Sell through percentage: what it tells a small shop

Sell-through is the share of the stock you had available that sold during a period. Divide units sold by units available, then multiply by 100. A product that started the month with 50 units, received no more and sold 20 has a sell-through of 40%.

A shop uses the figure to decide what to buy again, what to mark down and what to stop carrying.

What does sell through mean?

Retail sell through measures how much of what you stocked found a buyer, per product or per buy, over a fixed period. The Wikipedia entry on sell-through notes that the period is usually a month. It does not say how long the rest will last or what the product earned, only whether the quantity you bought matched demand.

How to calculate sell through percentage

Sell-through (%) = units sold in the period ÷ units available in the period × 100

Units available is the stock on hand at the start of the period plus any units received during it. Some shops use units received alone, which gives the same answer for a seasonal line that had no stock before it arrived. Use one version for every product so the results compare.

1. Choose a period, such as the last 30 days.
2. Take the stock count at the start of the period.
3. Add every unit received during the period.
4. Count the units sold in the period, after returns.
5. Divide units sold by the total from steps 2 and 3, then multiply by 100.

If you count stock instead of recording each sale, units sold is opening stock plus receipts minus closing stock. That gap includes theft and damage, so shrink pushes the result up.

A weekly sell through figure suits fast sellers and perishable lines, where a slow week means waste. A month suits most products, and 90 days suits slow lines.

Worked examples

These worked examples use made-up products and numbers over the same 30 days.

The candle's last 15 units may run out before the next delivery. The tea towel's 40% means little until you compare it with its own history. At the planter's pace, the 18 left would take nine months to clear.

How to read high and low results

A high figure means most of the stock is gone, which is the aim for an everyday line. But a product at 95% may have sold out partway through the period, and sales missed while the shelf was empty never show in the result. On a seasonal line bought once, a high figure says to buy more next season.

A low figure means stock is sitting. Read it by product type:

• Everyday items usually post a high figure every period. A fall from their usual level points to a price change, a new competitor or a poor shelf position.
• Seasonal and trend items have a fixed window to sell. A low figure halfway through the season is the time to mark down.
• Slow, high-ticket items such as furniture sell a few units a month, so a low monthly figure is normal.
• New products start low while customers find them. Give them a full period first.

What is a good sell through percentage?

No single figure is good for every product. A result that suits a slow gift line would be a warning for a daily staple. Judge each product against three things:

1. Its own history. Compare this period with the last three, or with the same month last year. A fall from 70% to 40% on a staple needs a look.
2. Its margin. A wide margin can carry a lower figure, because each sale covers more of the cost of unsold stock. On a thin margin, one markdown can wipe out the profit.
3. Time left to sell. A seasonal item at 40% with eight weeks to go may be on track. With one week left, it needs a markdown.

How to improve sell through

Try these in order, from cheapest to most final:

• Move it to a better shelf or a display near the register.
• Buy fewer next time. The same sales against a smaller order give a higher figure and tie up less cash.
• Mark it down once it has had a fair period in a good spot.
• Drop it and give the space to a better seller.

Deciding when to discontinue a product comes down to three checks. The figure has stayed low for several periods, a markdown has not moved it, and the space would earn more with something else.

Sell through vs inventory turnover

In units, a product that holds 20 on average and sells 120 a year turns 6 times. The Wikipedia entry on inventory turnover sets out the cost and unit versions and notes that comparisons only hold within one industry. For a national picture, the Census Bureau's monthly Manufacturing and Trade Inventories and Sales report tracks retail inventories alongside retail sales.

A simple sell through report

List every product with its opening stock, receipts, units sold and result for one period, then sort from lowest to highest. The bottom rows are your markdown and drop candidates. The top rows with little stock left are your buy-again list.

The sell-through estimate in headoffis

headoffis has no connection to a register or POS system, so sales are entered by hand against a product and a stock location. Sales & stats estimates sell-through for each product over the last 7, 30 or 90 days, counting today, as units sold ÷ (units sold + current stock).

That is a current-stock proxy, not the opening stock plus receipts version above. A transfer into the location or a recount changes it without a new sale. If nothing was received, moved or recounted during the window, units sold plus current stock equals the stock at the start, and the two versions agree. A product whose stock has never been counted shows no estimate. headoffis does not track cost or margin, so the margin check stays with you.

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