Sell-Through Rate

Quick Definition

The percentage of inventory sold compared to what was received, measuring how quickly products move.

What is Sell-Through Rate?

Sell-through rate measures the percentage of inventory sold compared to what was available. If you received 100 units and sold 75, your sell-through is 75%. It shows how well products are moving.

Sell-through is typically measured over a specific time period (weekly, monthly) to track product velocity and identify slow movers early.

Why Sell-Through Rate Matters

High sell-through indicates strong demand and good inventory planning. Low sell-through means you're sitting on products that aren't moving, tying up cash and risking obsolescence or markdowns.

Tracking sell-through by product helps identify winners to reorder and losers to discount or discontinue.

Using Sell-Through Rate

Set sell-through targets by product category. Fashion items should sell through faster than basics. Monitor weekly to catch problems early. Low sell-through products may need better merchandising, promotion, or markdown.

Formula

Sell-Through Rate = Units Sold ÷ Units Received × 100
Can also use: Units Sold ÷ (Units Sold + Units On Hand) × 100

Example

Monthly product performance:

• Units received: 500
• Units sold: 350
• Units remaining: 150

Sell-Through Rate = 350 ÷ 500 × 100 = 70%

70% of inventory sold in one month is strong for most retail. The remaining 30% may need markdown or different placement.

Related Terms

Inventory Turnover Ratio
How many times a company sells and replaces its inventory during a period, measuring inventory management efficiency.

Days Inventory Outstanding (DIO)
The average number of days a company holds inventory before selling it.

Gross Profit Margin
The percentage of revenue remaining after subtracting the direct costs of producing goods or services sold.