What is Primary, Secondary and Tertiary Sales?

What is Primary Secondary Tertiary Sales

In FMCG, retail and distribution businesses, sales don’t end the moment goods leave the factory. Goods go through a chain of transactions before being sold to the end customer. The phenomenon is elucidated with the help of Primary Secondary Tertiary Sales.

Primary Secondary Tertiary Sales gives brands the ability to know if they have stock, where the stock is and whether customers are buying it or not. Many companies look only at company-level sales, but that does not paint the full picture. This post walks through the actual sales flow in plain language so one does not “hop to” – or forward along prematurely, for lack of understanding about what he is doing.

What is Primary Sales

Primary sales are those where the transaction is between manufacturer / company and distributor/ super stockist. This constitutes the 1st leg of Primary Secondary Tertiary Sales.

Example:

• A packaged-food brand wholesales 50,000 units to its in-state distributor.
• This is considered the primary sales.

Key points of Primary Sales:

• Company warehouse to distributor: Stock Transferred in Between the Company’s Warehouse and Distributor
• Company recognizes revenue at this point
• Indicative of how much share is issued into the market
• Does not confirm customer demand

Primary sales are usually driven by targets, incentives, bulk orders etc. High primary sales may seem like a good sign, but if the stock can’t move out of distributors’ hands again fast enough then there’s excess inventory.

What is Secondary Sales

Secondary sales take place when distributors offload products to retailers like kirana stores, pharmacies or supermarkets. This is 2nd stage in the process of Primary to Secondary sales.

Example:        

Of the 50,000 units received, the distributor sells 38,000 to retailers.

Key points of Secondary Sales:

• Here is how stock will flow from Distributor to Retailer
• Reflects real market movement
• Shows distributor efficiency
• Helps brands understand store-level demand

Secondary sales are more informative than primary sales, as retailers typically demand goods that they hope customers will want.

What is Tertiary Sales

Tertiary sales are retailers selling to consumers. This is the last and most crucial step for Primary Secondary Tertiary Sales.

Example:

Retailers are selling 32,000 a month to consumers.

Key points of Tertiary Sales:

• Shows actual consumer buying behavior
• Helps judge product acceptance
• Metrics for pricing and offers effects
• Guides future production and supply

Tertiary sales data reveals what customers really want. This step allows brands to prepare for promotions, packaging and product enhancements.

Difference between Primary, Secondary, and Tertiary Sales

Summary of Primary Secondary Tertiary sales.Remarks: Each level has its own activity and role to play in selling the product.

There’s a focus on the primary sale, which is pushing stock from us to distributors. This serves to help production plan, but doesn’t represent market demand.

Secondary sales provide insight into how distributors are moving product to retailers. It’s a demand-driven level at the store, to help brands determine fast- or slow-moving areas.

The tertiary sales are accounting for the last buying by a costumer. This stage validates whether products are well-liked in the market and selling at estimated rates.

The entire 3 stages of the Chain makes up the Primary Secondary Tertiary Sales cycle and would seem to provide a complete picture of supply and demand.

What Primary Secondary Tertiary Sales Mean for Businesses

Reporting on only one sales tier can be misleading. For instance, robust primary sales may mask softness in retail demand.

What do companies realise with PSTS tracking? With Primary Secondary Tertiary Sales tracking, companies can:

• Back-off excess stock at distributor poles
• Reduce product expiry and returns
• Improve demand planning
• No 2: Support the right stock mix for retailers

By using data from all three phases of sales, both salespeople and their managers also take better control over the process.

Managing and Tracking Sales at Every Level for Brands

Structured sales systems and reporting procedures are used for handling Primary Secondary Tertiary Sales of the businesses.

Common practices include:

• Distributor billing and sales reporting
• Field teams monitoring retail sales
• Beat-wise and outlet-wise sales data
• Frequent check of stock and sell-out figures

“If brands have sight (visibility) into Primary Secondary Tertiary Sales, they are able to respond faster to underperforming markets and invest more in markets with high demand.