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Sell through rate

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The Sell-through rate is a metric that analyses the amount of inventory sold compared to what was purchased from a supplier or manufacturer within a given time period.


What is the Sell-through rate?

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.

How to calculate the sell-through rate?

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

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%

Why Sell-through rate is important?

  • 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?

The rate varies according to product and industry, as per 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.

FAQ

Q. What is an optimal sell-through rate?

Ans. It varies by item and industry, but the general sell-through rate above 80% is Good. This means that for every 100 items that are available, at least 80 of them are sold.

Ans. It varies by item and industry, but the general sell-through rate above 80% is Good. This means that for every 100 items that are available, at least 80 of them are sold.

Q. Sell-through rate vs. inventory turnover

Ans. Sell-through rates mainly focus on how many items were sold in a given period of time (usually one month), while inventory turnover measures how quickly you go through a product or item (frequently you sell your inventory).

Q. How do I measure sell-through rate for my Shopify store ?

Ans. Konigle automates  sell-through rate calculations on your Shopify store. Install the app here.


Frequently asked questions