Why Is My Velocity High? How Stock-outs Affect Your Adj. Velocity
Using the Stock-out feature can help to average out your adjusted velocity in SoStocked to predict what you WOULD HAVE sold if you hadn't run out of stock. If you don't understand this setting, then your adjusted velocity may appear to be too high, based on historical data. Let's look at why...
The adjusted velocity number is an average of the units sold per day for that period of time. If you have selected multiple periods, then SoStocked is simply averaging the averages. In the example below, this product's adjusted velocity is calculated to be 2.32 sales per day, based on the averages of the time periods selected (in green).
But you as a seller know that this 2.32 units / day adjusted velocity seems too high. There is a reason why, and that reason is stock-outs. Open up the forecast settings and scroll down to the Stock-Outs feature and you'll see that it's turned on. This means that SoStocked is looking over the last year or so and finding any days when the inventory was at zero. NOTE: If the product sells 10 or more units / day on average, then SoStocked will also calculate partial stock-outs. A partial stock-out is any day when your sales velocity drops by 70% or more. You can turn these off or on.
Here we see many days of full stock-out, meaning zero inventory and thus, zero sales.
If we simply turn off Stock Outs, then SoStocked will no longer remove those stock out days from your forecast. Meaning, your forecast will go down.
Now that stock-out days are not filtered out, your adjusted velocity will go down to the actual number of sales you made, including zero sales on stock-out days.
Most users prefer to keep the Stock Outs feature ON, meaning it's filtering out stock-outs. But you have the option either way.