Three sales of one packet

The idea

One packet is sold three times before anyone eats it. The company sells it to the stockist (primary). The stockist sells it to the retailer (secondary). The retailer sells it to the shopper (tertiary). Each sale has its own bill and its own owner. The company books revenue on the first, but the market is only healthy when the third keeps pace. We call this three sales of one packet.

The three sales

The company's own accounts see only primary. Every rupee of its turnover is a primary invoice. But primary can be pushed. A stockist can be persuaded to take 60 extra cases on the 29th (chapter 3.4). That makes this month's number look good and tells the company nothing about whether shoppers are buying.

Why brands want secondary data

Secondary is the closest the company can get to the real market without visiting every shop. From the stockist's sales bills it can see:

• Which outlets bought, and how many outlets bought at all (chapter 3.9).
• Which products move and which sit.
• Whether schemes worked — did retailers buy more during the scheme, or did the stockist just collect the money?
• Whether stock is building up in the stockist's godown.

That is why companies ask stockists to send secondary sales every day or every week, in their own format or through their own software. It is also why scheme claims are checked against secondary bills (chapter 3.13): the bill to Ravi Stores is the proof that the scheme reached a retailer.

At the counter: when primary runs ahead

A detergent stockist over three months, in cases:

The company's report shows primary growing from 500 to 600 cases: a 20% rise. Its SO is happy. But secondary is slowly falling, and the stockist's godown has gone from 20 days of stock to 36. The extra 140 cases bought in October are sitting on his floor, on his money.

What happens next is predictable. The stockist refuses November's order, primary crashes, the company launches a scheme to "clear the pipeline", and the older batches move close to expiry. All of it was visible in October if anyone looked at secondary.

Opening + primary − secondary = closing. If you keep only this one line per product per month, you will always know whether you are building stock or selling it.

Tertiary

Tertiary is what shoppers actually buy. Big companies estimate it from retail audits and shopper panels run by research agencies. A stockist rarely sees it directly. But a retailer who orders the same product every week is selling it to shoppers; a retailer whose old stock is still on the shelf is not. Your DSR sees tertiary with his eyes every day. Ask him.

Common mistake

Sending secondary data that is not real — typing a round "sold" figure for the company's report that is different from your bills. Next quarter a claim is checked against your bills, the figures disagree, and the claim is rejected. Worse, the company sets your next target on the inflated figure. Send what your bills say.

Where you'll use this

Chapter 3.9 turns secondary data into the numbers brands track. Chapter 3.11 uses closing stock and sales to decide the next primary order. Chapter 3.13 uses secondary bills as claim proof. In Part 4, the software that makes your sales bills can produce the secondary report directly, so the two can never disagree.

Check yourself

1. Which of the three sales does the company count as its turnover?
2. In the table, by how many cases did closing stock rise from the end of August to the end of October?
3. Why does a scheme claim need secondary bills?

Answers

1. Primary — its sale to the stockist.
2. From 320 to 550: 230 cases.
3. Because the bill to the retailer is the proof that the scheme benefit actually reached a retailer.