Inventory Turnover
How many times you sell through your entire inventory in a given period.
Definition
Inventory turnover is calculated by dividing COGS by average inventory value over a period. It measures how efficiently you convert inventory investment into sales — higher is generally better, but optimal rate varies by category.
Why It Matters for Shopify Brands
Low inventory turnover ties up cash in slow-moving stock — reducing the capital available for marketing, product development, and operations. High turnover can signal stockout risk if not managed carefully.
Benchmarks
Optimal inventory turnover by category: fashion 4–6x/year, supplements 12–24x/year, electronics 6–12x/year, home goods 3–5x/year.
Need help improving your Inventory Turnover?
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