In our previous post we explored some of the key information you need about your business in orders to grow it successfully. Volo’s work with our multi-channel customers has helped us identify what we see as the 5 ‘levers’ of ecommerce growth. Each of these levers determines sales growth and can be pulled in the right direction to accelerate and maintain your sales. Becoming great at all 5 levers can have dramatic and lasting effects on your top line revenues. Good reporting and analysis gives you visibility into how you can improve in each of these areas.
The better your products and their variations are listed, and the quicker you can list them, the more likely they will be found by buyers. Reporting systems allow you to look at your ecommerce order and sales data to determine how well your items are selling, by product, over different time-frames, across regions and channels. Poorly performing items may be down to the quality of information or language that is presented to the buyers, and this analysis enables you to zero in on the areas where you can improve your listings, or indeed other determinants of success like price, and adjust your listings accordingly.
The data on your products is often down to the data you’re given by your suppliers. Being able to analyse your sales by supplier, therefore, helps you spot not only the items that are selling well with a particular supplier, but also those items that are not selling well due to inferior or inaccurate accompanying information. This is something you can then address directly with each supplier.
How much inventory?
The more inventory you have, and the more variations you can offer, the more you can sell. You need to have enough stock so that you don’t run out, suffer a stock outage and oversell. Also, many sellers use drop-ship partners to widen the breadth of inventory they can offer their customers. In this instance, you need to make sure that the information and reporting you're getting from your virtual suppliers is reliable and current. Systems like the Volo platform allow you to take in supplier feeds so that you’re analysing the total picture of your sales performance.
You need to be aware of the time it takes to sell each item of inventory – from your physical or drop-ship warehouse - and the different lead times for ordering and reordering, down to a SKU level. Good reporting will allow you to balance your stock and your sales, sliced across a range of criteria, like marketplace or channel, region, SKU and supplier.
Breaking down sales
You should use a master/sub SKU report to break down sales by variant for a selected time period. Review your best sellers within the range and ensure that the popular variants such as colour and size are kept in stock and that the appropriate quantities are reordered. Studying the sales velocity of your items will also indicate which items are increasing or decreasing their velocity. Items that are increasing are clearly your key to ecommerce sales growth in the short term. A rise in velocity may indicate that your pricing is too low and less competition may allow you to raise prices and drive better margins. These indicators will also help you decide to re-order or liquidate stock, depending on the circumstances. Using a SKU velocity report identifies risers and fallers and helps you make decisions on pricing and re-ordering.
A stock forecast report helps you see, down to the individual SKU level, how many days of stock you had left, the supplier lead time for reordering the stock, and the days until you had to re-order the stock. What's more, a zero stock report showing you how long each item was out of stock for, combined with supplier lead times, helps figure out your total elapsed time without stock. Better still, a system like Volo's platform allows you to set up automated email notification to let you know if a SKU’s stock level goes ‘amber’ or ‘red’, according to rules you put in place.
Your ecommerce channel coverage strategy encompasses your website or websites, as well as the various different marketplaces around the world and myriad other channels like price comparison sites, daily deal aggregators and so on. It also includes the traditional avenues like a physical store, mail order and telephone order. The more places you can offer the same stock, the more potential customers see your listings and the more sales you make. Being able to analyse the performance of your products across the different channels – over different time periods and perhaps also by supplier - lets you see where the growth areas are, as well as the areas for improvement.
The more promotions you do, the more you increase your sales. Analysing your sales performance allows you to identify what the best promotions are and what products suit promotions better than others. For example, let’s say that you have a best-selling laptop and you also stock a case for the laptop, which would make an ideal bundle. You can use a system like Volo Vision to analyse the customers who bought the laptop but not the case and make them an offer accordingly. Similarly, studying which SKUs sell well with other SKUs allows you to put together new bundles that you hadn't thought of but that the market is effectively identifying and demanding from you.
A crucially important commodity of your long-term success is margins and profit. If you focus all your efforts on driving sales volumes for products that yield very low profit, while ignoring products that sell at lower quantities but with much higher profit, then you need to rethink your strategy.
A multitude of costs combines to turn your gross margin into the all-important net margin on the items you sell. Having to aggregate these costs manually is extremely time consuming and laborious. Great ecommerce reporting and analysis gives you the mechanism to define all of these charges. You'll also be able to monitor performance against target across ecommerce channels, suppliers, countries, SKUs over time. For example, you can compare your margins for products below or over a certain price point.
Let’s not forget, though, that you have a business to run. Reporting resources allow you to customise your dashboard so that at a glance you can see the most important or most viewed metrics for your business. The more you can automate your reporting and analytics, setting up alerts and notifications across a range of levels and thresholds, the more time you can spend buying, marketing and selling.
Check back tomorrow for our final Reporting & Analysis in ecommerce blog...