Understanding Sales Velocity

In the context of sales, we're talking about the speed at which you sell products–expressed as sales per day over a period of time, such as the last 7 or 30 days. It is also sometimes referred to as inventory velocity and average daily sales.

The calculation is straightforward:

Sales Velocity = Items Sold in last X days / X

Let's have a look at an example:
If you sold 315 items of your Shine Lip Tint over the last 7 days, the sales velocity of this product would be:

This means that, on average, you are currently selling 45 units per day.

The idea is that the more sales you have happen in a shorter amount of time, the higher the sales velocity. The less sales you have in the same amount of time, the slower your sales velocity is. Monitoring this metric regularly helps you keep track of current demand—just like checking your speedometer while driving.

RetentionX calculates the sales velocity for all your variants and products. To find this data, navigate to All Variants or All Products and look for the Sales Velocity metric:




By default, sales velocity is calculated based on the last 7 days. However, you can adjust this time frame under Company Settings > Report Settings to fit your needs:

Why Sales Velocity Matters

Low sales velocity can generally be a sign that some products are no longer trending or may be underperforming. Inventory issues can also lead to low sales velocity, even though products may still be in high demand. Let's learn why sales velocity is an important metric to monitor:

• Identify Fast- and Slow-Moving Products
  Analyze sales velocity across SKUs to differentiate between current bestsellers and underperforming items. Use this insight to inform pricing strategies, promotions, and clearance sales.

• Optimize Marketing and Promotions
  Products with high sales velocity can benefit from additional promotional spending, while slow-moving items can be bundled or discounted to increase sales.

• Inventory Management
  A high sales velocity indicates strong demand, which can help you determine reorder points and prevent out-of-stocks. Conversely, a low sales velocity may indicate excess inventory, leading to higher carrying costs.

• Demand Forecasting
  Sales velocity allows you to anticipate future demand. By monitoring velocity, you can understand (seasonal) trends and adjust purchasing strategies accordingly.

• Cash Flow and Profitability
  Products with high sales velocity contribute to faster revenue generation and reduced inventory costs. Ensuring that your inventory is in line with sales trends helps maintain healthy cash flow.