Pay-by-scan and merchandising
Know what sold, what to send and what you are owed
On many pay-by-scan programs the plants on the shelf stay yours until they sell, and the retailer pays when they are scanned at the register. The agreement decides ownership, settlement and shrink terms. That makes store inventory, POS sell-through, shrink, markdowns, replenishment and settlement part of your own operation, and ECOM connects them to the invoices, deliveries and merchandising visits that surround them.
Overview
Pay-by-scan is a retail arrangement in which the retailer pays for an item when it is scanned at the point of sale, and the supplier usually owns the plants in the store until then. It is closely related to scan-based trading and consignment, and the three terms overlap in everyday use, so the agreement, not the label, decides who owns the plants, when and how payment is settled, and how shrink, markdowns, returns and disputes are handled.
Sound familiar?
Pay-by-scan moves inventory risk to the supplier, so errors in data and settlement come out of the supplier's margin.
What you see. Store inventory is estimated from deliveries minus reported sales, and visits find different counts.
What it costs. Overstocked displays, empty displays and plants that die on the shelf.
What you see. POS reports come as files, portal downloads or emails in the retailer's format.
What it costs. Manual re-keying, late replenishment and no sell-through by store.
What you see. Retailers net shrink and markdowns against settlements without store-level detail.
What it costs. Margin erosion that is not questioned because it cannot be checked.
What you see. Remittances, deposits and invoices are matched by hand.
What it costs. Disputes raised after the deadline and unapplied cash.
What you see. Merchandisers record counts and issues on paper or in messages.
What it costs. Replenishment is late, quality issues are not documented and photographs are lost.
What the operation needs
Pay-by-scan, settlement and merchandising are one process viewed from different roles, and they share the same store records.
Track the plants you own in each store from delivery through sale, loss and return, under the terms of each retailer's agreement.
Compare what the retailer pays with what your records say is due, and track differences to resolution.
Keep stores selling: visit, count, display, care for the plants and turn what you find into the next order.
Terms
The three terms are used loosely, and programs mix features of each. This table shows how they are commonly understood. The agreement for your program decides every point.
| Aspect | Pay-by-scan | Scan-based trading | Consignment |
|---|---|---|---|
| Commonly understood as | The retailer pays for an item when it is scanned at checkout. | Sales data drives settlement and often replenishment for stock the supplier owns in the store. | The supplier places stock with the retailer and keeps title until it is sold. |
| Who owns the plants in the store | Usually the supplier, until the scan. | Usually the supplier, until the sale. | The supplier, until the sale. |
| How sales are reported | From point-of-sale scans. | From point-of-sale or other sales data. | From scans, or from periodic sales reports or counts. |
| Settlement | On the retailer's schedule in the agreement. | On the schedule in the agreement. | After the sale, as the agreement sets. |
Ownership, settlement, shrink, returns and royalty accrual all follow the applicable agreement. For licensed varieties, royalties can accrue on shipment, on sale or on payment, depending on the license and customer agreement.
Worked example
This example follows one retailer program through a settlement period: what was delivered, what sold, what was lost or returned, what you expect to be paid and what arrives. The numbers are hypothetical and the terms are assumed.
Illustrative example: hypothetical numbers and terms, not customer results
| Line | Units | Amount | What it means |
|---|---|---|---|
| Opening store inventory | 2,000 | – | Plants the supplier still owns in the stores at the start of the period. |
| Delivered to stores | 10,000 | – | From delivery documents. Nothing is due on delivery, because the plants are not yet sold. |
| Sales reported by the retailer | 7,400 | $18,500 | Point-of-sale scans at the agreed $2.50 per unit. |
| Customer returns netted by the retailer | −100 | −$250 | Returned sales are taken out of the units payable. |
| Net units sold: expected payment | 7,300 | $18,250 | What your records say the retailer owes. |
| Shrink | 600 | – | Plants lost in the stores. Under the assumed terms the supplier bears the loss, so it is recorded with a cause and not billed. |
| Pulled and returned to the supplier | 300 | – | Removed by a merchandiser or driver. No payment effect, and the stock is received back. |
| Calculated closing store inventory | 3,800 | – | 2,000 + 10,000 − 7,300 − 600 − 300. Compared with counts from store visits. |
| Retailer remittance received | – | $17,800 | What arrives, as shown on the remittance advice and bank deposit. |
| Difference to expected payment | – | −$450 | $200 matches an agreed markdown allowance. The other $250 has no matching term and goes to dispute. |
In a real program the prices, shrink treatment, markdown funding and dispute window come from the retailer agreement. Differences are raised as exceptions with the delivery documents and photographs that support them.
Reports and invoices
Settlement depends on the retailer’s sales report. The process tracks expected reports, handles late and corrected ones, and produces invoices from validated sales.
A report is expected for each retailer and period. When one is overdue, the period is flagged as open, expected units can be estimated for planning only, and your team follows up with the retailer. Nothing is invoiced on an estimate unless your agreement allows it.
A corrected report is loaded as a new version. The system compares it with the original, shows the units and amount that changed, and produces a credit or adjusting invoice. The original and every later version stay on file.
Once sell-through is validated against the agreement's rules, an invoice is generated per retailer and period from net units sold at the agreed prices and posted to the ERP. Where the program has the retailer pay from its own sales report, its remittance is matched to your records instead.
When payment arrives, the remittance is matched to the invoices. Differences are listed by store and cause, routed for review, and kept with the delivery documents and photographs needed to dispute them within the retailer's window.
Nursery scenarios
Typical situations for scan-based suppliers, not customer stories. Each retailer's agreement decides the details.
The situation. Sales in one store far exceed the pattern, and the display is empty by Monday.
How ECOM helps. Sell-through data raises a replenishment need for the store, the next route includes it, and the merchandiser's visit confirms the count.
What you gain. Fewer empty displays, and less guesswork at the order desk.
The situation. A remittance arrives lower than the invoices it should cover, with deductions that are not explained.
How ECOM helps. The remittance is matched against invoices and deposits, the differences are listed by store and cause, and each is routed for review with the evidence on file.
What you gain. Questions go to the retailer while the dispute window is still open.
The situation. A visit finds plants in poor condition and a rack that is not in the planogram.
How ECOM helps. The merchandiser photographs the issue, records the removal, corrects the display and records the replacement needed.
What you gain. The issue is documented for the claim, and the store is restocked quickly.
ECOM building blocks
These products connect store data, orders, deliveries and money for scan-based programs.
ECOM's specialized drop-ship and unified commerce solution for U.S. retailers, brands, distributors and suppliers, with support for pay-by-scan models.
Remittance ingestion, bank deposit verification and invoice matching, delivering data ready to post against invoices.
Truck loading, mobile route sales, offline operation, delivery confirmation and document capture, returns and collections.
Retailer orders, ship notices, invoices, sales and inventory reports exchanged by EDI or API.
Good to know
In discovery, ECOM reviews each retailer's program documents, then confirms what data is sent and how often, how shrink, markdowns and returns are treated, remittance formats, dispute windows and invoicing rules.
Keep exploring
FAQs
Yes. ECOM supports pay-by-scan models through PRISM UniChannel and connects the data to ordering, delivery and finance. Retailer-specific requirements for data, settlement and disputes are reviewed during discovery.
Typically store-level sales from the retailer's point of sale, and sometimes store inventory or shrink figures, sent as EDI, files or portal reports. The retailer's program documents define what is available and when; ECOM reviews them with you.
Remittance data, bank deposits and invoices can be matched, and differences raised as exceptions for review. PRISM Reconcile360 provides remittance ingestion, bank deposit verification and invoice matching; each retailer's remittance format is reviewed with you.
Deductions can be recorded against the store, item and settlement they relate to, and tracked through a dispute process with the supporting records, such as delivery documents and photographs, within the retailer's dispute rules and deadlines.
Store visits, counts, display and rack filling, plant care, photographs and quality issues can be captured on a mobile device, with replenishment orders created from what the visit finds.
Markdowns and shrink are recorded by store and item where the program provides them or where your team records them on visits, so that their cost can be seen against sales and margin.
The terms overlap. In each, the supplier typically keeps ownership of the plants in the store until they sell, and payment follows the sale. Pay-by-scan ties payment to the register scan, scan-based trading emphasizes sales data driving settlement and replenishment, and consignment places stock with the retailer until it is sold, sometimes reported by count rather than by scan. Ownership, settlement and royalty accrual all follow the applicable agreement.
A missing report flags the period as open and prompts a follow-up, and nothing is invoiced on an estimate unless your agreement allows it. A corrected report is loaded as a new version, compared with the original, and produces a credit or adjusting invoice, with every version kept on file.
Tell us which retailers sell your plants on scan, how sales and settlements reach you, and how your store visits are run.
