Amazon FBA Sell-Through-Rate: The 2024 Guide for Amazon Sellers

Are you struggling with high storage costs and low sales on Amazon? 

Your Sell-through Rate might be the culprit. A poor STR can lead to overstocking, increased storage fees, and ultimately lower profit margins for your Amazon business. 

In this blog post, we’ll explore:

• What is the Amazon Sell-through Rate? (and how it’s calculated)
• Is a Good Sell-through Rate on Amazon Really Important?
• How to Improve Your Sell-through Rate
• The Amazon Inventory Performance Index 

What is the Amazon Sell-through Rate?

FBA Sell-Through Rate (STR) is a key performance metric on Amazon that calculates the percentage of inventory sold within a specific time frame. Essentially – how quickly your inventory is moving.

Amazon calculates this rate by comparing the number of units shipped in the past 90 days to the average inventory held during the same period.

It significantly impacts your storage costs and inventory management strategy on Amazon, and helps you gauge the effectiveness of your marketing and pricing strategies.

How to Calculate Your Sell-through Rate

While STR is calculated and reported by Amazon, it’s beneficial to understand what goes into this calculation. 

STR is calculated as the total number of units shipped over the last 90 days divided by the average units in your FBA inventory over that same period.

Sell-Through Rate = Total units sold over 90 days / Average inventory level

Here’s an example: 

If you sold 150 units from an average inventory of 120, your STR would be 1.25. This figure indicates that you’re selling more than your average inventory, which is a positive sign.

NOTE: your FBA sell-through rate is calculated differently from other calculations for STR that you’ll see elsewhere. 

If you’re not an FBA seller, you’ll want to calculate your sell-through rate like this:

Sell-Through Rate = (total units sold in given period/inventory in given period) x 100

So if my inventory in May was 500 units, and I sold 380 units, my sell-through rate would be: (380/500) x 100 = 76%

In eCommerce, sell-through rates typically fall between 40-80%, with anything over 80% considered an extremely healthy rate. 

What is considered a good FBA sell-through rate?

Amazon categorizes STR as Excellent (above 7), Good (3-7), Fair (1-2), and Poor (below 1). If it’s below 1, it means you held more inventory than you sold in the last 90 days, indicating a potential overstocking issue that’ll hurt your IPI score. 

Where to find your sell-through rate on Amazon Seller Central

You’ll find all things inventory management in the Inventory Performance Dashboard under the Inventory tab.

Here, you’ll find details on your FBA sell-through rate both overall and for individual products, enabling you to manage your inventory across your entire product range more effectively.

One of the great things about Amazon’s system is that it automatically updates your STR so you can monitor your performance without any manual calculations.

Is a Good Sell-through Rate on Amazon Really Important?

The short answer: Yes. 

The longer answer: To some extent yes, but proceed with caution. Here’s why.

A strong STR is a clear indication that you’re efficiently managing your inventory and is just one of the metrics that influence your Inventory Performance Index (IPI) score, which affects your storage limits and fees on Amazon. (More on that later)

Overstocking also leads to unnecessary storage costs and an unhealthy STR is a red flag that you’re doing just that. 

However, some sellers have pointed out that an STR above 7 is highly difficult to maintain and puts them at risk of stocking out. 

For example, if your average inventory is 100 and you sell 700 units over the period, you’d achieve a score of 7. But that means you’re holding fewer than two weeks’ worth of inventory at any given time, so anything from a shipping delay to a sudden surge in sales could put you at risk of stocking out and losing sales.

How to Improve Your Sell-through Rate

Particularly if your sell-through rate is below 3, improving it requires strategic planning and execution. Here are some effective strategies to boost your STR:

• Optimize product listings: Use high-quality images and detailed descriptions to make your products more appealing to customers and drive more sales.

• Use Amazon PPC advertising: This can drive targeted traffic to your product listings and increase sales.

• Monitor and adjust pricing regularly: Stay competitive by keeping your prices in line with market trends.

• Encourage customer reviews: Positive reviews enhance product credibility and attract more buyers.

• Utilize Amazon promotions: Tools like Lightning Deals and Coupons can boost your product visibility to help run down your excess stock.

• Analyze STR data regularly: Use this data to refine your marketing and inventory strategies. Just because you manage to improve it once, doesn’t mean it will stay that way.

Understanding the Amazon Inventory Performance Index (IPI) Score

Your STR as a stand-alone metric doesn’t provide you with the full picture of how successful you’re inventory management strategy is. 

The Amazon Inventory Performance Index (IPI) Score is a truer reflection of the health of your Amazon inventory and includes your STR as well as your:

• Excess inventory percentage
• Stranded inventory percentage
• In-stock rate

By improving your STR or any of the other metrics, you directly contribute to a better IPI score.

---

For more on optimizing your IPI score and other inventory management strategies for Amazon sellers, check out the other blogs in our inventory management series:

• The Seller’s Guide to Boosting Your IPI Score
• Complete Guide to Amazon Inventory Management
• The low down on Amazon FBA Capacity Limits

---