What is Supply-Demand Ratio, and how do you calculate it?
In short – Ratio of available listings to active buyers. A key marketplace metrics you should track.
Supply-Demand Ratio Formula
Supply-Demand Ratio = Number of Active Listings ÷ Number of Active Buyers
Supply-Demand Ratio compares the number of available listings or products on the marketplace to the number of active buyers. This metric helps in understanding the balance between supply and demand.
An optimal Supply-Demand Ratio ensures that buyers have enough options without overwhelming them, and that sellers have a fair chance of making sales. Monitoring this ratio aids in strategic decisions regarding user acquisition and inventory management.
How can you find your Supply-Demand Ratio?
You should generally be able to calculate your Supply-Demand Ratio with tools you already posess. If that's not the case, signing up for an analytics tool may make sense.
Among others, twosided is one of the tools you could consider. Out-of-the-box, you'll get over two dozens marketplace KPIs and detailed tracking for your supply, demand and other factors that determine marketplace health.
Explore other metrics
Order Frequency
Average number of orders placed by a buyer within a specific period
Cross-Sell Rate
Percentage of transactions that include additional products or services
Supply-Demand Ratio
Ratio of available listings to active buyers
Listing Quality Score
A metric evaluating the quality of product listings based on predefined criteria
User Net Adds
Net increase in the number of users over a specific period