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Your Top-Selling SKU Is Leaking Money—Here’s Why


Leaking pipe.

Let’s talk about the golden child in your product lineup—the top-selling SKU. You know the one. It moves fast, racks up impressive POS numbers, and is the darling of every buyer presentation.


But behind the scenes? It may be bleeding you dry.


The Seductive Trap of Velocity

It’s easy to get mesmerized by velocity. When a product consistently flies off shelves, the instinct is to double down. Push it harder. Promote it more. Extend the line.


But here's the kicker: many suppliers never stop to ask, "At what cost?"


High velocity can mask high leakage. And in today’s retail landscape, that usually means unauthorized deductions, compliance fines, and post-audit reversals that eat away at your margin—quietly, steadily, invisibly.


Fictional Example: The $3 Million Problem

Let’s imagine a mid-sized beverage brand. Their top SKU? A sparkling water 6-pack that sells like wildfire at a major retailer. It accounts for 40% of their annual revenue.


But something’s off. Despite solid sales growth, year-end profits are flat.

They dig into the numbers and find this:

  • $3.2 million in sales revenue from that SKU

  • $267,000 lost to deductions tied to that one item


The culprits? Late delivery fines due to carrier issues, shortage claims from a mis-scanned DC pallet, non-compliance charges for barcode placement, and a slew of post-audit fines tied to promotion terms no one remembered.


This SKU was a rockstar at the register. But behind the scenes? It was being picked apart.


Why Hero SKUs Attract More Deductions

There are a few reasons top-sellers get hit hardest:

  • They ship more frequently, increasing exposure to shipping shortages, invoice mismatches, and EDI errors.

  • They’re promoted more often, multiplying the risk of missed allowances, invalid deal terms, and late billbacks.

  • Retailers apply more third-party scrutiny to high-volume items—meaning your top sellers are more likely to be flagged for compliance audits, shelf checks, and fine-tooth comb reviews from external auditing firms.

  • They attract more attention across the board—from both your team and the retailer’s, which ironically can lead to more mistakes and more eyes catching them.


And because finance teams often focus on total deduction amounts—not by SKU—these hits get buried in the averages.


Data You Should Be Tracking (But Probably Aren’t)

To catch deduction leakage tied to your top sellers, you need to track:

  • Deductions by SKU, not just by retailer

  • Chargeback types and reasons (Are shortages growing?)

  • Promotion-related errors and disputes

  • Historical patterns (Do deductions spike after each promo?)


You're operating in the dark if you're not breaking down deductions at the item level.


What To Do About It

This isn’t a “stop selling your hero SKU” moment. It’s a get-smarter-about-it moment. Here’s how:

  1. Conduct a deduction audit focused on top-selling items. Don’t let volume disguise vulnerability.

  2. Set alerts for recurring deduction reasons. If your top SKU is getting hit with late fines every month, something upstream needs to change.

  3. Talk to your broker or deduction recovery partner. The right partner will help you analyze SKU-level deduction patterns and go after what you’re owed.


The Real Cost of Not Looking

Let’s be real: in an environment of rising tariffs, freight hikes, and thinner margins, every dollar counts.


Ignoring deductions tied to your best-sellers is like celebrating a high-paying job while letting someone skim 15% off your paycheck weekly. It’s money lost. And it’s money you need—for growth, hiring, and your next retail pitch.


Take Action:

Think your best-seller is bulletproof? Look again. Let us help you uncover what your top SKU is really costing you—and how to get that money back.



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