Sell-through rate: the formula and how it differs from velocity
Sell-through rate = units sold ÷ units available in the period × 100. It tells you how much of a buy cleared in a given window, which is a different question from how fast a SKU is moving today.
What sell-through rate means
Sell-through rate is the share of the stock you had available in a period that you actually sold, written as a percentage.
The formula
- Sell-through rate = units sold ÷ units available × 100
- Units available = stock on hand at the start of the period + units received during the period
Pick the period first. Retail buying teams usually run it per month or per season. Smaller stores often run it per month, because that is how purchase orders land.
Worked example
Take one candle SKU. You start 1 March with 40 units on hand. A supplier delivery of 80 units arrives on 3 March. Units available for March is 120. You sell 78 units by 31 March.
78 ÷ 120 = 0.65, so the sell-through rate for March is 65 percent. You end the month with 42 units on the shelf.
The variant you will also see
Some buyers divide by units received only, ignoring opening stock. On the same SKU that reads 78 ÷ 80, or 98 percent, which is a very different-looking number for the same month. Neither version is wrong. Write down which one you use, and use the same one every month, or your trend line is meaningless.
Sell-through rate versus sales velocity
Sell-through rate is a ratio with no time in it. Sales velocity is a rate: units per day. That single difference decides what each one can tell you.
Sell-through looks backwards at a batch. It answers buying questions: did this order clear, should I repeat it, is this colourway dead stock. It is also blind to timing. Two SKUs can both finish March at 65 percent sell-through when one sold three units a day all month and the other sold out of its first delivery in week one and sat empty until the next.
Sales velocity looks at a window of recent days and gives you a number you can multiply. Multiply velocity by supplier lead time and you get the stock you need to cover the wait. That is the number a reorder point is built from. Sell-through cannot be multiplied by lead time, because 65 percent is not a quantity.
So keep both, for different jobs. Sell-through tells you what to buy next season. Velocity tells you what to buy on Thursday.
Side by side
| Sell-through rate | Sales velocity |
|---|---|
| What it measures | Share of available stock sold in a period |
| Unit | A percentage |
| Time frame | A closed period, usually a month or a season |
| Question it answers | Was this buy the right size |
| Feeds a reorder point | No, it carries no quantity per day |
| Hides | When in the period the sales happened |
Related terms
Sell-through rate sits in a small family of numbers. The others in this glossary do the work it cannot.
- Sales velocity is units per day over a chosen window, and the window choice changes the answer more than most merchants expect.
- Lead time is how many days pass between placing an order with your supplier and the stock being sellable. Only you can supply it.
- Reorder point is the stock level at which you place the order, worked out from velocity and lead time.
- Days of inventory on hand converts current stock into a runway in days, which is the plain-language version of the same arithmetic.
- Safety stock is the buffer you hold on top, sized against how erratic demand and deliveries are.
- Stockout is what all of it exists to prevent, and it costs more than the empty shelf suggests.
Questions
What is a good sell-through rate?
There is no single number, and anyone quoting one is usually quoting their own category. Reason it through instead: a high rate means you nearly cleared the buy, which is healthy unless you ran out early and lost sales you never saw. A low rate means capital is sitting on a shelf. Compare a SKU to its own history and to its neighbours in the same category, not to an industry figure.
Does a 100 percent sell-through rate mean I did well?
Not necessarily. Selling every unit means you ended the period empty, so you cannot know how much more you could have sold. That is why sell-through on its own is a weak reorder signal: it tops out at 100 percent and tells you nothing about the demand that arrived after the last unit went.
How do I calculate sell-through rate for a Shopify SKU?
You need three numbers for the period: opening stock, units received, and units sold. Opening stock and receipts come from your own purchase orders and stock counts. Units sold comes from your sales data for that SKU over the same dates. Then divide units sold by opening stock plus receipts and multiply by 100. Keep the dates identical across all three or the result drifts.
Is sell-through rate the same as inventory turnover?
No. Sell-through is units sold against units available over one period, expressed as a percentage. Inventory turnover is cost of goods sold divided by average inventory value, usually over a year, and it comes out as a number of times rather than a percentage. Turnover is a finance-side view of the whole catalogue. Sell-through is a buying-side view of one SKU or one order.
Which metric should I watch if I keep running out of best sellers?
Sales velocity and days of inventory remaining, not sell-through. Running out is a timing failure, and timing needs a per-day rate against your supplier lead time. Sell-through will confirm afterwards that the order was too small, but it will not warn you in time.
Can I use sell-through rate to set a reorder point?
Not directly. A reorder point is a quantity of units, so it has to be built from a quantity per day. You can derive a velocity from the same raw data you used for sell-through, units sold divided by the number of days in the period, and use that instead.