A practical guide to sell-through rate (and how to fix it)
Unsold inventory can be a liability for your business if it’s not being sold fast enough. Sell-through rate (STR) is the key metric that measures how quickly that stock turns into cash and directly affects inventory turnover. The higher your STR, the better.
This guide shows you how to calculate STR, why it matters, and how to fix it if it’s too low.
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What is sell-through rate?
Sell-through rate is a percentage that measures how quickly your inventory is sold compared to the amount you received over a set period.
A high STR means products are selling fast, usually driven by strong demand, while a low STR signals slow-moving items and weak inventory turnover. Tracking this helps retailers make better decisions on purchasing, pricing, promotions and inventory management, especially when demand trends shift quickly.”
🧠The standard formula
- Formula: Sell-Through Rate = (Units Sold ÷ Units Received) × 100
- Example: If you sold 400 units out of 500 you received, your sell-through rate is 80%.
- (400 ÷ 500) × 100 = 80%
This calculation shows how efficiently you’re moving products and whether your inventory levels match demand. Knowing your STR helps guide smarter inventory planning, so you don’t overbuy or understock.
Why sell-through rate is your business’s financial health score
It’s easy to dismiss sell-through rate as just another performance stat, but it’s actually a direct gauge of your financial health. STR is one of the clearest ways to see if your inventory aligns with demand and whether your stock levels are sustainable.
A low rate creates a snowball effect of costs that can cripple your business.
- Imagine a pallet of new products arrives. The clock starts ticking immediately. The moment you buy that inventory, your working capital is tied up in those boxes.
- Every day those items don’t sell, they accumulate storage, insurance, and management costs—your investment is now actively costing you more money.
- To move this lingering stock, you’ll eventually have to offer discounts and markdowns, which eats into your profit margins. If it sits for too long, it can become dead stock—a total loss.
A healthy STR, on the other hand, gives you control. It proves your forecasting is accurate, frees up cash flow by turning products into revenue faster, and protects your profit margins. Businesses with a higher sell-through rate are more agile, more profitable, and less exposed to carrying costs.
Strong STR performance also improves your flexibility in pricing and sale execution, since you’re not forced to discount as heavily. This allows you to develop a more sophisticated pricing strategy that fits market demand and sales trends.
What is a “good” sell-through rate?
There is no single “good” sell-through rate that applies to every business.
An 80% STR might be excellent for one product but terrible for another. Performance depends entirely on context, such as product category, business model, and timeframe. For example, fashion retailers often aim for higher seasonal STR than furniture sellers.
Use these general benchmarks as reference points, not firm rules:
| Category | Benchmark STR | Timeframe |
| Fashion & Apparel | 70-80% | Per season |
| Toys & Seasonal Items | 80-90% | Per season |
| Beauty & Personal Care | 30-60% | Monthly |
| High-Volume Consumables | 20-40% | Weekly |
| Consumer Electronics | 10-20% | Monthly |
| Home Goods / Furniture | 5-15% | Monthly or quarterly |
Instead of chasing a generic number, a better way to judge your STR is to ask:
- Is my STR improving or declining over time?
- Is it high enough to avoid overstocking?
- Is it aligned with my cash flow needs and product cycle?
A high sell-through rate across these metrics generally means your inventory strategy is on track.
How to analyze your business with sell-through rate
To get truly actionable insights, you need to go beyond the standard formula and apply it to specific parts of your business.
- Choose the right formula variant
Selecting the right formula for your sell-through rate calculation depends on your business model and inventory situation. Here’s a quick guide to help you decide:
- Use “Units Received” Formula:
Units Sold ÷ Units Received × 100
- Best for: Businesses with straightforward inventory, like standard retail or direct-to-consumer (DTC) brands. “Units received” refers to new inventory added to your stock during the period. This formula works well if you have clear, consistent data on incoming stock shipments.
- Use “Units Available” Formula:
Units Sold ÷ Units Available × 100
- Best for: Businesses with fluctuating stock, such as those handling frequent returns, restocks, or transfers, or marketplaces that rely on listing availability. “Units available” includes remaining inventory from a prior period plus any new stock added.
Example:
Let’s say you had 300 units left from May and received 200 more in June (total available = 500). If you sold 400 units in June, your STR is 80%.
STR = (400 ÷ 500) × 100 = 80%
Tip: Always match your “units sold” and “received/available” numbers to the same time period to ensure accurate calculations.
Choose the formula that aligns with how you track and manage inventory to get the most accurate insights for your business. Consistency in how you calculate STR is key to making it a reliable tool for inventory management.
- Analyze performance in four key ways
Use STR to answer critical business questions by applying it to different segments of your operation:
- To Find Out WHAT Is Selling (Product-Level): Calculate STR for each SKU or product line to separate your high-performing “winners” from the “deadweight” that is tying up your cash.
- To Find Out WHERE It’s Selling Best Online (Channel-Level): Compare STR across your different sales channels, like Amazon, Shopify, or retail distributors. This helps retailers find which platforms convert stock into sales most efficiently and guide smarter sale campaigns.
- To Find Out WHERE It’s Selling Best Geographically (Location-Level): Measure STR across your various warehouses, stores, or fulfillment centers to spot regional issues. This allows you to reallocate products that are stagnating in one location but selling quickly in another.
- To Find Out WHEN It’s Selling (Time-Based): Track STR over different timeframes like weeks, months, or quarters. This is crucial for identifying trends, understanding seasonality, and measuring the performance of campaigns or pricing changes.
How to fix a low sell-through rate
If your sell-through rate is lagging, avoid the temptation to just slash prices. The fastest way to recover your margin is to find the misalignment in your process and fix it at the source.
Below is a list of four most common problems that result in low STR and how to fix them.
Over-ordering the wrong products
- Cause: Buying SKUs that do not align with actual customer demand.
- Fix: Use historical sell-through data to guide your purchase decisions. Set automated replenishment thresholds based on product velocity instead of guesswork.
Inaccurate demand forecasting
- Cause: Poor demand forecasting that leads to inventory imbalances, such as stockouts or excess stock.
- Fix: Implement forecasting tools that consider seasonality and historical STR trends. Align your planning with real demand, not outdated assumptions. Better forecasting tools and smarter purchasing can help prevent excess inventory.
Inventory stuck in the wrong place
- Cause: Your inventory is sitting in an inefficient location, arrives late, or is slowed by internal delays.
- Fix: Monitor your STR by location to find stuck inventory. You can then relocate slow-moving products to better-performing warehouses or sales channels. This step alone can transform your inventory management and prevent capital from being trapped in the wrong place.
Ineffective sales and marketing
- Cause: Your sales are being hampered by weak product listings, a lack of SEO, stale product pages, or insufficient promotional activity.
- Fix: Optimize your product titles, keywords, and images. Bundle slow-moving items with faster-selling products or run limited-time promotions to create urgency and stimulate sales activity
These fixes can be broken down into two categories: immediate actions you can take today (Quick Wins) and long-term strategies to build upon (Long-Term Levers).
| Quick Wins | Long-Term Levers |
| Update product listings | Automate forecasting |
| Bundle slow SKUs | Improve planning cycles |
| Run flash promotions and sale events | Centralize inventory data |
Putting it all together
Ultimately, sell-through rate is a reflection of your business’s overall health.
A strong STR signals that your purchasing, forecasting, and marketing are all aligned, protecting your profit margins and freeing up cash flow.
By regularly monitoring and acting upon the insights from your STR, you can take control of your inventory and build a more resilient, profitable business.
Optimize your sell-through rate with Linnworks
Sell-through rate improves when you have full visibility and control over your inventory—and Linnworks gives you both.
Linnworks shows you what’s selling, what’s not, and where stock is building up across every channel and location. Set reorder points based on real-time sales data, automate workflows to handle slow-moving stock, and use smarter forecasting to stay lean and make faster pricing and sale decisions.
Book a demo to see how Linnworks can help you move stock and protect your bottom line.
