Product Development

The product development analysis delivers deep insights about your customer experience, emerging market trends, and information about your marketing activities - enabling you to make timely business decisions that give you a head start over your competitors. So let's take a look at the Product Development!

Definitions

The report reveals the performance of your products over time. But before you dive into data analysis, let's ensure that we are on the same page with some definitions.

Items
Items represent the total units sold. Gross items sold counts every unit ordered before accounting for product returns, while net items sold reflects the remaining units after subtracting any units customers send back.

Revenue
Revenue is the total income from product sales. By default, both gross and net revenue exclude sales tax, shipping fees and are calculated after discounts. Learn more about RetentionX's revenue definitions and how to change them here. As this report analyzes revenues at a product level, net revenue is calculated by deducting the Gross Merchandise Value (GMV) of the returned items from gross revenue, regardless of a refund. Learn more here.

Returns
Returns represent the proportion of sold items that customers return; tracked both by number of units and by the Gross Merchandise Value (GMV) of the return products. The value of the return products is expressed by the Gross Merchandise Value (GMV) of those returns. RetentionX automatically attributes returns to the original order date, regardless of when a refund is processed. Learn more here.

Use Cases

If you want to make sure that you spend your time and money on the most impactful products it is important that you are aware of their performance.

1. Understand Seasonal Trends: Tracking product performance over time helps pinpoint seasonal trends. If certain products see a spike in sales during specific months, you can plan targeted promotions and inventory restocking accordingly.

2. Monitor Product Cannibalization: When launching new products, it's essential to track if they are cannibalizing the sales of existing products. If you notice that sales of an established product drop significantly after a new product launch, it may indicate that customers are opting for the new product instead. Learn more here.

3. Analyze Product Life Cycles: By comparing the performance of products over different time frames, you can understand their life cycles. For example, if a product's sales start to decline after six months, it might be time to refresh the product line or introduce a new version.

4. Optimize Marketing: By regularly monitoring which products are selling the most units and generating the highest revenue, you can identify your bestsellers. These products can be highlighted in marketing campaigns, given prime placement on your website, and stocked in larger quantities to meet demand.

5. Evaluate Pricing: Reviewing revenue and profits relative to units sold can inform your pricing strategy. If a product is selling many units but generating less revenue and profit, you may consider a slight price increase if demand remains strong. Conversely, if a product has fewer sales but high revenue per unit, ensuring the perceived value matches the price can help sustain its performance.

6. Spot Quality Issues Early: Higher-than-average return rates in certain products or categories can signal design flaws, poor materials, or manufacturing defects. Monitoring these rates lets you identify and address issues before they escalate.

7. Align Messaging with Customer Expectations: Returns often stem from a gap between marketing promises and the actual product experience. If customers return items because they don't match what was advertised, it's time to reassess your messaging.

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