How can you effectively measure the success of your buying decisions?

1 Sales volume

One of the most obvious indicators of your buying success is the sales volume of your products. Sales volume measures the quantity of units sold within a given period, such as a day, a week, a month, or a season. By tracking your sales volume, you can identify which products are in high demand and which ones are slow-moving or overstocked. You can also compare your sales volume to your sales goals, your competitors, and your industry benchmarks to assess your market share and growth potential.

2 Gross margin

Another important metric to measure your buying success is the gross margin, which is the difference between the sales revenue and the cost of goods sold (COGS). Gross margin reflects how much profit you make from each product you sell, after deducting the expenses of acquiring and delivering it. By calculating your gross margin, you can evaluate the profitability of your buying decisions and identify the products that contribute the most to your bottom line. You can also compare your gross margin to your target margin, your historical margin, and your industry standards to determine your pricing strategy and cost efficiency.

3 Sell-through rate

A third metric that can help you measure your buying success is the sell-through rate, which is the percentage of units sold from the available inventory within a given period. Sell-through rate indicates how well your products match the demand and how fast you are turning your inventory into sales. By monitoring your sell-through rate, you can optimize your inventory levels and avoid overbuying or underbuying. You can also compare your sell-through rate to your expected rate, your peers, and your category averages to identify the best-selling and worst-selling products and categories.

4 Markdown percentage

A fourth metric that can help you measure your buying success is the markdown percentage, which is the percentage of units sold at a reduced price from the original price. Markdown percentage reflects how much you have to discount your products to clear your inventory and stimulate sales. By analyzing your markdown percentage, you can evaluate the impact of your discounts on your sales volume and gross margin. You can also compare your markdown percentage to your planned percentage, your competitors, and your industry norms to determine the optimal timing and amount of your markdowns.

5 Customer feedback

A fifth method that can help you measure your buying success is the customer feedback, which is the information and opinions that you collect from your customers about your products and services. Customer feedback can help you understand the needs, preferences, and satisfaction of your target market and how they perceive your value proposition. By gathering and analyzing customer feedback, you can improve your product selection and quality, enhance your customer service and loyalty, and increase your referrals and reputation.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?