![]() Your Amazon inventory turnover ratio can help you improve your restocking process and points to areas where you need to forecast better. This increases holding and warehouse costs while also preventing you from restocking high-demand items. Having too much inventory on hand: If your inventory turnover occurs too infrequently, you may be wasting cash flow on storing low-demand goods. ![]() If your inventory turnover rate on Amazon is too high, this may indicate you need to rethink the number of units you stock at any given time. This can cause you to lose out on potential sales and waste money on rush fees as you scramble to keep items in stock. Not having enough inventory on hand: If you restock inventory too often in a given time period, you might not have adequate inventory on hand.This number allows you to analyze your inventory management and can determine if you’re falling prey to either of the following inventory issues: Why is inventory turnover important?Ĭalculating your inventory turnover ratio on Amazon is a key inventory KPI. Just getting started with Amazon? Read more about the key differences between fulfillment options when selling on this platform: Everything you ever wanted to know about Amazon FBM. It’s important to note this calculation cannot replace your Amazon inventory turnover ratio. Looking at the previous rolling 90 days, your sell-through rate is calculated based on the number of units you sold and shipped divided by the average number of units available across fulfillment centers at that time. While these two may seem similar, Amazon’s sell-through rate is based on a rolling 90 days. If you sell on Amazon, you’re likely familiar with the platform’s own version of an inventory turnover metric - your Amazon sell-through rate. You can visualize your Amazon inventory turnover using the following formula:Īmazon Inventory Turnover Ratio (ITR) = Total Cost of Goods Sold (COGS) ÷ Average Inventory During Period of Time Sell-through rate vs. This number will show you how your Amazon sales channel is operating and where you might have room for improvement in your inventory management. This measurement can determine whether or not you have the right amount of inventory on hand at any given time in relation to your sales performance.Įach time you replenish your inventory over a given period of time, you experience inventory turnover. Similarly, Amazon inventory turnover refers to the rate at which your Amazon inventory is bought and sold. The ratio is generally expressed as a cost of goods sold to inventory held. Inventory turnover is the rate at which a retailer’s inventory is bought and sold over a given period of time. What is an ideal Amazon inventory turnover ratio? Finally, we’ll discuss what your ideal inventory turnover rate should be when selling on this eCommerce platform. In this guide, we’ll dive into what Amazon inventory turnover is, why it’s important to measure and track, and a step-by-step guide to calculate your Amazon inventory turnover. ![]() When you sell on Amazon, diving into your specific Amazon inventory turnover rate is key to optimize that channel. Measuring and understanding your eCommerce inventory turnover is critical to manage your inventory effectively and profitably. For the past 10 years, he’s covered eCommerce topics ranging from SEO to supply chain management. ![]() Matthew is the Director of Marketing at Skubana, a leading solution for multi-channel, multi-warehouse DTC brands. This is a guest post from Matthew Rickerby. ![]()
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