Inventory Turnover

Higher turnover means less cash tied up and lower storage fees. Compare it within your category; apparel and consumables turn very differently.

Inventory turnover = cost of goods sold ÷ average inventory at cost

What is a good inventory turnover ratio for an ecommerce brand?

It varies by category, so compare against your own history and similar products. Fast-moving consumables usually turn much more often than seasonal apparel or durable goods, and a rising trend is generally a good sign as long as stockouts are not increasing.

• Days of InventoryThe number of days current inventory will last at the expected sales rate. Also called days of supply or days inventory outstanding.
• Sell-Through RateThe share of received inventory that sold during a period.
• Carrying CostThe total cost of holding inventory over time, including capital, storage, insurance, shrinkage, and obsolescence.