Most retailers develop their own approach to evaluating their sales success through performance metrics. When you start selling through Walmart, you don’t have to throw that analytics strategy away—but you do need to give priority to the metrics that Walmart buyers care about most.
Every supplier working with Walmart is evaluated with a scorecard that measures weekly, monthly, and quarterly sales, along with a bunch of other performance metrics. Those numbers will have a direct impact on your relationship with your buyer.
It doesn’t matter if your own performance metrics tell a different story about your retail success: There are certain metrics for which Walmart buyers expect you to put up strong numbers. Here are five data points you can expect your buyer to obsess about.
Within the overall sales metric, there are other smaller metrics that you and your buyer will likely care about, but the big ones are your volume of sales, your dollar-bill sales, and your comparable store sales, which is a comparison of your brand’s current sales to your performance during a similar timeframe at that store in the past.
For stores that have been open for at least a year, comp store sales are the most accurate picture of the health of a business. It can easily demonstrate whether sales are growing efficiently from one period to the next.
From a buyer perspective, if sales are flat or declining, there’s a problem that needs to be addressed. You need to keep these numbers growing if you want to justify your spot on Walmart shelves.
Buyers are very mindful of how much inventory they carry for individual products at any given time. They want to see that that inventory is turning over quickly, and decreasing over time as sales strategy becomes more efficient. The more inventory they have sitting in a warehouse, the greater sales risk Walmart is taking on by stocking your products—and that isn’t good for you, or them.
Ideally, Walmart wants to keep products in stock while minimizing the amount of inventory they have at the store, in hopes of selling that inventory and replenishing it quickly. When this retail system works to perfection, Walmart has already sold your products before they pay your delivery invoice. Don’t let Walmart run out of stock of your products, but optimize your ordering and deliveries in pursuit of optimal inventory numbers.
Walmart wants a product’s in-stock percentage to be at least 98.5 percent. If you’re missing that mark, you are going to frustrate your buyer.
In-stock percentage is a measurement of sales and inventory, and it quickly illustrates that your products are in stock and available on store shelves. When your products aren’t on the shelves, they can’t be sold, in which case the space you’re taking up at Walmart is going to go to waste. To hit the desired mark for in-stock percentage, you’ll need to have an excellent system in place to manage production, inventory, and your supply chain.
OTIF (On Time, In Full)
This is one of the biggest, if not the single-biggest term Walmart has been throwing around in recent years. At a high level, Walmart calculates the percentage of orders that are fulfilled on time—not late, and not early. And although early might seem to be to your benefit, early orders mean that inventory spends more time sitting in storage, which Walmart doesn’t want.
If suppliers fall short of the desired OTIF benchmarks, Walmart will charge an extra fee for your lack of compliance.
Walmart buyers are tracking margin at the category level. If they buy shampoo, for example, they want to see a strong margin between the acquisition costs for those products and the retail prices at which they’re sold.
Margin can be evaluated on a weekly, monthly, or custom timeframe basis. Although sales is an important metric, margin is what really demonstrates the relative health of a store’s retail category. If sales volume is strong, but the margin is only 5 percent, that isn’t acceptable—and buyers will be tasked with making whatever changes are needed to reduce acquisition costs and drive a healthier margin.
When you’re evaluating your own retail performance, always view these results through Walmart’s eyes. Apply their metrics and scorecards to your own retail efforts, and develop corrective strategies to subpar performance before your land in the hot seat with your Walmart buyer.