What Is Scan Based Trading? Pay-by-Scan Explained for Wholesale Growers
If you have asked what scan based trading means for a wholesale grower, the short answer is this: it is a consignment-style arrangement where the retailer pays you only for product that sells through its registers. The industry also calls it pay on scan, or SBT. The retailer gives you bench space, your plants travel on its trucks or yours, and store point-of-sale systems report scanned sales back to you. You invoice from those scans, or the retailer self-bills from them.
For retailers, the appeal is obvious. They carry less inventory risk in perishable categories and pay only for what customers actually buy. For growers, the model can mean more shelf presence and a closer view of sell-through at each location. It also moves cost and risk onto your balance sheet.
Cash follows sell-through rather than delivery. A flat of petunias shipped in early April might not be paid for until weeks after its last plant leaves the store, depending on the retailer's reporting and payment cycle.
Who Owns the Plants, and When
Under SBT, title typically stays with the grower until the moment of sale. That has practical consequences:
- Plants on retail benches remain your inventory and should appear that way in your books.
- Unsold, dead or damaged product is usually your loss, subject to whatever allowances your agreement provides.
- Revenue is recognized as scans are reported, not when the truck is unloaded.
Agreements vary, so read program terms closely. Pay particular attention to how the contract defines shrink, who handles plant care in store, and what happens to end-of-season leftovers. If your accounting system cannot hold stock at a customer location as still yours, that gap will surface quickly. Our overview of accounting software for plant nurseries covers what to look for.
Consignment Selling vs. Vendor Managed Inventory
Growers often hear SBT and VMI mentioned in one conversation, and the two do overlap. They solve different problems, though.
VMI changes who makes replenishment decisions. Instead of a retail buyer deciding how many perennials each store needs, the supplier reviews store-level sales and stock data and decides what to ship. In garden centers, that often means grower merchandisers or route crews visiting stores, assessing benches and recommending or placing orders.
Consignment on scan changes ownership and payment timing. It answers two questions: who owns the plants sitting in the store, and when does the grower get paid? You can run VMI without consignment, where the retailer still buys on delivery, and you can sell on scan while the retailer controls ordering.
The simplest way to remember it: VMI is about who decides; SBT is about who owns product and when cash moves.
How Garden Center Programs Combine Both
Many live goods programs blend the two. The grower decides what goes to each store, owns that product until it scans, and often provides in-store labor to water, merchandise and pull dead material. That combination gives you more control over freshness and assortment, but it also concentrates risk. Overship ahead of a cold, rainy spring weekend and you own both the forecasting mistake and the plants that decline while waiting for buyers.
Consider a hypothetical grower serving 120 stores across three states. A route crew in one district reports that hanging baskets are moving fast, while another district reports soggy benches and slow traffic. Without sell-through and on-hand figures by location, the grower ships the same mix everywhere and absorbs the losses in the slow district. With good data, the crew can shift product toward stores that are actually selling. When you carry both responsibilities, store-level visibility stops being optional.
The EDI Document Trail Behind Pay-by-Scan
Electronic Data Interchange is the standardized, computer-to-computer exchange of business documents between trading partners. In consignment programs, EDI is how orders, shipments, sales and invoices move between you and the retailer. Large retail chains commonly expect suppliers to send these documents electronically rather than by email or paper, and each chain typically publishes its own implementation guidelines.
Think of the lifecycle as a chain of documents. Each one must tie to the one before it. When a link breaks, reconciliation becomes manual and margin leaks. Argos Software describes its connectivity options on its EDI and integrations page.
Purchase Order and Advance Ship Notice
The purchase order is the retailer's electronic request for product, listing items, quantities, stores and delivery dates. In the ANSI X12 standard widely used in North American retail, this is the 850 transaction. In VMI-style programs, the grower may generate the replenishment order itself, but a purchase order or equivalent reference usually still exists.
The advance ship notice (ASN, or X12 856) tells the retailer what is actually on the truck: items, quantities, carton or rack details and the destination store. It must match what was loaded. If 40 flats of begonias are ordered but 36 ship because of crop quality, the ASN needs to say 36. Otherwise the starting point for every later reconciliation is wrong.
Sales or Scan Report, Invoice and Payment
Once product is in the store, the retailer reports what sold. Many programs use a product activity report (often the X12 852) that lists units sold, and sometimes on-hand counts, by item and location for a given period. Some retailers deliver this data through a supplier portal or flat file instead. Whatever the format, this report is the basis for what you get paid.
The invoice (X12 810) should be built from scanned quantities, not shipped quantities. In some programs the retailer self-bills, generating the payable on its side, and you simply verify it. Payment then arrives, often with a remittance advice (X12 820) showing which invoices or periods the deposit covers, along with any deductions. Matching remittances back to specific stores and weeks is where many growers discover differences they did not expect.
The Risks Growers Carry Under Consignment Terms
Selling on scan moves several risks from the retailer to the grower. The most visible is shrink: the gap between what you shipped to a store and what that location reports as sold, minus any product you pulled or were credited for.
The second is cash flow. Under traditional terms, a spring shipment gets paid on a predictable schedule. Under SBT, money arrives as plants sell, after the chain processes its data and runs its payables. During peak season, when labor, fuel and input costs run highest, a large share of your working capital may be sitting in garden centers waiting for shoppers.
The third is administrative. Someone on your team has to reconcile scan reports against shipments and invoices, store by store, often across hundreds of locations and SKUs. That work does not get lighter when the season gets busy; it grows.
Where Shrink Shows Up
For live goods, shrink has several distinct sources:
- Plant loss: product that dies or declines from missed watering, heat or cold.
- Damage: broken pots, crushed flats and snapped stems during handling.
- Theft: plants that leave without being scanned.
- Mis-scans: a cashier scans one tag for several different plants, or rings a higher-priced item as a cheaper one.
- Wrong UPCs or tags: incorrect or missing tags mean sales are credited to the wrong item or not at all.
Tracking shrink by cause and by location helps you see whether a problem comes from crop quality, store care or tagging. Tag accuracy starts in your own facility, so confirm that item barcodes follow GS1 standards and that your plant label software prints what the retailer's catalog expects.
Why Reconciliation Breaks Down
Reconciliation fails when documents disagree and nobody catches it quickly. Common breakdowns include ASNs that do not match actual loads, item numbers that differ between your catalog and the buyer's, sales reports that arrive late or in an unexpected format, and invoices built from shipments instead of scans. When these mismatches live in spreadsheets, small discrepancies pile up across a season. By July, disputing a March shortage at a single store is difficult, and multiplying that across a chain turns into real money you may never recover.
What Your Grower Software Needs to Track to Make Consignment Programs Work
If you are evaluating a scan program, or already struggling under one, your systems matter as much as your crop plan. Spreadsheets can work for a handful of stores. They rarely hold up across a full spring peak with multiple retailers, frequent shipments and weekly sales reports.
The goal is simple: at any point in the season, you should be able to say what you own, where it sits, what has sold, what has been lost and what you are owed. Answering those questions requires inventory, shipping, EDI and accounting to share one set of records rather than four disconnected files. Our guide to plant nursery inventory software explains why location-level stock records matter.
A Practical Readiness Checklist
Use these questions to judge whether your systems are ready:
- Consigned inventory by store: Can you see how many units of each item you shipped to each location and still own?
- Item and UPC accuracy: Do your item numbers, UPCs and tags map cleanly to the retailer's catalog?
- ASN accuracy: Are ASNs generated from what was actually loaded, not just what was ordered?
- Scan-data import: Can you bring retailer sales reports into your system without retyping them?
- Shrink and allowance tracking: Can you record shrink by store and cause, and apply agreed allowances?
- Invoice matching: Can you match invoices or retailer self-billing to scanned quantities and flag differences?
- Cash visibility: Can your controller see the value of inventory on retail benches and expected receipts?
If several answers are no, close those gaps before expanding into more stores or more retailers.
How a WMS Supports EDI-Connected Workflows
A warehouse management system with EDI and integration features can exchange documents electronically with trading partners, so purchase orders, ship notices and invoices do not have to be keyed in by hand. Connecting order, shipping, inventory and invoicing data in one system can reduce re-keying and give your team a cleaner starting point for reconciliation. When the ASN is built from the actual load and the invoice is built from scanned quantities, the documents are far more likely to agree.
Before committing to a new retail program, list the specific EDI documents and partner connections each retailer requires, compare them against what the platform you evaluate supports, and confirm the details using your own item, store and shipment data. Ask how the system would record stock held at a customer location, how it would bring in weekly sales data, and how it would flag a gap between shipped and scanned units. Request a Demo to see Argos Software with your own order-to-cash questions in mind.