See how Raylo decreased their packaging costs by 11% Average inventory Packaging doesn't need to drain your budget. Fortunately, there are ways to reduce that.Ĭustom packaging is an important part of a luxury product's appeal - but it doesn't have to cost you a lot Essentially, you’ll need to calculate the cost of purchasing an item.īut in each case, when you're selling physical products, don't forget to add the cost of your product packaging. Obviously, if you buy and resell products, it’s a much easier calculation. To produce a chair, you will probably need wood, screws, fabrics, and somebody to assemble it. Let’s imagine, for example, that you're a chair company. If you're a D2C brand manufacturing your own products, you’ll have costs in multiple areas, including materials and labour. Think about the different factors involved in acquiring your products. The cost of goods sold (COGS) is the price of purchasing or manufacturing a product that has been sold to a customer.
You first need to know the cost of goods sold and the value of your average inventory. What you need to calculate your inventory turnover ratio "Math" might sound daunting, but it involves a very simple equation. To calculate the turnover, unfortunately, you'll have to do some math. Such inventory management mistakes will cost you if you don't know your ratio. Not to mention all the stock you had to throw away due to expiration or lack of warehousing space. If your products are regularly out of stock, your customers might lose interest in buying from you.ĭid you know that due to stockouts, 7.4% of CPG revenue in the US was lost in 2021? That's $82 billion of unrealised revenue. With customers encountering your brand from many different e-commerce touchpoints, it’s vital that you stay on top of your inventory levels and don’t run out often. Whether you’re selling on Amazon or in a high street store, the inventory turnover ratio should be your go-to metric. Slow-moving inventory? Read about its negative effects on your business and how to prevent them With proper inventory turnover ratio analysis, you can accurately predict when you will need to restock each product. Inventory turnover ratio tells you how many products in your inventory have been sold, shipped, and replaced over a specific period. How improving your ratio can help you reduce operational costs.How to analyse the results of your calculations.How to calculate your inventory turnover ratio.What constitutes an inventory turnover ratio.How quickly are you selling the stock that you hold? How often do you need to restock? To find the answers to these questions, you need to know your inventory turnover ratio. Part of a good business strategy is knowing the performance of your products. And the less control you have over it, the less efficient you are at selling what you have. Extending and diversifying your product range can help your business thrive.īut, the bigger the assortment, the more complicated your inventory management.