Inventory Turnover: How Fast You're Selling Your Stock

Inventory turnover measures how many times you sell and replace your stock in a given period.

Inventory turnover = COGS ÷ Average inventory value

Average inventory = (Opening stock value + Closing stock value) ÷ 2

A turnover of 6 means you sell and replace your entire stock inventory 6 times per year — roughly every 2 months.

A related metric is Days Inventory Outstanding (DIO): DIO = 365 ÷ Inventory turnover. DIO of 60 means you hold 60 days' worth of stock on average.

Optimal turnover varies significantly by product type:

| Category | Typical turnover range |

|---|---|

| Fast fashion / trend items | 10–20× per year |

| General apparel | 4–6× per year |

| Electronics | 4–8× per year |

| Home & living | 3–5× per year |

| Beauty & skincare | 4–8× per year |

| Jewellery / accessories | 2–4× per year |

| High-end / luxury | 1–3× per year |

High turnover is generally good — it means capital is not sitting in stock and your products are selling well. But excessively high turnover can mean frequent stockouts. Low turnover means capital is tied up in slow-moving inventory.

With inventory and COGS data connected (via Shopify, Amazon, or a CSV upload), ask AskBiz:

• *'What is my inventory turnover rate by product category?'*
• *'Which products have the lowest turnover in the last 6 months?'*
• *'What is my average Days Inventory Outstanding this quarter vs last quarter?'*

Sort by turnover ascending to surface your slowest-moving lines first. These are your candidates for markdown, promotion, or discontinuation.

For slow-moving stock:

1. Markdown: reduce price to clear. Set a minimum acceptable price (at or above landed cost) and mark down in stages — don't panic-discount to below cost unless there is a genuine cash emergency.

2. Bundle with fast-movers: attach slow-movers to high-velocity products as a bundle or gift-with-purchase.

3. Re-merchandise: change the display or search placement. Sometimes product visibility is the issue.

4. Return to supplier: if you have a buyback clause in your supplier agreement, exercise it.

5. Discontinue: if none of the above work and the product has been sitting for > 180 days, removing it clears capital and warehouse space for better-turning products.

For overall low turnover:

• Review your buying quantities — are you over-ordering relative to demand?
• Improve your demand forecasting (see Inventory Forecasting guide)
• Reduce lead times with suppliers so you can buy in smaller, more frequent batches