What is Sell Through Rate?
Sell through rate represents how much of a product you sell compared to how much you purchased from your manufacturer or supplier. The higher the Sell Through Rate, the better your store is performing. Sourcing the right products can be a massive challenge for ecommerce businesses. If your products don’t resonate with your customers, this can negatively impact your sell through and ultimately, cause a downturn in your business. That’s why it’s important to know your customers' wants and needs when sourcing new products.
How to calculate Sell Through Rate
You can calculate your Sell Through Rate with the following formula: Sell Through Rate = Number of Units Sold / Number of Units Received x 100. This is a practical way of knowing your percentage of sell through. Ideally, you want that to be as close to 100% as possible. When an item sells out on your website it validates that you are bringing in the right products for your customer base and often creates demand for more of that item. A good practice is to allow customers to sign up for notifications when items sell out. This gives you a good gauge of how many customers are anticipating a restock and can give you a good estimation of your Sell Through Rate for that next wave of products upon restock.