Scan-based trading (SBT) is a retail selling model that shifts ownership of inventory to the supplier until a product is scanned at the register. Retailers improve cash flow and reduce risk on categories with volatile demand, low sales predictability, or high freshness requirements. Suppliers gain direct control over assortment and replenishment, as well as greater visibility into point-of-sale performance.
When looking to implement SBT, it is best applied where supplier expertise improves outcomes and shrink can be managed with discipline.
Categories That Perform Well Under SBT
If you’re considering implementing SBT for some of your inventory, there are product categories that make good starting points.
Convenience Stores
- Fresh Bakery (donuts, muffins, pastries)
Frequent turns, daily or near-daily replenishment, vendor-managed freshness
- Magazines & Newspapers
High SKU churn, unpredictable demand, frequent updates
- Seasonal & Promotional Merchandise
Holiday décor, novelty items, themed promotions (short life cycles, limited commitment)
- Specialty Beverages
Craft sodas, niche energy brands, regional launches
Grocery Stores
- Produce (Select Items)
Packaged berries, salad kits (tight rotation, vendor quality control)
- Floral
Perishable, event-driven demand, strong vendor care standards
- Greeting Cards
Large assortment, seasonal peaks, display discipline matters
- Prepared Meals
Grab-and-go salads, sandwiches, meal kits (daily rotation)
- Specialty Dairy
Artisan cheeses, yogurts (niche demand)
- Seasonal Center Store
Baking kits, themed snacks, holidays (limited windows, high variance)
Rule of thumb: If freshness, variety, or short cycles drive performance, and a supplier can manage those better than a store team, SBT is a strong candidate.
Pros for Retailers and Suppliers on SBT
Retailers
- Lower Inventory Risk: Payment occurs at sale; unsold product isn’t on your balance sheet
- Improved Cash Flow: Capital isn’t tied up in speculative inventory and can instead be used in other strategic areas
- Operational Relief: Supplier manages rotation, display integrity, and replenishment
- Test-and-Learn: Introduce new products and seasonal assortments without heavy commitment and financial exposure
Suppliers
- Direct Merchandising Control: Placement, rotation, and display compliance are in your hands
- Better Demand Signals: POS data visibility supports precise forecasting, route planning, and product development
- Deeper Partnerships: Regular in-store engagement builds trust and improves execution
- Sales Growth Opportunities: Daily purchase monitoring by SKU to identify and prioritize the right products that sell in specific demographics
Best Practices for Successful Scan-Based Trading Programs
Start with Categories You Can Control
Begin with SKUs that have clear freshness standards, predictable rotation, and manageable shrink. These are easier to monitor and provide a strong foundation for success. Pilot programs should start in stores with reliable execution and engaged managers before scaling to a broader network.
Define Roles and Standards Up Front
Clarity is critical. Establish who owns display integrity, how returns will be handled, and what stock thresholds should look like. Written processes for damages, stales, and seasonal pullbacks prevent confusion and disputes later. Clear par levels and reorder signals help avoid both stockouts and overfill.
Get the Data Right
Accurate POS and delivery data is the backbone of SBT. Ensure UPCs, pricing, and promotional flags are correct before launch. Reconciliation should occur on a regular cadence, with exception reporting for transparency. Performance views such as sales per facing, sell-through, shrink rate, and route productivity should be shared across teams.
Treat Shrink as a Managed Outcome, Not a Mystery
Shrink will happen, but it should be predictable and controlled. Daily or route-based rotation for perishable categories, disciplined display standards, and markdown protocols near end-of-life all help reduce waste and improve sell-through.
Align Incentives
Both retailers and suppliers should be working toward the same goals. Use sell-through targets, display compliance checks, and joint reviews to keep focus aligned. Incentives tied to net performance (sales minus shrink) are more effective than those based solely on delivery volume.
Pilot, Measure, Adjust, Then Scale
Start small with limited stores and SKUs. Track baseline versus SBT performance, including sales lift, shrink rate, and labor time saved. Expand only where data shows improvement and execution is repeatable.
The Bottom Line
Scan-based trading is most effective where supplier control reduces waste and increases conversion. Categories like fresh bakery, floral, prepared meals, magazines, greeting cards, and seasonal assortments are great examples. Success depends on clean data, clear standards, disciplined rotation, and aligned incentives. Start small, measure tightly, and scale where execution holds.
