Wholesale Blog

5 KPIs Every Resale Business Should be Measuring

Ever wonder how others in the resale industry track their growth? We've talked with our store partners and found a consistent message: focus on the numbers.

Mary Zubritsky

Ever wonder how others in the resale industry track their growth? We’ve talked with our store partners and found a consistent message: focus on the numbers.

WE’VE GOT YOUR NUMBER

Measuring your business’ performance using retail’s Key Performance Indicators (KPIs) is the best way to determine whether you’re on the right track or you’ve fallen off course.

You may be wondering which KPI metrics you should be measuring? It really depends on your focus, priorities, objectives, challenges, and goals. Here are five of the key metrics we think you should be focusing on.

Gross & Net Profit

Gross profit margin is a measurement of profit that tells you how much you made after deducting the cost of goods. On the other hand, net profit will tell you how much you made after subtracting costs of goods, services, and other business expenses.

Your gross and net profit will tell you if you’re actually putting money in your pocket—after all, you need to make a profit off your sales.

Tracking these KPIs will help you make smarter business decisions. If you’re not making enough of a profit, you might need to rethink your strategy and make changes, such as making sure to source the known bestsellers, become more competitive on pricing to move items faster, streamline operations, and more.

Gross Merchandise Value (GMV)

This is the total value of merchandise sold over time on an e-commerce platform that’s used to measure the health of your online business. It’s calculated prior to the deduction of any fees or expenses (such as advertising, deliveries, and returns) and provides information your retail business can use to measure growth.

Since many retailers don’t actually produce the items they’re selling, this is a good measurement of the gross value of all your sales and provides insight into the company’s performance.

Sell-Through

Sell-through is the percentage of units sold versus the number of items that were initially available.

Measuring your sell-through is a great way to evaluate your inventory’s performance, find out how quickly your items are selling and estimate how much you should order next time. A high sell-through rate means the items are popular and you should probably stock up on more! While a low sell-through rate means it’s not selling quite as well as you had hoped and you need to figure out how to move it…whether it’s via a sale, promotion, or on social media.

But sell-through isn’t the only metric you should use to measure the success of your buys. Understanding the velocity of your inventory turnover in addition to sell-through is important.

Inventory Turnover

Inventory turnover, or stock turnover, measures how many times during a calendar period your business sells its inventory and replaces it. This is important because it shows your business’ ability to sell goods.

To find out your inventory turnover rate, just add the cost of sold inventory and then divide the total by the value of the inventory that remains at the end of the year. Ideally, you want to pursue a high turnover rate without reducing prices.

Online Sales Versus Brick-and-Mortar

Although this KPI is relatively new, it is now more important than ever before. It compares the sales of retailers who are selling both online and in store, essentially measuring the effect of each channel on your revenue.

These days crediting your sales to just one channel isn’t enough. You need to look at e-commerce analytics and compare it to your brick-and-mortar location to get a better handle on how your physical presence influences your e-commerce sales.

MOVING FORWARD

So, what are your next steps? Hopefully, get to know your metrics, use your data to identify areas for improvement and get back to normalcy. So, here’s to wishing your business the best and the most impressive KPIs you’ve ever seen!

*LePrix is not affiliated with any brands in any manner. All items are LePrix Vetted and Approved: LePrix’s team of specialists inspect every item before it’s listed and sold on LePrix Wholesale.