Fast and slow sellers: finding which products earn your shop's money and which only fill shelves
A monthly half-hour method to rank your products by what they actually earn, not only by how fast they sell, sort them into four groups, and decide what to keep, move, reprice or stop reordering. Worked examples in rupees.
Ask a shopkeeper which products matter most and the answer comes quickly: sugar, flour, oil, milk, the cold drinks in the fridge. They are the things that leave the shop all day. The sugar carton is empty by Wednesday, and the boy goes to the back room for more twice before lunch.
Now look at what each one leaves behind. Suppose a kilo of sugar earns the shop Rs 5, and you sell eight a day. That is Rs 40 a day. On the top shelf, a row of hair oil sells three bottles a day and earns Rs 40 on each one. That is Rs 120 a day, three times the sugar, and nobody in the shop thinks about it because it never causes a rush.
At the far end of the shop there is a whole shelf of products that have hardly moved since last Eid.
"Sells fast" and "earns money" are two different lists. This article shows how to make both in half an hour a month, put each product into one of four groups, and decide what each group deserves: more space, a closer look at the price, less of your cash, or nothing at all.
Speed and earnings are two different lists
For every product you need two numbers for the same period.
- Units sold. How many left the shop. This tells you how fast it moves.
- Profit earned. Units sold multiplied by the profit on each one, which is the selling price minus what it cost you. This tells you what it actually added to the shop.
Here is a small example for four weeks in a grocery. The figures are examples only.
| Product | Sold in 4 weeks | Profit on each (Rs) | Profit earned (Rs) |
|---|---|---|---|
| Shampoo sachet | 400 | 2 | 800 |
| Biscuits, small pack | 300 | 3 | 900 |
| Sugar 1 kg | 200 | 5 | 1,000 |
| Cooking oil 1 L | 100 | 20 | 2,000 |
| Hair oil 200 ml | 80 | 40 | 3,200 |
| Floor cleaner 1 L | 6 | 50 | 300 |
| Imported sauce | 2 | 120 | 240 |
Sort by units sold and the sachets and biscuits are at the top. Sort by profit earned and the hair oil and the cooking oil are at the top, and the sachets fall near the bottom. The two lists rarely agree.
Neither list on its own tells you what to do. A product that earns very little on each piece may still be the reason customers walk in.
Get four weeks of numbers
You do not need every product. Start with your top fifty by units sold, and add anything that takes up a whole shelf or more, however slowly it sells.
For each one, write down five things in a notebook or on your phone: the product, how many you sold, the selling price, the cost, and the profit earned.
Three points keep the numbers honest.
- Pick an ordinary four weeks. Not the Ramadan rush, not the week the shop was closed for a wedding. If you want to plan for a season, compare it with the same season last year, as the Ramadan and Eid planning article describes.
- Use today's cost, not last year's. If the supplier has raised a price twice since you last checked, the old cost makes the product look more profitable than it is. The pricing article explains how to work from the real cost.
- Use the price you actually charge. If you round the sugar down for regulars or give a little off to anyone who asks, use the lower figure. Profit earned is what you really kept, not what the price label says.
If you have only a selling price and a cost, the free profit margin calculator works out the profit on each unit and the margin for you.
Put every product into one of four groups
Now ask two questions about each product. Is it in your top twenty by units sold? Is it in your top twenty by profit earned? In a shop with hundreds of products the line falls in a different place than in the small example above, but the idea is the same.
The two answers give four groups.
- Stars: fast and earning. They bring customers in and they bring money. In the example, cooking oil.
- Crowd pullers: fast but earning little. They bring customers through the door, but each one leaves only a few rupees. Sugar, biscuits and sachets.
- Quiet earners: slow but earning well. They sell steadily and earn a good amount on each sale, and they are easy to forget. The hair oil.
- Shelf fillers: slow and earning little. They hold your cash and your space and give very little back. The floor cleaner and the imported sauce.
What each group deserves
Stars: never let them run out
A star that runs out costs you twice: the profit on the sale, and the customer who goes elsewhere for it and buys the rest of the list there too.
- Give stars a careful reorder level and check it every month. Reorder levels shows how to set one.
- Keep them where customers can reach them easily, with enough space that the shelf never looks empty.
- Check their cost against your price every month. A supplier increase on a star hurts more than one anywhere else, because you sell so many.
- Do not discount them to bring people in. They already sell.
Crowd pullers: keep them, but do not let them take over
These are the products customers compare between shops. If your sugar is dearer than the shop next door, people notice.
- Keep the price close to what others charge. A few rupees on each one is fine; that is their job.
- Do not drop them because they earn little. They bring the baskets that the stars and quiet earners fill.
- Do not give them more shelf than they need. A low-earning product spread over three shelves is taking space from something better.
- Watch the profit on each one. If a cost rise has pushed it to zero or below, change the price. Selling at a loss is not a strategy; it is a leak.
Quiet earners: help customers see them
Quiet earners are often hidden on a high shelf or in a corner, because nobody asks for them in a hurry.
- Move them to eye level or near the counter, where people wait to pay.
- Keep them in stock. When a quiet earner runs out, you do not notice, but the customer who came for it does.
- Mention them when it fits naturally, and put them on your WhatsApp price list. Taking orders on WhatsApp covers how to keep that list useful.
- Do not raise the price only because it earns well. It may be selling steadily because the price is right.
Shelf fillers: stop feeding them
- Stop reordering first. Sell what is there, and do not buy more until you have decided.
- Ask whether anyone comes for it. If one regular buys that sauce every month and also spends a good amount on groceries, keep one or two. If nobody would notice it gone, let it go.
- Give the space away. The shelf a filler leaves behind is worth more to a star or a quiet earner than the filler ever earned.
- Turn what is left back into cash. Ask the supplier if they will take it back, offer a modest discount, or put it beside a fast seller. The discount calculator shows what each discount costs you before you offer it.
Look at what each shelf earns
Products compete for space, and space is limited. So it helps to ask not only what a product earns, but what its shelf earns.
Take the example again. Say one shelf row holds the hair oil, one row holds the shampoo sachets, and three rows at the far end hold the floor cleaner, the sauce and a few products that sold nothing at all.
- The hair oil row earned Rs 3,200 in four weeks.
- The sachet row earned Rs 800.
- The three slow rows earned Rs 540 between them, about Rs 180 a row.
That end of the shop is earning a small fraction of what one good row earns. Clear one of those three rows and give it to a star or a quiet earner, and the same shelf works much harder without any new stock or new customers.
Before you drop a product, check four things
A product can look like a shelf filler for reasons that have nothing to do with the product.
- Was it out of stock? If it was missing for half the month, it sold half as much. Count only the days it was actually on the shelf.
- Was it hidden? A product behind a stack of cartons cannot sell. Move it to a fair spot for a month before judging it.
- Is it seasonal? Winter goods look like shelf fillers in summer. Compare them with the same season, not with last month.
- Is the price wrong? A slow product may simply be dearer than the same thing down the road. Check before you give up on it.
There is one more reason to keep some slow products: completing a list. A customer buying for a family meal who cannot find one small item may buy the whole list elsewhere next time. Keep a small quantity of the things your regular customers expect to find, even if they earn little.
Judge a product by the profit it leaves behind and the customers it brings in, not by how often you hear the drawer open for it.
Make it a monthly half hour
- In the first week of the month, take the last four weeks' numbers for your top fifty and your biggest shelf users.
- Mark each product with its group. Notice the ones that moved from one group to another since last month.
- Pick one action for each group: check a star's cost, check a crowd puller's price against the market, move one quiet earner to a better place, and stop reordering one shelf filler.
- Write down what you changed. Next month, look at whether it made a difference.
Questions shopkeepers ask
Should I stop selling products with a very small profit?
Usually not, if they are crowd pullers. Products like sugar and flour bring customers in, and those customers buy other things in the same visit. What you should do is make sure the profit on each one is not zero or less after the last cost increase, and that they are not taking more shelf space than they need.
How many products should I review each month?
Start with your top fifty by units sold, plus anything that takes up a full shelf or more. That covers most of your sales and most of your space; look at the rest once a quarter.
A product sells to only one regular customer. Should I keep it?
If that customer is a good customer who buys plenty of other things from you, keep a small quantity, perhaps one or two at a time. You can also ask them to tell you a few days before they need it, so you do not hold stock in between. If the customer rarely buys anything else, the shelf space is probably better used for something that sells.
Is a product with a high profit on each piece always good?
No. A product that earns Rs 120 each but sells twice a month earns less than one that earns Rs 5 and sells two hundred times. Look at the profit earned over the month, not the profit on one piece.
My records only show daily totals, not sales for each product. What can I do?
For the fifty products you care about, work it out from stock. Count them today, add what you buy over four weeks, and count them again at the end. What is missing is roughly what you sold, plus any losses. A stock take gives you a clean starting count, and from then on it is worth recording sales product by product.
In Saleva, each product keeps its purchase price, and entering deliveries updates your costs, so the profit on each product is worked out from what you really paid. The Forecast screen works out how fast each product sells from your own bills, lists anything with no sale in ninety days under Not moving, and shows where cost has crept up on price under Thin margin, while Reports shows whether the month's gross profit moved after your changes. The products and stock guide shows where each of these lives.
Try this in Saleva
Saleva is a free Android point-of-sale app for small shops: selling, stock, customer dues, staff and an online shop page. Selling works with no internet at all.