Loyalty glossary · 12b. B2B, channel and trade incentives (26)
Sell In
Sell in is a channel incentive design that rewards a partner for purchasing inventory from the supplier, before any end customer sale. It pays on the buy, not the sell out, and shifts inventory into the channel. The risk is that it rewards loading stock rather than moving it.
Sell in rewards a partner for buying inventory from a supplier, before any end customer pays. It is the easiest incentive to run, because purchase data sits in the supplier's own ledger. The harder question is whether anyone beyond the channel wants the product, and sell in never answers that.
The trap is channel stuffing. A sell in programme pays the same rebate for a warehouse shelf as for a customer purchase, so the incentive is to order more than the market can absorb. The result is a false active member rate, because one bulk order in a quarter makes a partner look active even if the stock sits for months.
Work the arithmetic. A partner buys 500,000 dollars of stock in a quarter. A 2 percent base rebate accrual yields 10,000 dollars. A volume bonus adds 1 point per dollar, so the partner earns 500,000 points worth 5,000 dollars at 1 cent per point. Total reward is 15,000 dollars, or 3 percent of purchases, without a single end customer sale.
Activity-based qualification is the corrective. If a reward requires a partner to report sell out data or run a promotion, the programme starts paying for movement, not just purchasing. The difference shows in the active member rate: a partner who buys once and reports nothing stays inactive, no matter how large the order.
The cleanest channel programme pays nothing at sell in beyond a modest purchase rebate, and reserves the meaningful rewards for sell out. A supplier that cannot measure sell out should not pretend it is running a loyalty programme; it is running a purchase discount and calling it by a nicer name.