Endless Aisles Could Mean Endless Loss

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With the advent of the “endless aisle,” home furnishings retailers are playing a dangerous game with Profit & Loss. After all, if you’re adding new products because they look hot – you might just be missing the boat.

How?

Online retailers often overlook individual SKUs when assessing the success of their websites. The thought pattern: This sofa sells wonderfully – why not add a matching lamp and coordinating rug? Let’s throw in a free blanket and suggest a storage ottoman, too.

This is dangerous because you need to know your true cost. (True cost accounts for the labor hours, electricity, packaging, and shipping of a product – in addition to the cost of the item.) That free blanket isn’t free. It comes with an hourly rate for the employee packing it, the electricity it takes to run the distribution center, packing costs and postage. Yes, you can take steps to save on shipping costs, but at the end of the day, you also factor in the facility and payroll. When you study the product data and do the math, you might find out that you’re throwing handfuls of cash out of your beautifully dressed window!  

It’s essential to take control of your product data so that you have a clear, easy way to manage individual SKUs and in turn, more easily track Profit & Loss. This gives you the numbers you need to make an informed choice about creating packages, adding additional items to your store,    

After all, once you understand the true cost of everything in your ‘virtual’ warehouse, you can assess whether it’s a business win to pair certain items for “package pricing” or to offer a “free accessory” and/or “free shipping” to your guests.

You see, this is where the “endless aisle” gets some retailers into trouble. The time, energy and payroll that goes into moving that same item from Point B to C gets costly. That’s why, when you take control of your product data, you’re able to get the information you need on individual SKUs for improved decision making.

Then, once you read the results, you’re better educated to add items to your store that carry a higher margin and still meet the needs of your customers. (Not to mention that you’re free to delete the items weighing your business down and cutting into your bottom line.)  

Finally, analyzing the product data surrounding individual product SKUs allows you to learn more about what your customers love and leave. This lets you add similar items to keep their shopping carts full and your financial outlook bright.

Now, we want to hear from you! How do you use product data to improve your profitability? Leave a comment in the section below. And, if you’re not, it’s time to have a conversation with a member of the team. Send a note and someone will reach out with ideas about streamlining your business and improving your bottom line with improved data sets.