• Taylor Daniel

eCommerce KPI Cheat Sheet

Updated: Sep 28



Introduction:


It is important for business owners and decision-makers to understand the mathematics of retail. Building the necessary reports is easy, but it is critical to learn HOW to look at your sales data, so you too can uncover valuable insights about your products, your inventory, and your customers, and discover the merchandising levers you can strategically pull to improve your business and the resulting customer experience.


Regular reporting and analysis of your sales and inventory information will result in a more holistic understanding of what is, and isn't, driving your business in the right direction. If you just don't have the chops for digging into sales data, don't worry, you can learn.


Check out this comprehensive list of retail math formulas and definitions that every eCommerce business owner needs to understand. Download your copy today: visit the bottom of our homepage.




SALES METRICS




Net Sales Revenue ($)

The sum of revenue dollars driven by a style or department of goods, minus any applicable returns or refunds. Use this metric for each product category and compare it to previous seasons to understand how your business is growing & changing.

$ = ($ Gross Sales- $ Customer Returns)

Dollars Per Square Foot ($/SqFt)

The sum of revenue dollars driven by a style or department of goods, minus any applicable returns or refunds. Use this metric for each product category and compare it to previous seasons to understand how your business is growing & changing.

$/SqFt = ($ Net Sales÷ Sq Footage of Selling Space)

Dollars Per Transaction (DPT)

The average number of dollars each customer spends per transaction on your eCommerce store. Driving this metric up will result in higher revenues and more margin dollars.

DPT = ($ Net Sales ÷ # of Transactions)

Revenue % Contribution ($ Sls %)

The percent of total revenue driven by a particular SKU, style, or department. Allocating your inventory investments relative to this metric is a smart way to approach your purchasing decisions.

$ Sls % = (Style $ Sales ÷ Total $ Sales)

Build or % Change (%▲)

The percent change in any KPI relative to a previous period (Last year, last season, last quarter, last month, yesterday, etc). Use this with multiple KPI's to monitor how your business is changing over time.


(Ex: $ Sales TY/LY, U Sales TY/LY, GM$ TY/LY, MD$ TY/LY, OH TY/LY, etc.)

%▲ = $% Cont = (Style $ Sales ÷ Total $ Sales)

Average $Dollars Per Store ($DPS)

Sometimes referred to as DPC (Avg $ per Channel), it is the average number of revenue dollars driven PER STORE (or channel) for a particular SKU, style, or department.

$DPS = (Total $ Sales ÷ Total # of Styles ÷ Total # of Stores/Channels)

Unit Sales (U Sls)

Sum of unit sales driven by a particular SKU, style, or department, minus any applicable returns or refunds. Use this metric for each product category and compare it to previous seasons to understand how your business is growing & changing.

U Sls = (TTL U Sales- TTL U Returns)

Units Per Transaction (UPT)

The average number of units sold per transaction during a given period of time. Driving this metric up will result in higher revenues and more margin dollars.

UPT = (TTL U Sales ÷ # of Transactions)

Unit Sales % Contribution (U Sls%)

The percent of total unit sales driven by a particular SKU, style, or department.

U Sls % = ([SKU/Style/Dept] U Sales ÷ TTL U Sales)

Unit Sales to LY (U to LY)

The percent change in the unit sales driven by a particular SKU, style, or department of products relative to last year over a specified period.

U to LY = ((U Sales TY – U Sales LY) ÷ U Sales LY)

Sell Thru % (ST%)

The total unit sales divided by the total beginning inventory, or unit buy. This helps to understand what percent of your available inventory has sold over a specified period.


For SEASONAL (short-term) products, you should target a Sell Through rate of 100% for the anticipated selling period.


For SEASONLESS (basic, long-term) products, you should target a Sell Through rate of ~70% between purchasing cycles. This will ensure that towards the end of the season, you will be left with enough inventory to still service a full size range of customers before you absolutely need replenishment.

ST% = (Units Sold ÷ [BOP] or [Initial Unit Buy])

Rate Of Sale, a.k.a. "Unit Sales Velocity" (ROS)

The average number of units sold per week of a particular SKU, style, or department over a specified period of time. This is a simple figure that helps you easily compare how quickly various products are selling per week.

ROS = (TTL U Sales ÷ # of Weeks Selling)





PROFIT METRICS






Gross Margin $ (GM$)

This figure shows the value of profit dollars generated by a SKU, style, or department of products. (This can be calculated off of the AIR, but AUR is more accurate)

GM$ = (AUR - COGS)

Gross Margin% (GM%)

This figure shows the percent of profit margin that is generated by a SKU, style, or department of products. (This can be calculated off of the AIR, but AUR is more accurate)

GM% = (GM$ ÷ AUR) x 100

Net Profit $ (NP)

The total profit dollars achieved by a business. It is calculated by subtracting the COGS and Operating expenses from the Total Net Sales Revenue.

NP = (Net Sales - COGS - Operating Expenses)

Gross Margin Return on Investment (GMROI)

The measurement of the efficiency of investments in your inventory; expressed in dollars to understand how much gross margin is produced from each dollar invested in the products sold.

GMROI = (GM$ ÷ Avg Inventory @ Cost)





PRICING METRICS






Inventory @ Retail (Inv @ Rtl)

The average value of all your owned inventory as it relates to the Average Initial Retail, or ticket price.

Inv @ Rtl = (# of Units OH × AIR)

Cost of Goods Sold (COGS)

The final cost of a product, including the costs for materials, production, freight, packaging, and any other costs associated with getting the finished product in your possession.

COGS = (SUM: Materials + Production + Freight + Packaging + etc)

Average Unit Retail (AUR)

This is the ticket price, with no discounts taken.

AIR = $ Ticket Price

Average Initial Retail (AIR)

This is the ACTUAL selling price, considering any promotions, coupons, or markdowns that were taken.

AUR = (TTL $ Revenue ÷ TTL U Sales)

Markup % (MU%)

This is the percent difference between the COGS and AIR.

MU% = ((COGS - AIR) ÷ COGS)

Discount Rate % (DR%)

This is the percent difference between the AIR and the AUR to show the discount being taken on a given SKU, style, or department of products.

DR% = ((AIR - AUR) ÷ AIR)

Markdown % (MD%)

Any permenant reduction to the selling price of a product as a means to drive traffic, unit sales, &/or sell-thru of any unwanted inventory. "Clearance"

MD% = (((DR% ×AIR) ÷ $Net Sales) × 100)





INVENTORY METRICS






Weeks of Supply (WOS)

This ratio compares the # of units sold per week by the number of inventory units remaining in order to understand the number of weeks before an item is expected to sell out completely.

WOS = (TTL U Sales ÷ # Of Weeks Selling)

Average Units Per Store (UPS)

Sometimes referred to as UPC (Avg Units per Channel), it is the average number of unit sales driven PER STORE (or channel) for a particular SKU, style, or department.

UPS = (Unit Sales ÷ # of Stores or Channels)

On-Hand Inventory (OH)

The number of units on hand of a particular SKU, style, or department of products at a moment in time. It is useful to compare this number to your unit sales. You will use this figure in calculating your replenishment needs, as well as to inform your product decisions for future buys.

Beginning of Period Inventory (BOP)

Absolute value of inventory of a product at the beginning of a particular selling period; often expressed on a monthly or quarterly basis.

End of Period Inventory (EOP)

Absolute value of inventory of a product at the end of a particular selling period; often expressed on a monthly or quarterly basis.

Inventory @ Cost (Inv @ Cost)

The average value of all your owned inventory as it relates to the Cost of Goods Sold.

Inv @ Cost = (# of Units OH × COGS)

Time On Offer (TOO)

The number of weeks decided that a given product in an assortment of goods is planned to sell at regular price before any markdowns are taken.

For basic or year round styles, this could be 52 weeks, for seasonal or trend products, it could be 4-13 weeks.

Inventory Turnover Ratio (ITR or "Turn")

Measures how much time elapses between when your inventory is purchased until it is sold, and it is a measure of how well a company generates sales from the inventory it purchases.

ITR = Cost of goods sold (COGS) / average inventory value

For most industries, a good ITR is between 4 and 10. This ratio specifies that you sell and replenish your inventory every 1-3 months, and it's important to consider as you make decisions for your supply chain and forecast your unit sales demand.

Open-To-Buy (OTB)

Open-To-Buy planning is a very important part of the seasonal buying process. This critical step gives you a full view of current OH inventory, all upcoming receipts, and accounts for expected sales. This figure tells you how much "room" there is to buy additional inventory for a future season, which can prevent buying excess inventory units.

OTB = (Planned BOP - (OH Inventory + Upcoming Receipts)- Planned U Sales)

Planned Receipts (Rcpts)

The number of units that have already been purchased for future seasons. This figure helps you understand your upcoming "on-order" inventory receipts to prevent over-buying.

Rcpts = ((Planned EOP + Planned U Sales + Planned MDs) - Planned BOP)

Stock-to-Sales Ratio aka "Inventory-to-sales Ratio" (Stk:Sls)

The proportion between the BOP inventory levels and the $ Net Sales Revenue for the same month.

Stk:Sls = (BOP Inventory ÷ $ Net Sales Revenue)

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