Online sellers, here are the key inventory metrics you need to track this year:
- Inventory Turnover Rate
- Sell-Through Rate
- Stock-to-Sales Ratio
- Days of Inventory On Hand
- Perfect Order Rate
- Carrying Cost of Inventory
- Demand Forecast Accuracy
Watching these KPIs helps you:
- Keep the right stock levels
- Cut costs
- Boost sales
- Stay ahead of competitors
| KPI | What It Measures | Why It Matters |
|---|---|---|
| Inventory Turnover | How often you sell and replace stock | Shows efficiency, prevents excess |
| Sell-Through Rate | Percentage of inventory sold | Indicates popular items, guides restocking |
| Stock-to-Sales | Stock value vs. sales value | Helps balance inventory levels |
| Days of Inventory | How long items stay in stock | Improves cash flow, reduces holding costs |
| Perfect Order Rate | Orders delivered without issues | Increases customer satisfaction |
| Carrying Cost | Cost to store unsold items | Identifies ways to reduce expenses |
| Demand Forecast | Accuracy of sales predictions | Helps plan inventory, prevents stockouts |
Use a good dashboard to track these KPIs and make smart inventory decisions.
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What are Marketplace Inventory KPIs?
Marketplace inventory KPIs are numbers that help online sellers track how well they manage their stock. These KPIs show important information about:
- How much stock sellers have
- How fast items are selling
- How happy customers are
By watching these numbers, sellers can:
- Find ways to do better
- Cut costs
- Sell more
Picking the right KPIs is key. There are many numbers to track, so it's best to focus on the ones that matter most for your business. Good KPIs help you make choices based on facts, not guesses.
| Why KPIs Matter |
|---|
| Show how well you're doing |
| Help you make better choices |
| Point out where to improve |
| Save money |
| Boost sales |
Next, we'll look at seven important marketplace inventory KPIs to watch in 2024. These will help you:
- Manage your stock better
- Spend less
- Sell more
1. Inventory Turnover Rate
What It Is
The inventory turnover rate shows how many times a seller sells and replaces their stock in a set time. It helps sellers see how well they manage their inventory and where they can do better.
How to Figure It Out
Use this simple math:
Inventory Turnover Rate = Cost of Goods Sold / Average Inventory
For example:
- Cost of goods sold: $10,000
- Average inventory: $2,000
- Inventory turnover rate: 5
This means the seller sold and replaced their stock 5 times in the given period.
Why It Matters
| Good Turnover Rate | Low Turnover Rate | High Turnover Rate |
|---|---|---|
| Keeps cash flowing | May mean pricing problems | Could mean not enough stock |
| Helps avoid running out | Could show poor product quality | Might lead to running out |
| Prevents too much stock | Might show weak marketing | Can cause lost sales |
A good turnover rate helps sellers:
- Keep their money moving
- Have enough stock to sell
- Not have too much extra stock
If the rate is too low or too high, it can point to problems the seller needs to fix.
2. Sell-Through Rate
What It Is
The sell-through rate (STR) shows how much of your stock you sell in a set time. It helps sellers see how fast their items are selling and make smart choices about their stock, prices, and marketing.
How to Figure It Out
To get your sell-through rate, use this simple math:
Sell-Through Rate = (Items Sold / Total Items Available) x 100
For example:
- You had 500 items to sell
- You sold 400 of them
- Your sell-through rate is 80%
Why It Matters
| High Sell-Through Rate | Low Sell-Through Rate |
|---|---|
| Items are selling fast | Items are selling slowly |
| Need to restock often | May have too much stock |
| Good for cash flow | Money tied up in unsold items |
Watching your sell-through rate helps you:
- Know which items sell well
- Keep the right amount of stock
- Save money on storage
- Make smart choices to grow your business
3. Stock-to-Sales Ratio
What It Is
The stock-to-sales ratio shows how much stock you have compared to how much you're selling. It helps you know if you have too much or too little stock.
How to Figure It Out
Use this simple math:
Stock-to-Sales Ratio = Average Stock Value / Average Daily Sales Value
For example:
- Your average stock value: $10,000
- Your average daily sales value: $2,000
- Your stock-to-sales ratio: 5
This means for every $1 you sell, you have $5 worth of stock.
Why It Matters
| Benefits of Watching This Ratio | Problems It Can Help Avoid |
|---|---|
| Keep the right amount of stock | Having too much stock |
| Save money on storage | Running out of stock |
| Improve cash flow | Losing sales |
| Make smart choices about restocking | Wasting money on extra stock |
4. Days of Inventory On Hand
What It Is
Days of Inventory on Hand (DOH) shows how long items stay in stock before they're sold. It helps sellers see how well they manage their stock and use their money.
How to Figure It Out
Use this math:
DOH = (Average Inventory / Cost of Goods Sold) x Number of Days
You need to know:
- How much stock you have on average
- How much it costs to buy or make your items
- How many days you're looking at
Why It Matters
| Low DOH | High DOH |
|---|---|
| Sells stock fast | Stock sits around |
| Can restock quickly | Takes longer to sell |
| Uses money well | Ties up money in stock |
| Shows good planning | Shows poor planning |
Watching DOH helps sellers:
- Buy the right amount of stock
- Spend less on storing items
- Have more cash to use
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5. Perfect Order Rate
What It Is
The Perfect Order Rate (POR) shows how many orders are delivered without any problems. A perfect order is:
- On time
- Complete (all items included)
- Has correct paperwork (right invoice, packaging, and labels)
How to Figure It Out
Use this simple math:
POR = (Number of Perfect Orders / Total Number of Orders) x 100
For example:
- You had 100 orders
- 90 were perfect
- Your POR is 90%
Why It Matters
| High POR | Low POR |
|---|---|
| Happy customers | Unhappy customers |
| More repeat business | Lost sales |
| Good reputation | Bad reputation |
| Lower costs | Higher costs (fixing mistakes) |
Watching your POR helps you:
- Find ways to improve
- Make customers happier
- Sell more
- Spend less on fixing mistakes
By making your POR better, you can:
- Keep customers coming back
- Get more sales
- Save money on returns and fixes
6. Carrying Cost of Inventory
What It Is
Carrying Cost of Inventory, also called Holding Costs, is how much it costs to keep unsold items in stock. This number shows how much money you spend on storing items you haven't sold yet.
How to Figure It Out
To find your Carrying Cost of Inventory, add up these costs:
| Cost Type | Examples |
|---|---|
| Storage | Warehouse rent, electricity bills |
| Handling | Workers' pay, equipment costs |
| Services | Insurance, taxes |
| Lost chances | Sales you missed, other things you could have done with the money |
Use this math:
Carrying Cost of Inventory = (Total Value of Stock x Carrying Cost Percentage)
For example:
- Your stock is worth $100,000
- Your carrying cost is 20%
- Your Carrying Cost of Inventory is $20,000
Why It Matters
Watching your Carrying Cost of Inventory helps you:
| Benefits | How It Helps |
|---|---|
| Make more money | Cut down on extra costs |
| Have more cash to use | Spend less on storing items |
| Keep customers happy | Have items ready to sell |
| Waste less | Use space and money better |
7. Demand Forecast Accuracy
What It Is
Demand Forecast Accuracy shows how well you guess what customers will buy. It looks at the difference between what you thought you'd sell and what you actually sold. The closer your guess, the better your accuracy.
How to Figure It Out
There are a few ways to calculate this, but here's a simple one:
Accuracy = [(Real Sales - Guessed Sales) ÷ Real Sales] x 100
The lower the percentage, the better your guess was.
Why It Matters
Knowing how to guess customer demand helps you manage your stock better. Here's how it can help:
| Benefits | Problems It Avoids |
|---|---|
| Be ready for busy times | Running out of stock |
| Have enough items to sell | Having too much stock |
| Save money on storage | Wasting money on extra items |
| Make smarter choices | Losing sales |
By watching your Demand Forecast Accuracy, you can:
- Find ways to guess better
- Use facts to make choices
- Run your business better
Guessing right means you'll have what customers want when they want it, without wasting money on extra stock.
How to Track KPIs in Your Marketplace
To keep an eye on your KPIs, you need a good dashboard. This helps you make smart choices about your stock.
A good dashboard should show:
- How much stock you have now
- How much your stock is worth
- What might happen in the future
It should also tell you about:
- Sales
- Returns
- Shipping
- Broken items
This helps you see patterns in how your stock moves and fix any problems.
When picking a tool to track KPIs, look for these things:
| Feature | Why It's Important |
|---|---|
| Easy to use | Everyone on your team can understand it |
| Can be changed | You can track the KPIs that matter to you |
| Shows up-to-date info | You can act fast when things change |
By using a good dashboard, you can:
- See how well you're doing
- Find ways to do better
- Make smart choices about your stock
Conclusion
Watching the right numbers helps online sellers manage their stock better in 2024. The 7 key numbers we talked about can help you:
| Benefits of Tracking KPIs |
|---|
| Keep the right amount of stock |
| Spend less money |
| Make customers happier |
| Sell more |
To keep track of these numbers, use a good dashboard. It should:
- Show your current stock
- Tell you how much your stock is worth
- Help you guess what might happen next
A good dashboard also gives you info about:
- What you've sold
- Items customers sent back
- Shipping
- Broken items
This helps you spot patterns and fix problems quickly.
When picking a dashboard, look for one that:
| Dashboard Features | Why It Helps |
|---|---|
| Easy to use | Your whole team can use it |
| Can be changed | You can track what matters to you |
| Shows new info fast | You can act quickly when things change |
By using these numbers and a good dashboard, you can:
- See how well you're doing
- Find ways to do better
- Make smart choices about your stock
This can help you stay ahead of other sellers and reach your business goals.
FAQs
Which is an important KPI for inventory?
The Sell-Through Rate (STR) is a key number to watch. It shows how much of your stock you sell in a set time. This helps you see how well your items are selling.
What is the formula for Inventory Turnover Rate?
To find your Inventory Turnover Rate, use this math:
| Formula | What to Use |
|---|---|
| Units sold ÷ Average inventory | Count of items |
| Cost of goods sold ÷ Average inventory value | Money amounts |
How do I choose the right inventory management KPIs?
To pick good KPIs:
- Look at your business goals
- Ask your warehouse team
- Pick a few important ones
- Check and update them often
What are some additional KPIs to consider?
Here are more KPIs to think about:
| KPI | What It Shows |
|---|---|
| Sales Volume | How much you're selling |
| Seller Response Time | How fast you answer customers |
| Customer Satisfaction Score | How happy buyers are |
| Return Rate | How often items come back |
| Conversion Rate | How many visitors buy |
| Churn Rate | How many customers stop buying |
How do I track KPIs in my marketplace?
Use a good dashboard that:
- Shows your current stock
- Tells you stock value
- Helps predict future needs
- Gives info on sales, returns, shipping, and broken items
Pick a dashboard that's:
- Easy to use
- Can be changed to fit your needs
- Shows up-to-date info
This helps you spot patterns and fix problems fast.
