What is sell-through rate?
Sell-Through Rate measures the amount of inventory you’ve sold in a month versus the amount of inventory shipped to you from a manufacturer. Sell-through rate is an important retail sales metric that allows you to monitor the efficiency of your supply-chain. It’s an especially important metric for physical stores given the rise of ecommerce platforms like Ebay, Amazon, and Shopify.
You want to aim to have a high sell-through rate. Any product you have on the shelf is costing you money, and could be used for more popular products. If your sell-through rate is too low you will need to dig deeper into the problem. As a leading indicator, sell-through rate won’t tell you what’s wrong rather that something is wrong.
Segment your sell-through rate analysis by product to see which products are selling well and which products are selling poorly. Use this to inform your inventory process and reduce the risk of carrying slow moving product. Finally, be aware of the seasonal trends impacting product sales.
Example of KPI target
(Total Inventory at the beginning of the month - Number of products sold in a month / Total Inventory at the beginning of the month)x100