Why inventory turnover matters
Inventory is money sleeping in a warehouse: turn it fast and the same capital funds several rounds of sales a year; turn it slowly and cash suffocates inside stock while storage costs tick and styles age. For inventory-heavy founders, turnover is the metric that decides how much business the balance sheet can carry.
Reading and improving turnover
- Compute it per categoryThe blended number hides the sleepers
- Pair with marginFast-and-thin versus slow-and-rich are both viable, knowingly
- Raise it from both endsBetter forecasts in, faster markdowns out
- Watch the trendSlowing turnover is cash flow trouble arriving early
Questions
What’s a good inventory turnover for ecommerce?
Category-dependent by nature: fashion and consumables expect many turns a year, durable and luxury goods fewer. The usable benchmark is your own trajectory and your category’s norm, not a universal number.
Can turnover be too high?
Yes: chronic stockouts, panic reorders, and lost sales are the symptoms of stock run too lean. Turnover is optimized against availability, and safety stock is the deliberate brake.