Understanding Sales Velocity in CPG
Learn what sales velocity means for CPG brands, how to calculate it and why it matters for retail success.
If you are running a consumer packaged goods (CPG) brand, you have likely heard the term "sales velocity." It’s one of the most important numbers retailers, distributor and investors will want to know.
What does it really measure? Why does it matter so much? How can you influence it? This guide will break it down simply and practically so you can use this metric to make better decisions for your brand.
Why Sales Velocity Matters
If you want to stay on shelf and grow your retail presence, you need to prove strong sales velocity. Retailers do not make decisions based on your Instagram followers or your fancy brand story.
They care about whether your product earns its space by moving steadily week after week. A product that moves slowly risks being discontinued. A product with strong velocity earns more shelf space, reorders and opportunities to grow in new regions.
For example, if you sell a new sparkling water into 200 stores but each store only sells 1 unit per week, your product may not last long. But if you drive 4 or 5 units per store per week, that shows promise. It means the store is making money on your product. It means customers want it enough to keep coming back.
How to Calculate Sales Velocity
Sales velocity has a simple formula:
Total units sold in a time period ÷ the number of stores you are in ÷ the number of weeks in that time period.
For example, let’s say you sold 2,400 units over 4 weeks in 50 stores. Your calculation looks like this:
2,400 units ÷ 50 stores ÷ 4 weeks = 12 units per store per week (UPSPW).
12 is your sales velocity.
What Counts as a "Good" Sales Velocity?
The truth is, "good" depends on your category. A refrigerated beverage may need to sell 5 to 7 units per store per week to keep its space in a major retailer. A frozen meal might only need to sell 2. Supplements and skincare can have even lower thresholds, sometimes 1 unit per store per week, because they are higher price point items.
Retail buyers and category managers set different expectations depending on the section. The more crowded and competitive the shelf, the higher the velocity you need to stay there. This is why knowing your category benchmarks is critical. A "bad" velocity in one category could be great in another.
What Impacts Sales Velocity?
Several real factors affect how fast your product sells. The first is your price point. If your price is too high relative to competitors, velocity may suffer. The second is your shelf placement. Being eye-level drives more sales than being on the bottom or top. Promotions helps too. Temporary price reductions or in-store coupons can spike velocity during a promo period.
Another factor is brand awareness. If customers do not know who you are, they are less likely to pick you up in a crowded aisle. Sampling can help here. So can good packaging design that catches attention. Reviews, PR and influencer marketing can drive interest that turns into trial and repeat sales.
Lastly, inventory plays a hidden role. If your product is out of stock for even a couple days, your velocity calculation drops. Retailers hate out-of-stocks because they miss sales. Make sure your distributor or fulfillment partner keeps the pipeline full.
How to Improve Sales Velocity
One way to boost sales velocity is by running strategic promotions. A temporary price cut can double or triple your sell-through rate for a few weeks. This not only increases your velocity but signals to retailers that your product can move volume when needed.
Another tactic is improving your packaging. Your branding, color and design can influence whether a shopper grabs your product or the one next to it. Rebranding or updating packaging can lift velocity for many brands.
Investing in sampling programs is also effective. When customers taste or try your product, they are far more likely to buy it again. In-store demos, digital sampling, or partnerships with subscription boxes can introduce your product to new audiences. Make sure you track performance and feedback so you can learn more about your customers.
Sometimes your problem is distribution. If your product is only in a handful of locations or small-format stores, you may not be reaching the right volume of shoppers. Expanding store count or launching into bigger box retailers can increase velocity by tapping into larger traffic.
Sales Velocity for your Sales Pipeline
For consumer brands, velocity at retail is just one part of a bigger picture. On the wholesale and B2B side, you also have to think about velocity in your sales pipeline. These concepts are related but not the same.
Pipeline velocity also measures how quickly deals close in your pipeline. It is about how fast your sales team turns leads into orders. The formula includes four factors:
the number of opportunities
average deal size
win rate
average sales cycle length
Multiply the first three together, then divide by the average sales cycle.
For example, if your sales team has 20 qualified leads, an average deal size of $5,000, a 25 percent win rate and an average sales cycle of 30 days, the calculation looks like this:
(20 x $5,000 x 0.25) ÷ 30 = $833 in revenue per day.
This number helps you see how much future revenue your pipeline can generate in a given time period.
Higher sales velocity suggests your sales process is efficient and your team is closing deals fast. A low number could mean deals are stuck or your win rate is low. Sales performance improves when you shorten the sales cycle, nurture high quality leads and improve conversion rate.
Why Winning Deals Fast Matters
When pitching new chains or regional retailers, you want a fast-moving pipeline. Slow sales cycles stalls growth and hurts cash flow. Long delays reduce your ability to plan production and inventory.
For example, if your sales reps spend 90 days closing a regional grocery chain, that limits how fast you can expand. If they can shorten that cycle to 45 days by using stronger materials or better lead nurturing, you close more accounts faster. That means more stores and more potential unit velocity.
Sales forecasting depends on measuring sales velocity accurately. If you misjudge average deal value or win rate, your revenue projections will be off. Accurate data about your sales pipeline velocity helps you make better decisions about marketing spend, production runs and hiring.
Measuring Both Types of Velocity
Tracking sales velocity on shelves and pipeline velocity to close deals takes discipline. You need data from retailer POS systems, distributor reports or retail syndication services to measure how fast products sell in stores.
You also need a CRM or sales tool to track sales conversion: how many opportunities you have, average deal size, close rate and sales cycle length.
If you do not measure these numbers, you are flying blind. You won’t know if promotions worked. You won’t see if your sales team is falling behind. You won’t catch weak links in your sales process until it is too late.
Common Mistakes to Avoid
One mistake CPG brands make is focusing only on shipments to distributors instead of sell-through data. Just because you shipped 5,000 cases does not mean they sold at the store level. Always check retailer data or request for distributor reports when measuring true unit velocity.
Another mistake is ignoring the sales process. Your sales reps need a strong system to manage leads, follow-ups and closing. Otherwise, your sales velocity suffers and you cannot scale into new retailers fast enough.
Some brands assume promotions automatically fix velocity problems. But if your product or price point is wrong for the target audience, temporary discounts will not create lasting lift. You need the right positioning and packaging first.
The Bottom Line
For CPG operators, mastering both types of sales velocity - at the shelf and in the sales process - is the key to building a durable, profitable brand.
The brands that track these numbers closely and act on them make smarter decisions. They get better placement, more reorders and bigger opportunities over time. The ones that ignore velocity usually get left behind.
FAQ
1. What is sales velocity for CPG brands?
Sales velocity for CPG brands measures how quickly products sell at retail, calculated as units sold per store per week. It shows how fast your product moves off shelves into the hands of real customers, not just how much you ship to distributors.
2. How do you calculate sales velocity?
To calculate sales velocity, divide the total units sold by the number of stores and then by the number of weeks in that time period. For example, 2,400 units sold across 50 stores over 4 weeks results in a sales velocity of 12 units per store per week.
3. What is a good sales velocity for CPG products?
A good sales velocity depends on your product category. Refrigerated beverages may need 5 to 7 units per store per week to stay on shelf, while frozen meals or supplements might only need 1 to 2. Retailers set velocity expectations based on these category benchmarks.
4. How can I improve my product’s sales velocity?
You can improve sales velocity by running promotions, updating packaging to stand out on shelves, offering sampling programs and expanding your retail distribution. Ensuring in-stock inventory and building brand awareness also helps sustain velocity over time.
5. What is the difference between retail sales velocity and pipeline sales velocity?
Retail sales velocity measures product movement at the store level, while pipeline sales velocity tracks how quickly your sales team closes wholesale or distributor deals. Both are critical for CPG brands to drive revenue growth and retail success.
