Distribution Quality Index (DQI) evaluates the depth and effectiveness of your product’s retail distribution. Unlike Numeric Distribution, which focuses on how many stores your product is available in, DQI assesses how well your product performs in those stores by looking at factors such as sales throughput and assortment execution.

This KPI is essential for retail and FMCG brands looking to ensure that availability translates into actual business outcomes. It shifts the focus from just presence to performance within the covered outlets.

Why Distribution Quality Index Matters

• Measures the health of your distribution beyond just numeric reach
  
• Indicates whether products are moving consistently in each outlet
  
• Helps align supply with store potential to avoid over- or under-stocking
  
• Identifies underperforming outlets that may require support or delisting
  
• Ensures product depth through availability of core and variant SKUs
  
• Strengthens ROI on coverage and beat planning by surfacing quality gaps
  

How to Measure Distribution Quality Index

There is no universal formula for DQI, but it is typically built as a composite score based on sub-KPIs like:

• Sales per Outlet
  
• SKU Penetration
  
• Outlet Coverage Compliance
  
• Stock Availability Index
  

Brands can assign weights to each sub-KPI depending on business priorities, and track DQI as a score or index for each outlet, rep, or territory.

Example:
A brand defines DQI as a weighted index:

• 40% weight to Sales per Outlet
  
• 30% weight to SKU Penetration
  
• 20% to Coverage Compliance
  
• 10% to Stock Availability
  

DQI = (0.4 × Sales per Outlet Index) + (0.3 × SKU Penetration Index) + (0.2 × Coverage Compliance) + (0.1 × Stock Availability Score)

The output is an index score that reflects quality and depth of distribution, not just its extent.

What Drives Distribution Quality Index

Distribution Quality is influenced by multiple execution and performance variables. Key drivers include:

• Sales per Outlet
  Measures the sales productivity of each outlet covered by your field force
  
• SKU Penetration
  Tracks how many of your listed SKUs are actually being sold per outlet
  
• Visit frequency and coverage planning
  Ensures that reps return often enough to reinforce placement and address issues
  
• Merchandising and display execution
  Drives offtake by improving in-store visibility and engagement
  
• Stock availability and freshness
  Affects continuity of sales and brand trust among retailers
  

Among these, Sales per Outlet and SKU Penetration are the most direct indicators of distribution quality and will be discussed in detail next.

Sub-KPI 1: Sales per Outlet

What Is Sales per Outlet

Sales per Outlet measures the average volume or value of sales generated from each outlet where your product is available. It helps brands understand the actual productivity and return from each store being serviced.

Why Sales per Outlet Matters

• Reflects outlet-level execution quality and sell-through
  
• Helps benchmark performance by outlet type or geography
  
• Surfaces underperforming stores despite numeric coverage
  
• Indicates effectiveness of assortment, pricing, and stock levels
  
• Guides rep prioritization and resource allocation
  

How to Measure Sales per Outlet

Sales per Outlet = Total Sales ÷ Number of Outlets with Sales

Example:
If ₹10M worth of sales is generated from 2,000 active outlets:
Sales per Outlet = ₹10,000,000 ÷ 2,000 = ₹5,000 per outlet

Tips for measurement:

• Use sell-out or off-take data where available
  
• Track separately for each product line or region
  
• Compare actual vs. target sales per outlet to identify gaps
  

How to Improve Sales per Outlet

• Assign outlet-specific sales benchmarks based on historical data and outlet class
  
• Review store-level assortment and replace non-performing SKUs
  
• Train reps to identify under-leveraged potential in high-footfall outlets
  
• Revisit pricing, display, and scheme execution in low-performing stores
  
• Conduct periodic retail audits to validate data and uncover reasons for drop-offs
  

Sub-KPI 2: SKU Penetration

SKU Penetration tracks the number of your SKUs being sold per outlet out of the total listed or targeted SKUs. It reflects how deep your product assortment is in each store.

Why SKU Penetration Matters

• Ensures that your portfolio is represented and selling within each store
  
• Increases per-outlet revenue by maximizing cross-SKU sales
  
• Strengthens brand presence and dominance in the category
  
• Reduces reliance on single-product performance
  
• Indicates effectiveness of sales rep education and retailer engagement
  

How to Measure SKU Penetration

Formula:
SKU Penetration = Average number of SKUs sold per outlet ÷ Total target SKUs

Example:
If you target 5 SKUs and on average 3 are being sold per store:
SKU Penetration = 3 ÷ 5 = 60%

Best practices:

• Segment by outlet class and assign target SKUs accordingly
  
• Use POS or secondary sales data to track actual SKU-level sell-out
  
• Compare by rep, territory, or product category to uncover patterns
  

How to Improve It

• Train sales reps on portfolio selling techniques and category storytelling
  
• Offer combo deals or schemes to encourage multiple SKU uptake
  
• Ensure timely replenishment of full range of SKUs in-store
  
• Audit SKU presence and share visibility dashboards with reps
  
• Identify stores with high single-SKU dependency and add push plans
  

How These Sub KPIs Drive Distribution Quality Index

Sales per Outlet and SKU Penetration jointly reveal how effectively your brand is performing within covered stores.

• Sales per Outlet ↑, SKU Penetration constant = Improved productivity
  
• Sales per Outlet constant, SKU Penetration ↑ = Higher product depth
  
• Sales per Outlet ↑, SKU Penetration ↑ = Maximum yield and brand footprint
  

The goal is to balance both to maximize returns per store while strengthening category presence.

How to Drive Execution at Scale

• Define DQI targets and benchmarks per outlet class, rep, and territory
  
• Build a DQI dashboard that rolls up sub-KPIs for visibility at all levels
  
• Incentivize reps on quality KPIs like sales per outlet, not just numeric coverage
  
• Integrate audit workflows to validate stock, SKU availability, and sales throughput
  
• Create outlet improvement plans based on DQI score tiers
  

How BeatRoute Can Help

This is where BeatRoute’s Goal-Driven AI framework comes in.

• Track DQI components like Sales per Outlet and SKU Penetration across every outlet and rep with dynamic dashboards and KPI scorecards.
• Empower them with agentic AI workflows to drive distribution quality by improving outlet visibility, planogram execution, and on-shelf availability
• Assign points and recognition to reps who achieve multi-SKU sales, grow per-outlet revenue, or activate full-line distribution across their territory.
• Answer performance questions like “Which outlets are underperforming in SKU depth?” or “Where is Sales per Outlet below threshold?” and prompt smart workflows for immediate action.

Conclusion

Distribution Quality Index is a powerful metric that helps brands focus not just on where they are present, but how well they are performing in each store. It enables more efficient resource use, better field execution, and stronger retail outcomes.

By combining Sales per Outlet and SKU Penetration, brands can ensure every covered outlet delivers on its full potential.

👉This KPI is a core execution metric recognized across the global consumer goods and FMCG industry. It is widely used to measure field performance, outlet-level impact, and sales execution effectiveness. Tracking this KPI helps retail brands align local and national execution with broader business goals like growth strategy, market expansion, and profitability.