How it works
How to work out inventory turnover
Pull your COGS for the period
Cost of goods sold = supplier cost of every unit shipped, plus inbound shipping. Not retail. Your accounting software or Shopify Finances report gives you this.
Get your starting and ending inventory
The dollar value (not units) of inventory on hand at the start and end of the period. Most ecommerce platforms and ERPs have this as a report. Round to the nearest thousand if exact is hard to find.
Compare to your category
Fashion: 4-8× per year. Beauty: 6-10×. Electronics: 8-14×. Grocery: 12-24×. Your turnover should be at or above category norm to stay healthy.
Why turnover matters for ecommerce
Low turnover locks up cash you can't spend on marketing, new products, or growth.
Inventory is cash you can't move
A $72k inventory position sitting for 3 months is $72k not spent on ads, product development, or hiring. High turnover means that cash flows back to you and can be redeployed.
Storage costs compound
Every month a unit sits in a warehouse, you pay storage. Amazon FBA storage fees scale monthly and jump 4× in Q4. Slow-moving SKUs quietly eat margin through storage alone.
Obsolescence risk grows with days outstanding
Fashion and trend-driven products lose value fast. Beauty has expiration dates. Electronics get superseded. Any product over 180 days of inventory outstanding needs a markdown plan.
High turnover isn't always good
Turnover ratios above 30× often mean you're running out of stock. Stockouts lose sales and break customer trust. Aim for the high end of your category norm, not above it.
SKU-level beats store-level
Your store-wide turnover can look healthy while 20% of SKUs are dead stock. Run this calculator per SKU for your top-revenue products to catch quiet cash drains.
More free tools
All tools →- Abandoned cart recovery calculatorRevenue you could win back from abandoned carts.
- Free shipping threshold calculatorWhether a free shipping threshold adds profit.
- Shipping cost estimatorUSPS, UPS and FedEx cost by weight and zone.
- Reorder point calculatorWhen to reorder, from demand, lead time and buffer.
FAQ
Questions, answered
Depends on category. Fashion and apparel: 4-8× per year. Beauty and personal care: 6-10×. Electronics: 8-14×. Grocery and perishables: 12-24×. Compare to your category norm, not to other industries.
Ratio = how many times per period you cycle through inventory. Days outstanding = average days a unit sits before selling. They're the same info in different units: ratio of 8× per year = 365/8 = 46 days outstanding.
Cost. Match the unit: COGS is in cost, so inventory should also be in cost for an apples-to-apples ratio. Using retail would inflate inventory and give a misleading (lower) turnover number.
Five common levers: (1) markdowns and sales to clear slow SKUs, (2) bundle slow movers with fast movers, (3) improve product page conversion with better photos and reviews, (4) cut SKUs that haven't sold in 90+ days, (5) order smaller quantities per purchase order so you replenish more often.
No. Very high turnover (above 30×) usually means frequent stockouts. Stockouts lose sales and can permanently hurt rankings on marketplaces like Amazon. Aim for the top of your category range, not beyond it.
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