Retail Dogma


The Sales Equation

The sales equation for retail & ecommerce businesses is: Sales = Traffic x Conversion x Average Transaction Value (ATV) Sales Equation Example For a business that has received a traffic of 1354 customers and had a conversion rate of 30% and an average transaction value (ATV) or average order value (AOV) of 112$, the formula …

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Bounce Rate for Ecommerce Stores

Bounce rate measures the percentage of visitors that arrive at a website and leave without clicking to any other pages. Since ecommerce websites are transactional in nature, with the primary goal to convert visitors from browsers to shoppers by completing a transaction, bounce rate becomes an important metric for online stores. What is a Good …

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Units Per Transaction (UPT)

Units per Transaction (UPT), aka Items per Customer (IPC), is a retail KPI used to measure how many items customers add to the shopping basket on average. It is used together with Average Transaction Value (ATV) & conversion to assess the effectiveness of the sales process and the sales team at the store. Units Per …

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Average Transaction Value (ATV)

Average Transaction Value (ATV), aka Average Order Value (AOV) in ecommerce, is a sales KPI used to measure the effectiveness of the sales process and the sales team in the store. The more skilled the sales team on the floor, the higher ATV they can deliver for the business. It is usually combined with other …

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Days Sales in Inventory

Days Sales in Inventory (DSI) measures how many days it takes to sell the company’s inventory. It is used together with other metrics like inventory turnover ratio and GMROI to track how efficiently a company manages its inventory. While a low DSI can be positive or negative; ie it could mean that either the company …

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Retail Financial Ratios Benchmarks

This is an annually updated list of benchmarks for the most important financial ratios in the retail industry.

You can use it as a guidance for your own retail or e-commerce store performance.

Shrinkage: Stock Loss

Shrinkage is the inventory lost due to shoplifting, internal theft, damaged goods, or administrative errors done at retail stores. Every year, quarter or half year the retailer conducts a stock count to track all the existing inventory and then compare it with the value of inventory in the books (on the balance sheet). The difference …

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Inventory Turnover

Inventory turnover ratio (IT) measures how many times a company turns its inventory during a certain period of time. It gives an idea about how efficiently a company is managing its inventory. How To Calculate Inventory Turnover? Inventory Turnover Formula: Inventory Turnover (IT) = COGS ÷ Average Inventory To calculate IT you will need the …

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Forward Stock Cover

Forward stock cover measures how long the current stock on hand will cover future forecasted sales periods. This measure is used in inventory management to ensure product availability and adequate stock on hand coverage. It is also used during the buying budget calculation to ensure the inventory ordered is enough to cover sales for the …

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Sell Through Rate

One of the KPIs that you use to analyze your inventory & buying and also the performance of your suppliers is the sell through rate (aka. Sell-thru rate). Sell through rate represents the number of items sold out of the number of items received and is measured for a given period (e.g one month or …

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