Calculator
Secondary Sales Calculator.
Enter a distributor’s opening stock, what it bought from you in the period and its closing stock. The calculator works out secondary sales, days of stock cover and whether stock is building up in the channel.
Secondary sales are what a distributor sells on to retailers. Most brands cannot see every distributor invoice, so they derive secondary sales from stock: what the distributor started with, plus what it bought from the brand, minus what is still in the godown. The same three numbers also tell you how many days of stock the distributor holds and whether primary billing is running ahead of real market movement.
How it is calculated
| Output | Formula |
|---|---|
| Secondary sales | Opening stock + primary sales − closing stock |
| Average secondary sales per day | Secondary sales ÷ days in the period |
| Stock cover (days) | Closing stock ÷ average secondary sales per day |
| Primary-to-secondary ratio | Primary sales ÷ secondary sales |
All four numbers must be in the same unit. Cases (or units of one SKU) give the cleanest stock cover; ₹ works for a portfolio view, as long as opening stock, purchases and closing stock are all valued at the same price, for example distributor landing price. Mixing purchase value with a closing stock valued at a different rate distorts the result.
Worked example (illustrative)
An illustrative bakery-ingredients distributor, figures in cases of whipping cream for a 30-day month:
| Item | Value |
|---|---|
| Opening stock | 1,200 cases |
| Primary sales (bought from the brand) | 3,000 cases |
| Closing stock | 1,500 cases |
| Secondary sales = 1,200 + 3,000 − 1,500 | 2,700 cases |
| Per day = 2,700 ÷ 30 | 90 cases |
| Stock cover = 1,500 ÷ 90 | 16.7 days |
| Primary-to-secondary = 3,000 ÷ 2,700 | 1.11 |
The distributor bought 300 cases more than it sold, so stock grew from 1,200 to 1,500 cases. These are the calculator’s default values, not data from any real distributor.
How to read the results
- Ratio above 1: the brand billed more than the market took, and stock is building at the distributor. Fine before a season or a launch; a warning sign if it repeats month after month.
- Ratio below 1: the distributor is selling down its stock. Check that stock cover is not falling so low that outlets go short.
- Stock cover: compare it with the distributor’s reorder cycle and the product’s shelf life. A short-life product with long cover is a returns and expiry risk.
- Closing stock higher than opening plus primary: the calculator flags this, because it usually means a missed purchase, unrecorded returns from retailers or a wrong count.
Adjustments your company policy decides
The basic formula assumes every case that left the distributor went to a retailer. In practice, decide and write down how you treat:
- Returns: retailer returns to the distributor add back to stock; returns from the distributor to the brand usually reduce primary sales.
- Transit stock: goods billed by the brand but not yet received are often excluded from both primary sales and closing stock until they arrive.
- Damages, leakage and expiry: write them off separately so they are not counted as secondary sales.
- Free goods and scheme quantities: include or exclude them consistently in every period.
Whatever rules you choose, apply the same ones to every distributor and every month, or the trend will mislead you.
Where a DMS fits
A derived figure is only as good as the closing stock behind it, and closing stock usually comes from a monthly count. Autowhat’s DMS software for distributors keeps stock in hand as gate-pass quantity received minus outlet dispatches, plus corrections with a reason, and records each outlet dispatch with its invoice, so secondary sales come from actual dispatches instead of being worked back from a count.
Related reading: primary and secondary sales meaning and distributor stock visibility without physical counts.
Questions
What is the formula for secondary sales?
Secondary sales = opening stock at the distributor + primary sales (purchases from the company) in the period − closing stock. Use the same unit, cases or ₹ at one price, for all three figures.
How do you calculate distributor stock days?
Divide secondary sales by the days in the period to get average sales per day, then divide closing stock by that figure. For example, 1,500 cases ÷ 90 cases a day is about 16.7 days of cover.
What does the primary-to-secondary sales ratio show?
Primary sales ÷ secondary sales. Above 1 means the brand billed more than distributors sold and channel stock is rising; below 1 means distributors are selling down stock. Over several months it should stay close to 1.
Should returns and transit stock be included in secondary sales?
It depends on company policy. Commonly, retailer returns add back to distributor stock, returns to the brand reduce primary sales, and goods in transit are left out until received. Apply the same rule every period.
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