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.
Gross Items Sold | Number of items sold before accounting for product returns |
Net Items Sold | Number of items sold after accounting for product returns |
Gross Revenue | Revenue generated before accounting for product returns |
Net Revenue | Revenue generated after accounting for product returns |
CM1 | Contribution Margin 1, calculated as the sum of Net Revenue minus the sum of Cost of Goods Sold (COGS) |
All metrics can be broken down by variant, product, category or brand to see their individual performance - you can even add up to 3 data points to easily compare their development.
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.
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.
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