Sell-through rate

Definition

The percentage of held inventory for a specific product that was sold over a chosen time period.

Why is it useful?

Sell-through rate suggests the popularity of the inventory on hand and could potentially be useful when stocking up inventory in the future, or deciding on sales promotions to run in order to clear inventory stock. An optimised inventory will have enough buffer stock to cater to demand, and contain items that sell off quickly. This ensures good sales, and minimised inventory cost.

Example of Use

if you have 500 items and sell 300 in a month, your sell-through rate is 60%. You can compare this to other months, or other products to identify if this is fast enough. Change your product mix accordingly. It’s important for you to decide a useful time frame to use when measuring this – this will vary between different business types.

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