In the realm of ecommerce, maintaining optimal inventory levels is essential. The stock-to-sales ratio serves as a critical metric, indicating how much inventory is held relative to monthly sales volumes. This balance is imperative to avoid stockouts that frustrate customers or excess stock that incurs carrying costs. Since ideal ratios differ across industries, understanding one's specific ratio allows for informed inventory management decisions. Calculation involves averaging inventory value over a period and relating it to net sales, providing clarity on when to reorder stock or adjust strategies.
To keep your ecommerce business running smoothly, track your stock-to-sales ratio to find an inventory equilibrium.
The stock-to-sales ratio reveals whether you've struck a balance between having enough goods to meet customer demand without drowning in costly excess stock.
There's no absolute definition of what makes a good or bad stock-to-sales ratio because it varies widely by business type and industry.
Armed with a stock-to-sales ratio tailored to your business, you can make smarter decisions about when to order new stock.
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