Inventory Turnover
Inventory Turnover measures how many times a business sells and replaces its inventory over a given period. It is calculated by dividing cost of goods sold by the average inventory value. A higher turnover means you are efficiently converting inventory into sales.
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Inventory Turnover
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cogsaverage_inventoryHow to Calculate Inventory Turnover
Why Inventory Turnover Matters
Slow-moving inventory ties up cash and warehouse space that could be used for products that actually sell. Tracking inventory turnover helps you identify dead stock, optimize purchasing decisions, and maintain healthy cash flow. Brands with high turnover can reinvest profits faster and respond more quickly to changing customer demand.
Industry Benchmarks
What is a good Inventory Turnover? Based on industry benchmarks, an Inventory Turnover considered low is under 2x, average is 2x - 4x, and good is 4x+. These figures vary by industry, product category, and business model, so use them as directional guidance rather than hard targets.
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Sell-Through Rate
Sell-Through Rate is the percentage of inventory that is sold during a given period compared to the amount of inventory received. It is calculated by dividing units sold by units received and multiplying by 100. This metric tells you how quickly your products move off the shelves.
Average Order Value (AOV)
Average Order Value is the mean dollar amount spent each time a customer places an order on your store. It is calculated by dividing total revenue by the number of orders over a given period. AOV is one of the simplest yet most impactful levers for growing revenue without acquiring new customers.
Ecommerce Conversion Rate
Ecommerce Conversion Rate is the percentage of website visitors who complete a purchase. It is calculated by dividing the number of sessions that result in an order by the total number of sessions. Conversion rate is a core indicator of how well your store turns traffic into paying customers.
Revenue Per Session
Revenue Per Session is the average amount of revenue generated by each visitor session on your store. It is calculated by dividing total revenue by total sessions. Unlike conversion rate, this metric accounts for both the likelihood of a purchase and the value of that purchase.
Refund Rate
Refund Rate is the percentage of orders that result in a full or partial refund. It is calculated by dividing the number of refunded orders by the total number of orders. A high refund rate can indicate product quality issues, misleading product descriptions, or fulfillment problems.
Cart Abandonment Rate
Cart Abandonment Rate is the percentage of shoppers who add items to their cart but leave without completing the purchase. It is calculated by dividing the difference between carts created and carts completed by the total carts created. This metric reveals how much potential revenue is slipping through the cracks at checkout.
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