Inventory turnover is a standard retail metric — how many times inventory investment "turns over" into sales in a period — adapted here for a resale business, where inventory is typically unique, one-off items rather than restocked SKUs.
Inventory turnover (period)
turnover = cost of items sold in period ÷ average inventory cost during period
Example (illustrative): If the total purchase cost of items sold this quarter was $1,800, and your average unsold inventory cost (roughly: (start-of-period unsold cost + end-of-period unsold cost) ÷ 2) was $900, turnover = 1,800 ÷ 900 = 2 — your inventory investment effectively turned over twice this quarter.
Why this differs from traditional retail turnover
Traditional retail turnover assumes restocking the same SKU repeatedly. Resale inventory is usually one-off — you don't restock the exact same used dresser. The number is still meaningful as a measure of how efficiently your total inventory investment is converting to cash, but treat it as a directional trend indicator for your own business rather than a number to benchmark against a retail-industry figure, which measures a structurally different kind of business.
Reading a change in your own turnover rate
Interpreting turnover trends
| Trend | Likely explanation |
|---|---|
| Turnover declining over recent periods | Inventory is accumulating faster than it's selling — worth checking sell-through rate and days-to-sale for the specific cause |
| Turnover rising | Inventory investment is converting to sales faster — worth checking whether pricing is being set too conservatively low to achieve this |
| Turnover stable | Sourcing and selling pace are roughly balanced — the useful baseline to compare future periods against |
You can compute both inputs to this formula from ListNestly's CSV export — purchase costs for items sold in the period, and the purchase cost total for still-unsold items at the start and end of the period.