Inventory Turnover and Days on Hand for Small Sellers

Two numbers, one idea

Cost of goods sold is what you paid for the items you sold during the period. Average inventory is usually (starting value + ending value) ÷ 2, both at cost. Use cost for both numbers so they match.

Example

Last year you sold items that cost you $48,000. You started the year with $14,000 of inventory at cost and ended with $10,000.

On average, your stock turns over four times a year, and a dollar of inventory waits about three months before it sells.

What's a good number?

There isn't one universal answer. Groceries turn over fast; rare collectibles may sit for a year and still be profitable. What matters is your trend. If turnover is falling, you're buying faster than you're selling, and cash is getting stuck in stock.

Resellers often track a simpler version: sell-through rate, the share of items listed in a period that sold. Both point at the same question.

Look at it by item, too

A healthy overall number can hide dead stock. Sort your SKUs by days since last sale or by how long they've been listed. Many resellers put the month an item was sourced in the SKU (see SKU numbering) for exactly this reason.

What to do with slow stock

• Refresh the listing: new main photo, better title keywords, item specifics filled in.
• Send offers to watchers, or turn on best offer.
• Bundle slow items with fast ones.
• List it somewhere else. An item that sits on one marketplace may sell on another (see crosslisting).
• Mark it down on a schedule, for example 10% after 60 days, 20% after 90.
• Let it go. Donate or liquidate, and use the lesson to buy differently.

Raising turnover without running out

Buy smaller amounts more often for items you restock, using reorder points. Put your effort, and your best shelf space, behind the items that sell fastest. And count regularly: inventory you can't find can't sell.