Cash Flow
What Is Days Inventory on Hand (DIO)?
Days Inventory on Hand (DIO) measures how many days the average unit sits in your warehouse before it sells. DIO equals average inventory divided by COGS, times 365. Apparel DTC typically runs 110 to 180 days; subscription consumables run 30 to 60. Reducing DIO by 30 days on a $5M inventory position frees roughly $400K in working capital.
Days Inventory on Hand (DIO) is the number of days the average unit of inventory sits in your warehouse (or FBA, or 3PL) before it gets sold. Lower DIO = less cash trapped in product.
How DIO is calculated
DIO = (Average Inventory ÷ COGS (Cost of Goods Sold)) × 365
Average inventory = (Beginning Inventory + Ending Inventory) ÷ 2 for the period. COGS is the period's COGS.
Example
A DTC brand: average inventory $4.8M across the year, annual COGS $19.2M. DIO = ($4.8M ÷ $19.2M) × 365 = 91.3 days. Inventory turnover = 365 ÷ 91.3 = 4.0x per year.
What's a good DIO?
- Beauty / personal care DTC: 90140 days
- Apparel DTC: 110180 days (seasonal collections drag this)
- Food & bev (shelf-stable): 60100 days
- Food & bev (perishable): 2045 days
- Outdoor / hardgoods: 120200 days
- Subscription consumables: 3060 days
For full breakdown see inventory days by DTC vertical 2026 and DTC inventory days trend 2020-2026.
The most common mistake
Optimizing DIO at the brand level instead of at the SKU level. The brand-level DIO is the weighted average, it can be healthy while 30% of SKUs are sitting for 250+ days. Run DIO per SKU, then attack the long tail. That's where the cash actually lives.
Frequently Asked Questions
what's a good DIO for ecommerce?
Vertical-dependent. See ranges above.
how is DIO different from inventory turnover?
Inverse relationship. Turnover = 365 ÷ DIO.
how do I reduce DIO without stockouts?
Better forecasting, long-tail SKU rationalization, supplier lead-time reduction.
Related Terms
- What is inventory turnover?
- What is cash conversion cycle?
- What is working capital?
- Inventory days by DTC vertical 2026
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