{"id":8233,"date":"2023-06-05T12:00:00","date_gmt":"2023-06-05T12:00:00","guid":{"rendered":"https:\/\/www.shipbob.com\/au\/blog\/sell-through-rate\/"},"modified":"2025-07-27T18:41:50","modified_gmt":"2025-07-27T18:41:50","slug":"sell-through-rate","status":"publish","type":"blog","link":"https:\/\/www.shipbob.com\/au\/blog\/sell-through-rate\/","title":{"rendered":"Sell-Through Rate: Formula and 2026 Trends Explained"},"content":{"rendered":"\n

Table of Contents<\/p>

** Minutes<\/p><\/div><\/div>\n

What is sell-through rate?<\/a><\/p>\n\n\n\n

Why sell-through rate is important<\/a><\/p>\n\n\n\n

What factors can impact sell-through rate?<\/a><\/p>\n\n\n\n

How do consumer trends and supply chains affect business sell-through rates?<\/a><\/p>\n\n\n\n

Sell-through rate formula and calculation<\/a><\/p>\n\n\n\n

3 ways to improve your sell-through rate<\/a><\/p>\n\n\n\n

Common mistakes that can negatively impact sell-through rate<\/a><\/p>\n\n\n\n

ShipBob\u2019s inventory management capabilities can help sell-through rates improve<\/a><\/p>\n\n\n\n

Sell-through rate FAQs<\/a><\/p>\n<\/div>\n\n\n\n

Say you go back through your inventory and order history, and find you\u2019ve sold 500 units of a particular SKU<\/a> this quarter. 500 units sounds like a lot to sell \u2013 but is it actually?\u00a0<\/p>\n\n\n\n

That depends on how much of that SKU you started out with. <\/p>\n\n\n\n

To understand whether selling 500 units is a triumph or a disappointment, you\u2019ll need to put it in context. This means calculating the SKU\u2019s sell-through rate \u2013 in other words, framing the amount you sold as a portion of your overall stock for the period. <\/p>\n\n\n\n

When you calculate sell-through rate, you\u2019ll have the data you need to make the right inventory investments, optimise inventory flow, and minimise storage costs<\/a>.\u00a0<\/p>\n\n\n\n

In this article, we\u2019ll cover what a sell-through rate is, why it\u2019s important, how to calculate it, and tips for improving it. <\/p>\n\n\n\n

What is sell-through rate?<\/h2>\n\n\n\n

Sell-through rate is the amount of stock you sold during a given time period expressed as a percentage of the total stock you had within the same period. <\/p>\n\n\n\n

For example, let\u2019s assume a business wants to calculate the sell-through rate for the previous month. If the business sold 500 units of inventory that month, but began the month with 2,000 units, their sell through rate would be 500\/2,000, or 25%. <\/p>\n\n\n\n

At the SKU level, sell-through rates give you an estimate of how popular a SKU is (with a high sell-through rate indicating high popularity, and vice-versa). <\/p>\n\n\n\n

For a business\u2019s overall inventory, the sell-through rate is generally indicative of the general demand for the brand\u2019s products. <\/p>\n\n\n\n

If a brand has a high sell-through rate, that means that there is probably high demand for its products. Conversely, a low sell-through rate may indicate that there is less demand, or that the products are becoming obsolete<\/a>. <\/p>\n\n\n\n

Why sell-through rate is important<\/h2>\n\n\n\n

While sell-through rate may seem like an insignificant metric, it actually offers your business some very useful insights. <\/p>\n\n\n\n

First, sell-through rate is often a good indicator of whether you\u2019re making the right inventory investments. For example, if a SKU\u2019s sell-through rate is low, that means you\u2019ve invested capital in a product or type of product that isn\u2019t very popular. Using this information, you can adjust your inventory<\/a> strategy to stock up on inventory that’s more likely to sell, and generate more revenue<\/a>. <\/p>\n\n\n\n

Second, calculating your products\u2019 sell-through rates can also help you identify which items are popular with your audience, and which ones are slow to sell. This allows you to gauge audience demand and modify your product mix<\/a> for optimal sales. <\/p>\n\n\n\n

Third, tracking your brand\u2019s sell-through rate helps you better assess your inventory needs. This means you can avoid overstocking<\/a> and stocking out, and ensure that you always have enough inventory to meet customers’ demand without driving up storage costs. <\/p>\n\n\n\n

What is considered a good sell-through rate?<\/h3>\n\n\n\n

What constitutes a \u201cgood\u201d sell-through rate for your business will depend on a number of factors, including seasonality, your brand\u2019s industry, and its specific sales goals. <\/p>\n\n\n\n

A sell-through rate higher than 80% is generally considered excellent. While a sell-through rate of 100% is seemingly perfect, it could indicate that there is demand in the market that you\u2019re not capturing, and that you need to order larger amounts of stock.  <\/p>\n\n\n\n

Sell-through rates lower than 40% are suboptimal, and usually mean that a business should reevaluate its product mix and inventory management<\/a> strategy. <\/p>\n\n\n\n

What factors can impact sell-through rate?<\/h2>\n\n\n\n

Both internal and external factors can impact your company\u2019s sell-through rate. Here are some of the most common things that can affect it. <\/p>\n\n\n\n

Product prices<\/h3>\n\n\n\n

Your product pricing<\/a> hugely influences people\u2019s purchase decisions. Too high, and you might struggle to sell your products; too low, and your sell-through rate becomes extremely high, but you may lose out on revenue. <\/p>\n\n\n\n

Product availability<\/h3>\n\n\n\n

How available customers perceive your products to be can influence sell-through rates. If your business uses a periodic drop model to build hype and anticipation around releases, you may find sell-through rates are higher than when products are available at any time. <\/p>\n\n\n\n

The variety of products available may also impact sell-through rates. Offering too many competing product variations may overwhelm customers, and deter them from purchasing, which would lower sell-through rates. <\/p>\n\n\n\n

Supply chain velocity<\/h3>\n\n\n\n

In order to sell products, you need to be able to move products through the supply chain<\/a> quickly and effectively. High supply chain velocity<\/a> typically allows you to experience higher sell-through rates, as different processes functioning together help inventory get out the door and into customer hands faster. <\/p>\n\n\n\n

Competitors<\/h3>\n\n\n\n

If you\u2019re in a highly competitive market, don\u2019t be surprised if you struggle with lower sell-through rates. When customers have the option to choose between different businesses, they might go with a competition that offers the same product at a cheaper rate or with better features.<\/p>\n\n\n\n

Marketing efforts<\/h3>\n\n\n\n

Effectively promoting your products usually results in higher sales and better sell-through rates. So even if you regularly see a lower sell-through rate due to seasonal demand<\/a> changes, ramping up your marketing efforts during this time could help keep inventory moving.<\/p>\n\n\n\n

Sell-through rate formula and calculation<\/h2>\n\n\n\n

You can calculate your sell-through rate using the following formula:<\/p>\n\n\n\n

Sell-through rate = (Total number of units sold \/ Total number units received) x 100<\/strong><\/p>\n\n\n\n

Let’s say a stationery brand orders 500 units of a notebook for the month. By the end of the month, it\u2019s sold 400 of those notebooks. In this case, the brand\u2019s sell-through rate for the month would be as follows:<\/p>\n\n\n\n

Sell-through rate = (400 \/ 500) x 100<\/strong><\/p>\n\n\n\n

Sell-through rate = 80%<\/strong><\/p>\n\n\n\n

3 ways to improve your sell-through rate<\/h2>\n\n\n\n

If your brand is struggling with a low sell-through rate, there are a few different ways to improve it. Here are some of the most effective solutions to issues with sell-through rates. <\/p>\n\n\n\n

1. Consistently monitor sell-through rates<\/h3>\n\n\n\n

Sell-through rate can fluctuate over time, so consistently monitoring it over time can reveal patterns and pinpoint problems that need fixing. <\/p>\n\n\n\n

For instance, if you track sell-through rate month by month for a year and notice that it dipped significantly during the winter holidays, you can adjust your inventory and sales strategies during those months the next year to boost sell-through rate. <\/p>\n\n\n\n

Sell-through rate is most effective when it\u2019s tracked alongside other important metrics, such as days sales inventory<\/a> and SKU velocity. By putting your sell-through rate in conversation with other data, your brand can draw better, more useful insights. <\/p>\n\n\n\n

2. Market products<\/h3>\n\n\n\n

Sometimes, low sell-through rates aren\u2019t because of an issue with the product, but an issue with the product\u2019s marketing. When you can get them in front of the right audience and promote them effectively, sell-through rates may improve. <\/p>\n\n\n\n

Try coming up with creative marketing strategies or refreshing your existing ones to improve your sales. Marketing tactics such as flash sales<\/a> and bundle offers are great ways to entice customers to purchase and keep inventory moving.<\/p>\n\n\n\n

3. Use inventory management software<\/h3>\n\n\n\n

Proper inventory management is key to ensuring a healthy sell-through rate. This makes it crucial to invest in inventory management software<\/a> that will give you real-time visibility<\/a> into your inventory levels.\u00a0<\/p>\n\n\n\n

ShipBob, for example, enables brands to track SKU velocity over time to identify top-selling and slow-selling items, which helps you optimise your product mix for a better sell-through rate. Similarly, this will also allow you to plan your replenishment<\/a> strategy to avoid overstocking and stockouts.<\/p>\n\n\n

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Common mistakes that can negatively impact sell-through rate<\/h2>\n\n\n\n

To improve your sell-through rate, you also need to be aware of the common mistakes that can negatively impact it \u2013 and how to avoid them.<\/p>\n\n\n\n

Lack of inventory visibility<\/h3>\n\n\n\n

When there\u2019s a lack of inventory visibility<\/a>, you can\u2019t always get an accurate understanding of how much inventory you have left or how well certain items are selling. This makes it difficult to plan for customer demand and inventory replenishments. <\/p>\n\n\n\n

Subsequently, your brand may end up with too much inventory, too little, or the wrong product assortment<\/a> \u2013 all of which can hurt your sell-through rate.\u00a0\u00a0<\/p>\n\n\n\n

To get real-time information about inventory, most brands use an IMS<\/a>. Some tech-enabled 3PLs like ShipBob have inventory management capabilities built into their software, so brands can monitor their inventory levels<\/a> and fulfilment<\/a> from a single platform.\u00a0<\/p>\n\n\n

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\u201cFor inventory planning, I love the SKU velocity report, daily average products sold, and knowing how much inventory we have left and how long it will last. The enhanced visibility is great. <\/p>\n\n\n\n

With my old 3PL, I could never just open a page and get the info I wanted. ShipBob lets you manage your inventory while providing important data in a very digestible way. <\/p>\n\n\n\n

Between inventory forecasting tools and the ability to auto-create WROs, we don\u2019t have stockouts much anymore. I sleep better at night.\u201d<\/p>\nWes Brown, Head of Operations at Black Claw LLC<\/a><\/cite><\/blockquote>\n\n\n\n

Stockouts<\/h3>\n\n\n\n

When you run out of stock, it means customers can\u2019t get the products they need when they need it. Moreover, you may end up over-ordering to make up for the stockouts<\/a>, which means you could end up with more inventory than you can actually sell.<\/p>\n\n\n\n

To avoid overstocking and stockouts, brands should:<\/p>\n\n\n\n