Inventory turnover for an online shop: the formula, with a worked example

Published 8 October 2026 · 3 min read

Inventory turnover tells you how many times in a period the stock you hold is sold and replaced. For a shop that buys with its own cash, it is the difference between money that is working and money sitting on a shelf. Here is the formula, how to turn it into days, a worked example for a small clothing shop, and what to do with the answer.

The formula

Inventory turnover = cost of goods sold ÷ average inventory, both at buying price. Cost of goods sold is what the pieces you sold cost you to buy, not what you sold them for. Average inventory is the value of your stock at the start of the period plus its value at the end, divided by two.

Use the buying price on both sides. Dividing sales at selling price by stock at buying price inflates the number by your margin, and makes a slow shop look fast.

Days of stock: the same number, easier to read

Divide the days in the period by the turnover. A turnover of 6 in a year means stock sits for about 61 days (365 ÷ 6) before it sells. For a month, use 30 days and that month’s figures.

A worked example

A clothing shop starts the year with stock that cost ৳3,00,000 and ends it with ৳2,00,000. Its average inventory is (৳3,00,000 + ৳2,00,000) ÷ 2 = ৳2,50,000. The pieces it sold during the year cost ৳15,00,000 to buy. Its turnover is ৳15,00,000 ÷ ৳2,50,000 = 6, and its days of stock are 365 ÷ 6, about 61 days.

Work it out for each product, not just the shop

A number for the whole shop hides the problem. Kurtis that sell in three weeks and a batch of winter shawls that has sat since January average out to something that looks fine. Work it out for each product, and for each size where you can: M selling out in a week while XL sits for four months is a buying problem, not a demand problem.

What a good number is

There is no single right figure. Fresh food has to turn in days, while handicrafts or jewellery can sit for months and still make money. Compare a product with its own earlier months, and with the products beside it in your own shop. A number that falls month after month means you are buying faster than you sell.

When stock turns too slowly

Buy in smaller lots more often, if your supplier allows it, even at a slightly higher price per piece. Stop reordering the sizes and colours that do not sell, and put that cash into the ones that do. Clear old stock with a bundle or a discount before it ties up next season’s money, and post it again with new photos: a product nobody has seen for a month is not slow, it is hidden.

When it turns too fast

A very high turnover can mean you keep running out. If customers keep hearing “sold out”, the shop is losing sales it could have made. Keep more of the fast sellers, and reorder before they run out rather than after.

What you need to keep to work it out

Three records: the buying price of every batch, what you sold and when, and a count of your stock at the start and the end of each period. Without the buying price there is no cost of goods sold, and without a count the stock figure is a guess.

Sells Pilot keeps the buying price of every delivery, what each sale cost you and a count for every size, so the figures this needs are already in your records, and the reorder page shows how fast each product has been selling next to how many are left.