Best-selling products and stock rotation: decide what to buy

Your shop has two kinds of products: the ones that fly off the shelf and the ones that have been gathering dust for months. Knowing which is which completely changes what you buy, what you reorder and the cash you have free. Here's how to see it clearly.

What stock rotation is and why it matters

Stock rotation is, in plain terms, the speed at which a product sells and comes back in. A soft drink you restock every couple of days has very high rotation. A toy you bought eight months ago and is still on the shelf has almost none.

Why should you care? Because stock isn't "having products": it's your money sitting on the shelf. Every box you buy is money out of your pocket that doesn't come back until that product sells. If it rotates fast, that same money works for you many times a year. If it rotates slowly, it just sits there generating nothing, while you need it to pay the supplier for the things that do sell.

Star products vs dead stock

Your whole catalogue can be split, broadly, into two extremes you need to identify:

Star products

These are the ones that rotate most: they come and go constantly, show up again and again in your daily sales and, added together, make up most of your revenue. There are usually few of them, but they hold the shop up. Running out of these really hurts, because every time a customer can't find one it's a lost sale and, very often, a trip to the competition.

Dead stock

The opposite: product you've barely sold for weeks or months. It takes up space, ties up money and generates no till. Sometimes it was a guessed buy that didn't land, sometimes seasonal stuff that got left behind, sometimes an item that fell out of favour. It's not a disaster, but every euro trapped in dead stock is a euro you can't put into what does sell.

Most shops have no idea how much money they have tied up in dead stock, simply because they've never looked. And it's usually more than they think.

ABC analysis, jargon-free

There's a very simple way to rank your products that the experts call "ABC analysis". It sounds technical, but the idea is common sense: not all products matter equally, so don't give them all the same attention.

You rank your products by what they contribute to sales and group them into three blocks:

• Group A — the essentials: the few products (typically around 20%) that make up most of your revenue. These should never run out. They are your absolute priority.
• Group B — the middle ground: they sell steadily without being stars. Worth attention, but you can give them a bit more slack.
• Group C — the long tail: most of your items, each selling little. They add variety, but this is where dead stock usually hides. No need to overstock this group.

How your POS gives you this data, on its own

Here's the good news: you don't have to work any of this out by hand or keep a spreadsheet. If you take payment with a POS, every sale that goes through the till is already storing the information you need. You just have to look at it.

In Bipe's sales reports you can see at a glance:

• The ranking of best-selling products by units and by money, for whatever period you want (today, this week, this month). There are your stars, no argument.
• What hasn't sold in a while, so you spot dead stock before you forget you even have it.
• How much stock you have left of each item, because every sale deducts it automatically.
• An alert when a product drops below the minimum you set, so you restock your best sellers in time.

With that you stop buying on gut feeling and start buying on real data from your own shop. Not from a textbook: yours.

What to do with each type of product

How to avoid running out of your best sellers

Running out of a star product is one of the costliest mistakes, because it's a lost sale on exactly what's most in demand. To avoid it:

• Set a minimum per product based on how long the supplier takes to deliver. If it's a week, your minimum should cover a week of sales plus a margin.
• Let the system warn you. A POS that deducts stock with every sale can alert you when something drops below the minimum, instead of you finding out when a customer says it's gone.
• Account for peaks. Weekends, start of the month, seasons... if you know a product spikes on certain dates, stock up ahead.

Common mistakes that cost money

Frequently asked questions

What is stock rotation?

It's the speed at which a product sells and is restocked. A high-rotation product comes in and goes out fast; a low-rotation one sits on the shelf for weeks or months tying up your money. The higher the rotation, the more times the same money works for you over the year.

What is dead stock?

It's product you haven't sold in a long time that takes up space and cash without generating any till. You don't always have to bin it: often it's enough to clear it out, put it in a bundle or give it a better spot in the shop to recover the money and free up room for what does sell.

What is ABC analysis in a shop?

It's ranking your products by how much they contribute to sales. Group A is the handful of products that make up most of your revenue, B the middle ground, and C the long tail of items that each sell little. It tells you what to prioritise: the A products should never run out.