Know Your Numbers

If there is one thing we can’t stress enough after implementing your Content improvements it is the importance of knowing your numbers.  This seems like Basic Sales 101 but again and again we see people moving without a solid grasp of their numbers.  When most people think about numbers with regards to sales they think about pricing.  In an earlier article series we spent time talking about pricing and program elements.   But this is really only one aspect of the numbers that are important to know.  In this article we want to spend some time talking about the numbers (metrics) that drive the business.

In the online retail space the basic premise is consistent with what you would have in brick-and-mortal retail.  Most brick-and-mortar account executives will suggest the important things to focus on are:

  • POS metrics
  • Stock positions
  • Pricing metrics
  • Shipping / Receiving metrics
  • Demand metrics

Like the other articles in our series, the online channel mirrors the brick-and-mortar in many concepts with the addition of one major category, average review ranking.

Buyer’s are measured on these numbers and you are measured on these numbers – even if you don’t realize this.  Some online retailers provide a scorecard, something tangible you can review on a regular basis.  But most aren’t as formal.  Let’s take some time to review each category.

POS metrics

POS stands for Point of Sale, basically the retailer’s sales to the end user.  This is different than what the retailer purchases from the manufacturer.  While it is important to know what the retailer purchased, what they care about is what they sold.  When you talk to the buyer it is important to focus on POS, not your sales to them.

Stock positions

In-stock position is important to review on a regular basis.  Basically this is the difference between the sales and the orders the retailer has made from the manufacturer.  It’s the amount of inventory the retailer is holding.  It is important to be sure the retailer:

  • Isn’t dangerously overstocked on an item; potentially creating a return situation
  • Ordering too much based on the seasonality of the product
  • Has stock to cover forecasted orders
  • Has stock to cover specials – seasonal or other promotions that may be planned

While the retailer is ultimately responsible for the stock position we recurrently find that some don’t have automated systems to help manage the stock planning process.  And even if they do have these systems, sometime the systems don’t know the seasonal demand curve.  It is important as a partner to help manage the stock position by comparing the amount of in-stock to the weekly demand to determine how many weeks of inventory they are carrying.  Feeding that number back to the buyer will ensure everyone is on the same page and comfortable with the inventory level.

Pricing metrics

Pricing online can get complicated quickly.  Large retailers like Amazon.com, Walmart.com, Target.com, etc price match every day.  On some sites you can tell when they are matching a prices; on one major retail site these prices end in $x.54.   Your retail partner is looking to you to help ensure they have the right price.  One online buyer may manage more than 15,000 individual SKUs.  It is important for you to understand the margin requirements and pricing metrics that will help that online retailer be successful.

We’ll finish up metrics next week.  We welcome your input and look forward to the conversation; click here to leave a comment. For an overview of the purpose of this blog take a look at the initial post here.

 

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