Retail Buyer Glossary — U.S. Retail Terms Explained

Most first buyer meetings go wrong on vocabulary, not product. A founder nods through “forty points, twelve percent trade, OI for the reset, what's your fill rate?” and works out afterwards that the meeting priced the deal before the deck came out. Read the four groups below once, keep the page for reference, and the numbers in the room stop being a surprise.

The money · The chain · The order · The performance

Group one

The money.

How a dollar of shelf price gets divided. Every figure a buyer quotes comes from this group.

Shelf price (retail price): What the shopper pays. The only number in the chain the market actually sets — every other margin is worked down from it, which is why the shelf price has to be established before the model is built, not negotiated afterwards.
Margin vs. markup: Margin is the share of the selling price kept as gross profit; markup is the percentage added to cost. A 40% markup is a 28.6% margin. Buyers speak in margin — quoting markup in a margin conversation is how brands misprice by a full position.
Retailer margin: The retailer's share of the shelf price, set by channel norms rather than negotiation. In our worked example it is $10.00 of a $24.99 shelf price — forty points.
Distributor margin: The distributor's share of the price they resell at, where a distributor sits in the chain — in the worked example, 25% of the retailer's cost. Most independent and specialty coverage runs through a distributor, so many brands absorb two margins, not one.
Invoice price: What you actually bill: the shelf price less every margin ahead of you. The number that feels like revenue — and isn't, once the next four terms arrive.
Net realised revenue: What reaches you after trade spend, deductions and freight allowances come back out of the invoice price. In the worked example the gap between invoice and net is roughly seventeen percent — costs that only exist after the buyer says yes.
Trade spend: Promotional allowances, features and new-item support paid to retailers. Budget it as a percentage of invoice price — ten to fifteen percent is a working range — because it arrives whether or not you planned for it.
Deduction: Money a retailer takes back off an invoice: shortages, damages, late delivery, compliance failures. Unlike trade spend, deductions are entirely within your control — every one is a process problem with a name on it.
Chargeback: A deduction tied to a specific service failure — a missed delivery window, a labeling error, a routing-guide violation. Drug and mass channels enforce these rigorously.
Off-invoice allowance (OI): A promotional discount taken directly off the invoice for a set period. The most common form of trade spend and the first one a buyer will ask for.
Billback: A promotional allowance the retailer bills you for after the promotion runs, rather than deducting it at invoice. Same money, worse cash timing.
Slotting (new-item allowance): A one-time allowance some retailers charge to add a new item to the warehouse or planogram. Not universal and always negotiable — ask explicitly before budgeting for it.
Spoilage / damage allowance: A standing percentage that covers expired or damaged product in the channel, common in food and beverage. Cheaper than processing returns, priced into your terms.
MAP (minimum advertised price): The lowest price your product may be advertised at. It protects every retailer's margin from a race to the bottom — and it is enforced, or lost, mostly online.
MSRP: Manufacturer's suggested retail price. A suggestion: the retailer owns the actual shelf price. Your leverage over it is the margin story, not the label.
Landed cost: Everything it costs to put one unit on a U.S. pallet: product, freight, duty, insurance, warehousing, pick and pack. The number U.S. pricing is built on — and the one entering brands most often guess at.

Group two

The chain.

Who touches the product between your factory and the shelf, and what each one decides.

Retail buyer / category manager: The person who decides what gets listed in your category. They are measured on category revenue, margin and velocity — not on your product's story — which is why meetings are priced in their numbers, not yours.
Distributor: Buys from you, warehouses the product and resells it to retailers. Adds reach, credit cover and a second margin to the stack. The three routes to shelf — direct, distributor and hybrid — are covered in the distribution guide.
Broker: A sales agent who represents your brand to retailers for a commission. A broker sells; they do not warehouse, take title, or carry your receivables. Useful for coverage — but the retainer and commission sit in your overhead, not in the stack.
Direct store delivery (DSD): Delivering straight to individual stores instead of retailer warehouses. Common in beverage and fresh, where shelf life decides the route — and it changes the economics entirely.
Category review (line review): The retailer's scheduled re-evaluation of a category — the window when new items get considered and slow movers get cut. Miss the window and you wait for the next one, usually a year. Launch timing is built backwards from these dates.
Planogram: The diagram of what sits where on the shelf: your facing count, shelf height and neighbours. Written at the category review, executed at the reset.
Category captain: The brand or supplier a retailer trusts to help plan the category — usually the market leader. Occasionally a role worth courting; always a relationship worth understanding before you pitch into it.
Vendor setup: The onboarding paperwork that has to clear before a first PO: vendor agreement, W-9, insurance certificates, banking details, EDI or portal registration. Brands that start it after the yes lose a quarter to it.

Group three

The order.

What happens between the handshake and the delivery — where launches actually keep or lose their margin.

Purchase order (PO): The retailer's binding order: quantities, price, delivery window, terms. The launch starts here, not at the handshake — nothing before it is revenue.
Case pack / master case: The number of units in a shippable case. Buyers think in cases, warehouses charge by them, and shelf stocking is planned around them. Your pricing, MOQs and pack architecture should be built in cases too.
MOQ (minimum order quantity): The smallest order a party will accept — yours, your co-manufacturer's or your distributor's. The quiet constraint behind every first-PO conversation.
EDI (electronic data interchange): The system purchase orders, invoices and advance ship notices move through at scale. Smaller retailers use portals instead; the obligations — and the chargebacks for getting them wrong — are the same.
Routing guide: The retailer's rulebook for how freight reaches its warehouses: approved carriers, appointment windows, labeling, pallet specs. Violating it generates chargebacks, and the guide always wins.
Fill rate: The percentage of an order you ship complete and on time. In drug and mass channels it is non-negotiable — a purchase order you cannot fill is worse than no purchase order.
OTIF (on time in full): The scorecard version of fill rate, with fines attached for misses. The two numbers a retailer's supply chain team will know about you before the buyer does.
Lead time: The time between a PO and required delivery. Your production, freight and customs clearance have to fit inside it — every time, not just on the first order.

Group four

The performance.

The numbers that decide whether a listing survives its first year.

Velocity (units per store per week): The number buyers actually manage: how fast one SKU sells in one store in one week. Velocity — not revenue — decides whether you survive the first reset.
ACV (all-commodity volume): Distribution weighted by store sales rather than store count. Sixty percent ACV means your product sits in stores generating sixty percent of category sales — a very different claim from “in sixty percent of stores.”
Sell-through: Sales to the end shopper, as opposed to sell-in to the retailer. Only sell-through keeps you on the shelf; the first order is the retailer's bet, the reorder is the verdict.
Scan data: Register data showing what actually sold, by store and week. Retailers share it through portals and data services — it is the evidence base for every expansion conversation you will ever have.
Promotional lift: The sales increase during a promotion, measured against your baseline weeks. The figure your trade spend is judged on — and the reason promotions without a baseline are just discounts.
Reset: When the retailer re-merchandises the category to the new planogram. The moment slow movers get delisted and new items get their facing. Everything about year one is timed around it.