inventory can help boost morale (and improve accuracy).

Document your counting processes and techniques so that counting processes are consistent. As you find and fix any errors, update your documentation to reflect those changes.

This will be especially important if your store grows or you open multiple locations. It will be hard to determine where problems come from if your inventory counting processes aren’t the same across all locations. 

5. Supplement Cycle Counts With Reports and Analytics

By counting inventory and making sales, your POS system generates a wealth of invaluable data you can use for helpful inventory reports. 

You can then use these reports to spot errors, find trends, and make improvements without manual calculations.

Here are a few of the most helpful inventory reports.

• Stock alerts: Get low stock alerts so you know when to reorder, even when those items aren’t actively being counted.

• Discrepancy reports: Compare sales data with inventory levels to identify errors that may indicate theft, loss, or admin errors.

• Overstock identification: Highlight overstocked products so you can implement promotions.
• Automatic purchase orders: Once you’re confident in your inventory accuracy, you can set automatic POs based on min/max quantities and sales data to help maintain optimal inventory levels with minimal effort.

In addition to helping maintain your inventory, reports can improve your planning by helping with demand forecasting, finding seasonal trends, bestsellers, and more.

Maintain Accurate Smoke Shop Inventory With Cigars POS

As a retailer, your inventory is your business — and in a highly regulated industry like tobacco, you can’t afford to make mistakes.

Accurate inventory is essential to:

• Boost sales
• Improve customer retention
• Meet regulatory requirements
• Make smarter business decisions

Implementing smoke shop cycle counting is a great place to start — using the right tools can take you to the next level. 

Cigars POS is built specifically for small tobacco stores, smoke shops, vape shops, and cigar lounges to overcome unique industry challenges and find success. With features like auto ranking, detailed inventory reports, carton-pack tracking, and more, our system is designed to make your life easier.

Schedule a custom demo with our tobacco retail experts to see how Cigars POS can reduce inventory errors and optimize your inventory.