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The path to sales growth, if detailed, can yield dozens or even hundreds of methods without difficulty. What we will explore below are some sales-boosting details that are easily overlooked but highly effective.
Solving Stockouts to Boost Sales
In marketing, problems are more easily discovered and truths more clearly seen only in the market. Therefore, for years, I have maintained the habit of regularly and irregularly visiting markets and retail outlets—whether for our own products or those of our consulting clients. In fact, every market inspection yields discoveries, big or small. For instance, stockouts at some points of sale are quite common.
During a recent market inspection, the problems I found were related to stockouts. First, one of our dairy clients experienced a stockout at a hypermarket—specifically, the 1L family pack was out of stock, and its display space was empty. I immediately found the salesperson responsible for that category, who said, "It's been empty for about three days. I don't know if your promotion staff or sales reps have placed an order." The 1L family pack had monthly sales of nearly 40,000 yuan at that hypermarket. On a daily average, this stockout resulted in a loss of 1/10 of monthly sales. If this happens once a month, it amounts to nearly 50,000 yuan a year—enough to cover the hypermarket's barcode fees, promotion fees, anniversary celebration fees, and the brand service fee of over 20,000 yuan. But if it happens two or three times a month, wouldn't 20-30% more sales and profits simply evaporate?
Second, at multiple stores of a chain pharmacy, our functional food client also experienced stockouts—according to the store staff, the best-selling SKU had been out of stock for about five days. Upon further investigation, it turned out that the chain pharmacy's management approach for stores was: each month, each store submits a plan for how much of each product, brand, and SKU they need. If they order too little and fail to meet monthly targets, the store is held responsible; if they order too much and can't sell it, the store is also questioned. So, stores tend to be conservative in their plans. Is there no solution to this stockout problem? Later, Li Zhengquan gave three suggestions to the sales supervisor: First, offer promotional commitments to stores with good sales and frequent stockouts to encourage them to increase their order quantities. Second, coordinate with the pharmacy headquarters' relevant departments to increase deliveries if there is inventory, or place orders if there is none. Third, the company lends products to out-of-stock stores, and the next month the stores order more to return the borrowed goods. These suggestions proved feasible and effectively solved the company's stockout problem.
If not solved, how much sales would the company lose? The chain pharmacy delivers to stores twice a week, on Tuesdays and Fridays. Even under normal circumstances, if a stockout occurs on Monday, delivery starts on Tuesday, with a delivery fulfillment rate of 50%. The other 50% of stores with stockouts would have to wait until Friday, resulting in a stockout of over three days. If Friday's delivery isn't completed, some places might not resolve their stockouts until a week later. Estimating roughly, about 20% of sales could be lost as a result.
In fact, based on our experience, solving stockouts typically prevents a company from losing 20% of sales. If you achieved 80 million yuan in sales last year, you could tell yourself: I could have achieved 96 million yuan, because 20% of 80 million, or 16 million yuan, was "cut off" by stockouts.
From the above, we can also see that the causes of stockouts are diverse. How can we solve stockouts?
Do a good job of sales forecasting, especially for key sales periods like holidays when sales are brisk. Treat it as a homework assignment to keep channel inventory at a more scientific level.
Classify and grade various types of terminals more finely. Within traditional A, B, C, D store categories, further identify key terminals based on their sales and gross profit contribution. Provide key tracking and service to these key terminals to minimize stockouts at terminals with high sales and profit contribution, thereby reducing sales loss and effectively boosting sales.
Establish and improve terminal maintenance and supporting assessment policies to ensure sales personnel can detect stockouts at the first opportunity, enabling timely resolution.
Understand the delivery processes of various types of hypermarkets and chain stores, and develop targeted measures to prevent stockouts and address them when they occur.
When production is limited or logistics delivery is hindered by objective conditions (such as traffic problems caused by snow, ice, floods, etc.), promptly allocate goods from the company or neighboring regions to ensure that high-sales areas, major customers, and various key accounts do not experience stockouts.
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