What is a sell-through rate?
Basically, the Sell-through rate is a calculation that represents the percentages of the amount of inventory received from a manufacturer or supplier and what is actually sold in a given period of time.
The period is usually one month and it compares the measurement of monthly sales against a given target. STR helps in tracking sales and identifying items that aren’t selling well.
A high Sell-through rate is better for business and it changes according to time and season. According to product trends on seasonal days, it increases up to 80% or in some cases even more.
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What is the sell-through rate formula?
sell-through rates are easy to calculate using the below formula:
Sell-through rate(%) = Number of units sold (total sales) / Units received (stock) x 100
Sell-through rate calculation:
For example, if you received or buy 100 iPhones to sell in your shop and sold 40 units within a month, then you can calculate your sell-through rate as follows:
Sell-through rate(%) = 40 / 100 x 100 = 40%
Importance of sell-through rate in eCommerce
- It helps to optimize the supply chain
- It helps to reduce storage cost
- It helps to identify the best sellers and not selling product
- It helps to track performance
- It helps to manage cash flow
What is a good sell-through rate in retail?
If you are worried about what should my sell-through rate be? then here is the answer: The rate varies according to product and industry, as data from various studies indicate the following sell-through rates:
Tips to improve sell-through rate
Measure: track every item's rate of selling helps you to know about an item that isn’t selling fast enough, which could prompt you to create a promotional campaign to reach out to more customers.
Merchandising: A slow or not selling item isn’t an indication of low demand. In many situations, a low sell-through rate could be a result of poor marketing, So according to that improve marketing for the item.