Sell Through is the Most Important Metric in Wholesale, Here's Why

It might sound like we’re exaggerating, but we mean it when we say that sell-through rate is the most crucial metric for measuring your success in wholesale. 

It not only indicates how well your products are performing in retail locations but also informs your demand planning and inventory management strategies.

But, capturing accurate sell-through data is challenging. Fortunately, that’s what we’re here to help with today. 

What Is Sell-Through Rate?

Sell-through rate is a metric that measures the percentage of inventory sold within a specific period compared to the amount of inventory shipped to retailers. 

It answers the critical question: how quickly are your products selling out at retail locations?

An easy example is if you ship 10,000 units to a retailer and they sell all 10,000 units within a month, you have a 100% sell-through rate for that period. Ship 10,000 and sell 5,000, you’re looking at a 50% sell-through rate. 

Why Sell-Through Rate Matters

Your sell-through shows how well your products are doing in each retail location.

Looking at your sell-through rate will let you quickly know if your wholesale approach is effective or if it needs some adjustment. 

It also dictates your inventory replenishment cycles and production planning. High sell-through rates encourage your retailers to reorder and stock more of your products and it reduces the likelihood that retailers will need to discount unsold inventory, which ultimately protects your brand’s pricing integrity. 

A poor sell-through rate can lead to retailers discounting your products to clear shelves, which can harm your brand image and result in smaller, or no,  orders in the future.

Challenges in Measuring Sell-Through Rate

One of the biggest obstacles in tracking sell-through rate is the lack of access to retailers' POS (point of sale) data. Retailers may be reluctant or unable to share this information, making it difficult for brands to obtain accurate sales figures.

Even if you can access POS data from a fraction of your retail partners, it might not provide a complete or representative picture of overall performance.

Other Ways to Calculate Sell-Through Rate

Despite these challenges, there are effective strategies to estimate your sell-through rate (but some of them are pretty laborious). 

1. Implement Count and Fill Practices

Encourage your sales representatives to perform regular count and fill visits to retail locations:

• Manual Inventory Checks: Reps physically count the stock levels of your products on the shelves.
• Restocking: They replenish inventory as needed based on the counts.
• Data Collection: Reps report back with inventory levels, providing insights into product movement.

While this method requires effort and coordination, it offers valuable, firsthand data on how quickly products are selling. It's particularly useful for fast-moving consumer goods like sunglasses, footwear, socks, and other items with high turnover rates.

2. Leverage B2B Platforms for Reorder Cadence

Utilize B2B platforms (such as RepSpark’s) to monitor how often your retailers are buying from you. 

Wholesale software can track how often retailers are placing reorders for specific products and identify which items and sizes are selling faster based on reorder patterns. 

For instance, if a retailer initially purchases 50 polo shirts in a 1-2-2-1 size scale and consistently reorders the large size, it indicates strong sales for that particular size. This information will help you adjust inventory and production plans accordingly.

3. Communicate with Retailers

While not always feasible, maintaining open communication with your retail partners can provide additional insights. 

Ask retailers for general feedback on product performance and encourage them to share stock levels periodically. 

And, if stock isn’t selling, work together on promotions or strategies to boost sell-through rates.

Building strong relationships with retailers can sometimes grant you more access to sales data and collaborative opportunities.

Ways to Improve Sell-Through Rate for Wholesale Success

• Use Data: Use the data collected to forecast demand more precisely, reducing overstock and stockouts.
• Adjust Products: Modify products based on sales trends and retailer feedback to better meet consumer preferences.
• Allocate Inventory: Allocate more inventory to high-performing retail locations or regions.
• Provide Marketing Support: Provide retailers with marketing materials or promotions to help boost sales.
• Monitor Regularly: Regularly assess sell-through rates to identify patterns and respond promptly to changes in the market.

Your sell-through rate is a vital metric that offers deep insights into the performance of your products at the retail level. 

Prioritize sell-through rate in your wholesale strategy and you’ll see better optimized inventory management, stronger retailer partnerships, and greater success in the marketplace.

Ready to improve your sell-through rate and wholesale strategy? 

Reach out to see how we can help you gain better insights that will help you drive sales growth.