Ship to one city until the reorder rate holds.

Problem

First-order volume looks identical to demand. Six cities of first orders produced a revenue chart that pointed up and a warehouse full of returns nine months later.

Context

A shelf-stable spice paste sold through independent grocers. Expanded from 40 stores in one city to 260 stores in six within a quarter.

What they did

1. 1.Stopped opening new cities and let the existing shelves run without promotional support.
2. 2.Tracked reorder rate per store rather than orders per month.
3. 3.Withdrew from four cities where the reorder rate stayed under 20% after two cycles.
4. 4.Reinvested the freed working capital in depth in the two cities that held.

What to avoid

• •Promotions ran continuously during the expansion, so no month measured unsupported demand.
• •Returns from the withdrawn cities arrived over five months and were booked against the months they arrived in, which flattered the expansion quarter twice.

Sources

No public source for this one.

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