One of the great advantages a seller has on Ebay vs other online selling platforms is the 90 days of sold listing data that is available. This allows you to see what an item has been selling for recently. And, perhaps even more importantly, you can use the sold listing data to very quickly figure out how often similar items are selling.
Knowing how often something is selling is called the sell through rate and it is expressed as a percentage. Sell through rate can be calculated for different lengths of time (ie. Weekly, Monthly, Quarterly etc). This gives you powerful information to make smart buying decisions for your resell business. You do not want to invest a lot of money in inventory that is going to sit on the shelf for a long time. This is especially true when you are first starting out and trying to scale up.
Let’s take a look at how to use sell through rate, then I’ll show you I calculate it. As an example, say we’ve come across an item that looks interesting for resale and some quick research on our Ebay app shows us it has a 20% monthly sell through rate. That tells me that on average, 20% of the active listings for this item sell each month. So I would expect to have the item in my inventory for no longer than 5 months.
In reality, whether your items sells or not is based on a lot of factors. Price and condition, photos, description, seasonality, size or pattern etc. Sell through rate can also change with a sudden increase in supply or if the item is part of a passing fad. But all else being equal, sell through rate gives us a good barometer to measure against. If our 20% monthly sell through rate item is still in our inventory 9 months down the line, we know we need to take a good hard look at the listing and either make some improvements or cut our price and try to get our money back.
There’s more than one way to calculate sell through rate. Some people compare the number of Completed Listings on Ebay to the number of Sold listings. However, this method delivers over inflated results and is not reliable because items that don’t sell and are automatically relisted do not show in the Completed results. The reality is, most sell through calculations are probably flawed in some way, but I’ll show you what works for me. It’s a simple method and easy to do on the go.
I’m going to focus on the app since the idea is that you are out in the hunt, looking up items in the field and you need to figure out if it’s a good buy or not. The video will walk you through the process or follow along with the instructions and screenshots below.
Step 1 is to simply search for your item on the Ebay app. For this example, our search query is “Peter Millar Summer Comfort Polo” which gives us over 2,300 results:
Step 2 – Since we don’t run very many auctions on clothing, we need to filter the results to Buy It Now listings and since we are shopping at a thrift store let’s also only look at Pre-owned items. Tap Filter at the upper right of your app screen, tap Buy it Now under buying format, then tap condition and choose Pre-owned. That brings the number of results down from 2,300+ to 1,900+
Step 3 – We want to know how many of this item are selling, so scroll down through the filters and tap Sold Items. We see 2,200+ results, which is very encouraging.
Step 4 – Do the math. Ebay shows us 90 days of sold listing data, so let’s divide the 2,200 sold listings by 3 to give us a monthly number (2,200/3 = 733.33). So on average, over the last three months, 733 of these items are selling every 30 days. There were 1,900 active, so if sales continue at the same rate, we can expect about 38.5% of those to sell over the next 30 days (733/1900 = .385 or 38.5%). The monthly sell through rate is 38.5%.
Step 5 – Make the buying decision or drill down further. For clothing items in particular, I look to source items with at least a 30% sell through rate, so this would be a buy for me.
There are fast selling niches within almost every category, brand etc. and you can find those by drilling down. For example, there is a sell through rate for pre-owned VCRs, another sell through rate for pre-owned Sony VCRs and another sell through rate for pre-owned Sony VCRs of a particular model number.
For our example, look what happens when we add a filter for the size 2XL to our “Peter Millar Summer Comfort Polo” Pre-Owned Buy it Now search:
We drop from 1,900+ results all the way down to 56! Now look at solds:
184 over 90 days or 61.33 per month! That means on average more are selling each month than are currently listed! A 100% monthly sell through rate and a quick flip.
If you don’t like math or you’re not great with calculating percentages in your head here’s a quick tip — if the number of solds is equal to the number of actives, the item has a 30% monthly sell through rate. If the number of solds is greater than the number actives, it has a greater than 30% monthly sell through rate.
Sell through rate lets you make intelligent, profitable inventory sourcing decisions. You can set rules for yourself, or evaluate one off purchases. I mentioned that for pre-owned clothing I like to stick to items that have at least a 30% sell through rate. That way I know my inventory is generally only sticking around for 90 days or so and I will be making consistent sales.
Say you come across something random like a sealed handheld electronic video game and it looks like on Ebay they go for $50 on average. A combination of your cost to buy it and the sell through rate can help you make the buying decision:
- If the sell through rate is low (less than 15%) but you can purchase the item for $1, then perhaps it’s worth picking it up for the big ROI when it eventually sells.
- If the sell through rate is low and your cost to purchase the item is $20, it’s probably best to pass since you can flip that $20 many times over instead of waiting for this $50 item to sell.
- If the sell through rate is extremely high (50% or more) but your cost is $10-20, then it may still be a good buy if you can get $50. You’re investing more upfront but you know it will flip quickly.
- Obviously if the sell through rate is extremely high and your cost to purchase is extremely low then that is the ideal situation!