The decoder ring
Retail, in plain English.
Buyers talk in shorthand. Here’s every term that matters, what it actually means, and the metaphor a sharp friend would use to explain it.
Margin ladder
The chain of markups from what it costs you to make, to what you sell it to the retailer for, to what the shopper pays, with everyone taking their cut along the way.
Think of it asA relay race where every runner keeps part of the baton. If the baton is too small when it leaves your hand, there’s nothing left by the finish line.
Landed cost
What one unit really costs you by the time it’s sitting in a warehouse ready to sell: ingredients, packaging, freight, duties, everything.
Think of it asNot the sticker price of the couch. It is the price after delivery, the stairs fee, and the tip. That’s the number your budget actually feels.
Velocity
How fast your product sells once it’s on the shelf, usually counted as units per store per week. It’s the number buyers trust most.
Think of it asA restaurant doesn’t care how good your food smells. It cares how many plates leave the kitchen every night. Velocity is plates leaving the kitchen.
Planogram
The retailer’s map of exactly what goes where on every shelf: which products, how many rows, at what height.
Think of it asAssigned seating at a wedding. There’s a chart, every seat is spoken for, and you don’t get a chair just because you showed up in a nice suit.
Case pack
How many units ship together in one box, and the box’s dimensions. Retailers care because the box has to fit their shelf and their math.
Think of it asEgg cartons. Stores don’t buy one egg. They buy the carton, and if your carton doesn’t fit the fridge door, the eggs stay at the farm.
Slotting fee
Money a retailer charges up front just to give your product a spot on the shelf, often thousands of dollars per item, per chain.
Think of it asKey money for an apartment. You pay before you move in, you don’t get it back, and it doesn’t count toward rent.
Line review
The scheduled meeting where a retail buyer decides which products stay, go, or get added to a category, usually once or twice a year.
Think of it asDraft day. Everyone gets judged on the same day, the roster has limited spots, and someone currently on the team has to lose theirs for you to get one.
Broker
A middleman who already has relationships with retail buyers and pitches your product for you, taking a percentage of sales.
Think of it asA real-estate agent for your product. A good one gets you showings you’d never get alone. A bad one lists you and forgets you exist.
Distributor
The company that physically moves your product from you to stores (warehousing, trucks, invoicing) and takes a healthy cut for it.
Think of it asThe power grid between your generator and everyone’s lights. Nothing flows without it, and the grid charges tolls whether or not your product sells.
Chargebacks
Money retailers and distributors subtract from what they owe you, for late trucks, wrong labels, promos, damage, sometimes reasons you’ll never decode.
Think of it asA security deposit that leaks. Every month the check that arrives is a little smaller than the invoice you sent, and it’s on you to ask why.
Trade spend
The money you give up to fund the retailer’s sales, ads and discounts on your product, often 15–25% of your wholesale revenue.
Think of it asThrowing your own housewarming party in someone else’s house. You buy the food, they keep the house looking popular.
The first 13 weeks
Your probation window after launch. Most retailers judge a new product on its first quarter of scan data. Miss the velocity bar and you’re out at the next review.
Think of it asA restaurant’s opening month, except the landlord is reading the register every Friday and already interviewing your replacement.
SRP
Suggested retail price, the shelf price the shopper sees. Retailers work backwards from it to decide if your economics fit their category.
Think of it asThe menu price of a dish. The kitchen, the waiter and the landlord all get paid out of that one number, so it has to be set before the cooking starts.
PO
A purchase order, the retailer’s official commitment to buy a specific quantity at a specific price by a specific date. The thing every pitch is chasing.
Think of it asThe signed lease, not the friendly showing. Until it exists, every warm meeting is just a nice conversation.