As a distributor, receiving an order from a retailer is exciting and important, but the purchase order is just the beginning. The truth is it’s just as important, if not more so, that the retailer is then able to actually sell the products they buy from you to their customers.
Since, in most cases, you cannot be on the floor selling the product yourself, it is key that you set your retailers up for success. This means making sure they track the sell-through rate.
What is Sell-Through Rate?
Sell-through rate measures how much product you sell in a specified time period, compared to how much of that product you received during that period. It’s represented as a percentage and usually measured each month. Measuring the sell-through rate helps companies decide how much inventory to purchase, as well as how long it will take them to convert their inventory into sales and then revenue.
So How Do You Calculate Sell-Through Rate?
Businesses aim to have a high sell-through rate because that means the products aren’t sitting on the shelves taking up space, but rather making money for their company. This means businesses need to be successful in calculating the rate and then adjusting based on the final number. Luckily, sell-through rate isn’t that complicated to measure, because it’s simply a percentage.
The most common way to calculate it is to divide the number of units sold by the number of units received, and then multiplying the answer by 100 to convert the answer into a percentage. For example, if a company ordered 100 pairs of jeans in a month, and sold 60 pairs of those jeans during that same month, you would divide 60 by 100. You would then take that answer, .6, and times it by 100, meaning that the sell-through rate would be 60%.
While it could change depending on what you’re selling, a good target to shoot for is an 80% sell-through rate. On the opposite side of the scale, anything under a 40% sell-through rate is something to be concerned about.
How to Help Retailers Drive Sell-Through
Now that you know how to calculate it and about what the goal should be, use the below strategies to ensure you’re helping your retailer drive sell-through. Remember: the higher the sell-through, the more likely the retailer is to order more from you in the future.
1. Know your retailer
It may seem obvious, but it’s integral that you truly understand each of your accounts. Ask yourself the following questions to make sure you understand the retailers you are selling to: Where are they located? How many stores do they have? What other brands do they carry? Who is their customer? How old is their customer? What is their average price point? The more you know about your retailer, the more specific product suggestions you’ll be able to offer.
If the retailer is an existing customer, look at what they have bought in the past. Ask them what styles sold best for them and what didn’t move quite as well. You can also find this data directly in your B2B platform.
Understanding all of the above will allow you to create a curated collection, highlighting styles that are most likely to sell well for that specific retailer. Make sure that you are using personalized line sheets, leaving out products that are not relevant to their end customer, and showing the retailer that you understand their business.
2. Empower through education
Although you are an expert on your brand, you must remember that the buyer and their sales staff are exposed to many different brands. Providing their teams with information about the brand and the line will allow them to better sell the product. You should be giving information on fabric and fit, as well as the inspiration behind the collection and the brand story. Sales staff are much more likely to recommend a product they feel connected with and knowledgeable about.
3. Increase visibility
When working with larger retailers that carry hundreds of brands, such as department stores, it can be hard to be noticed by the end customer. You can and should discuss partnering with the retailer on digital co-ops or social media programs that highlight your brand and/or product and drive customers to that retailer to make the purchase. This can be done through branded or product-focused remarketing ads or Instagram posts and stories, to name a few.
Using social media tools such as the “swipe up” feature on Instagram stories or shopping ads on Facebook will allow the shopper to click directly to the product page, thus increasing chance of conversion. Talk to the retailer about what types of advertisements work best for them. Ultimately, your social media goal is to make sure the target end customer is seeing your brand and knows that they can shop for your brand products with this retailer.
In some cases, it may make sense to partner with an influencer or group of influencers that are relevant to the retailer to increase the visibility. Again, this is where knowing the retailer is so important. You want to partner with an influencer that makes sense for the specific retailer and their end customer.
4. Special promotions
Promotions have long been a part of retail, but using promotions creatively can have a huge effect on sell-through. Beyond the seasonal markdowns, think about running a limited-time promotion with a retailer that’s focused on specific styles or groups of styles. This can be done through a customer-facing promo-code online or a more traditional limited-time flash sale. The more exclusive or time-sensitive the promotion is, the more inclined the retailer will be to engage immediately.
Wrapping it up
Establishing a relationship with the retailer that extends beyond the purchase order can make a huge difference in your overall sales numbers. With high sell-through, you are more likely to receive in-season replenishment orders, additional leads, and larger future orders.
To learn how NuORDER can help you drive sell-through with your retailers, request a demo or reach out to your account manager today.
