Secondary sales is the movement of goods from distributors to retailers. This is the second stage in the FMCG & CPG supply chain and one of the best indicators of product demand in the market. Because, unlike primary sales — which depend on a distributor’s stocking preferences — secondary sales reflect actual retailer demand based on consumer purchases.
Going back to the example in the above section, this is where Nabati’s distributors would sell the product to individual retailers. This is still in bulk, but varies based on existing stock and demand in each retail outlet. Also, during secondary sales, the quantity of each product flavor sold can vary based on demand, giving companies a clear picture of which flavors are popular. These insights help manufacturers analyse product demand and success, fine-tune production, and keep inventory in check.
This also means they directly impact future primary sales. If secondary sales slow down, there would be no purchase orders from distributors — meaning a higher risk of product returns, potential losses due to expiry, and reduced cash flow. This, in turn, can impact your net revenue and overall market competitiveness.
Some key factors that influence secondary sales include retailer demand, consumer behavior, and seasonality. For example, Haldiram’s — an Indian snack brand — saw a 12% increase in its Kaju Katli sales during the Diwali season in 2024.
Similarly, a retailer’s decision to stock and promote a product depends on its profitability — higher margins, incentives, or attractive trade schemes can all help here.
Now for the tricky part — here are some challenges that manufacturers and distributors may face with secondary sales:
- Stock misalignment: If distributors overstock products that retailers don’t need, it can lead to excess inventory and potential wastage. Understocking, on the other hand, can lead to missed sales.
- Retailer trust: If retailers aren’t “motivated” to stock a product, they may prefer competitor brands. A lack of retailer incentives or trade promotions can slow down secondary sales.
- Limited data visibility: Many FMCG and CPG brands struggle with tracking real-time secondary sales, making it difficult to forecast demand accurately.
But the good news: DMS software — like Botree DMS — can help brands support distributors and address most of these challenges:
- Provide distributors with real-time sales insights to help them gauge order quantities accurately. In case of unexpected losses, you can set up automated workflows for seamless returns and claim management.
- Implement custom trade schemes and loyalty programs to encourage retailers to stock up and actively promote your brand.
- Get full visibility into secondary sales trends by syncing with your distributor’s accounting system.
