Sell-thru is one measurement that seems to cause a lot of confusion. And, it is probably the one I get the most questions about. Much like GMROII, I can’t give comprehensive coverage to it in a blog post, but I can give you a start to understanding it.
Is it sell-thru or sell-through? And what exactly is it?
Either sell-thru or sell-through is correct. Sell-thru is the percent of a product’s (or category’s or department’s) inventory that sells during a particular period of time.
How do I calculate it?
Formula: Units Sold/ (Units on Hand + Units Sold) or Units Sold/Total Units Received
Example: A store received 100 units of a promotional cereal in a special display unit on the 1st of the month. Because the product is a one-time buy, they would like to be sold out by the end of the month. The buyer believes the product should sell evenly throughout the month. Two weeks into the promotion 30 units have been sold.
Calculation: 30/100 = 30% sell-thru
To achieve the buyer’s goal, the store needed to sell half of their inventory by this date. They are behind and need to find a way to increase their sales rate.
NOTE: I have greatly simplified the example given here. In the real world, there are always complications.
What do I use it for?
Buyers often use sell thru to determine whether a product that is purchased with a finite amount of inventory will be sold by a pre-determined date. Sell-thru can also be used to monitor inventory levels for regular products by using beginning of month inventory instead of total units received.
If you have questions concerning sell-thru, or would like to see a similar beginner’s guide for a different measurement, please let me know via a comment or an email.