How to manage your online store’s poor performing products
Like their ‘Bricks & Mortar’ counterparts, e-commerce stores can contain thousands of products they are trying to sell to their customers. To keep your business profitable it is paramount that you know which products are flying off the shelf and which products are performing poorly.
In this article we look at how you can create a report to help you identify your non performing products. Please note, you will need to use an e-commerce extension as the data points/information you need aren’t in Magento‘s reporting functionality. In this article we are using our own product Moco Insight.
Below is the first report we recommend you create so you can readily identify your performing products.
This report contains the bare minimum number of columns you need to identify poor performing products. Further explanation of each column is:
- Product name – is self explanatory
- Product created [day] – this shows when you first listed the product on your online store
- Sold [#] – is the total number of stock you have sold for this product
- Stock levels – is how much of this product you have in stock
- Value of stock on hand [$] – is the total amount your business paid for this stock
- Unit cost [$] – how much per unit the product cost you
- Unit price [$] – how much you have listed in online
- Abandoned [#] – number of units that have been abandoned in a shopping cart
- Abandoned [$] – the total sales lost for this product in abandoned shopping carts
By combining of all the above columns you can ask the following questions for each product:
1. Does the product need more time to sell?
To answer this question you use the Product created column. The older the stock the least likely the product needs more time. You should look at how it has been promoted on your website and in your emails. You should also look at the Unit price as you may need to reduce the pricing and then market at this new price to see the impact.
2. How much is this product dragging down my online store’s profit?
Product that isn’t performing well is dragging down your store’s profit. Therefore to see how much each product is negatively impacting you profits you just need to refer to your Value of stock on hand column. You need to look at this by product and the total of your poor performing product.
The more it is negatively impact the sooner you need to do something about it. Prioritise your focus based on the product/s that are impacting the most.
3. Am I charging too much for this product?
One of the reasons a product isn’t moving can do due to the Unit price. Your Abandoned [#] column results can highlight this as an issue. Also a zero Sold [#] can be a flag for pricing as well as your product hasn’t been marketed properly.
By having the Unit cost and Unit price in the same report you can quickly see how much room you have to move in terms of discounting a product. Once discounted you need to monitor the effect of this price reduction on sales.
4. Have I been marketing this product properly?
The Sold [#] column, combined with your Abandoned [#] can give you an indication that it hasn’t had enough exposure to your customers. You can play around around with it marketing and monitor these columns to view the impact.
Also we are assuming you have analysed your stock and under taken full merchandising planning before order your products to ensure their is a prove appetite for your product amongst your audience!
This is a base report but you can also add columns such as brands, styles, types, manufacturers etc to see if there is a pattern and your online store needs to re evaluate what merchandise your purchase to sort your customers’ needs.
For Moco Insight clients when using this base report we recommend you use the following filter combinations:
The above filters sets can obviously be changed to run a range of queries. For example, if you are a fast moving fashion retailer you would change the Purchased date (by order line) to 30 days as product movement in the first 30 days is extremely important.
As a retailer it is key you identify and manage your poor performing stock. To do this we recommend you create a base report which gives you all the information you need at your finger tips to answer some business critical questions within minutes and not days/weeks when it will be too late.
We recommend you consider purchasing a Magento reporting extension as the money you save will far out way the amount you pay for the extension.