Sales Strategy

Harnessing Sell-Through Rates for Smart Inventory Management April 23, 2023 (0 comments)

Global Retail Insights--Retailers must accurately forecast demand to ensure appropriate inventory purchases, as incorrect quantities can lead to cash flow problems and financial losses. A global study revealed that retailers lost $1.1 trillion due to overstock and out-of-stocks. To avoid these issues, understanding when to reorder, the right quantities and the estimated sale duration is crucial.

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An article on Lightspeed states that the sell-through rate is a critical inventory metric that helps retailers predict product demand, optimize purchasing, and maximize profits. This rate measures the proportion of inventory sold compared to the amount purchased from manufacturers. It enables retailers to gauge the efficiency of their inventory turnover and prevents costs associated with storage or discounting.

Calculating sell-through rates can inform smarter inventory purchasing decisions and helps maintain sufficient stock levels without excess. This metric also supports targeted marketing campaigns and product promotions. The sell-through rate can be calculated for various categories, like product type, brand, or category, to determine which investments yield a quick return on investment (ROI).

High sell-through rates indicate fast inventory sales at full markup, while low rates suggest slower sales and the potential need for discounts. However, sell-through rates do not reveal the reasons behind product popularity, which may depend on factors like seasonality, style, and hype.

Click here to read the full Lightspeed article.