Falling E-commerce Revenue and Profitability: Action Steps

Overview

One of our clients, reliant on e-commerce sales, has been experiencing month-on-month declines in revenue and profitability. The promoter seeks to understand the reasons and implement corrective measures. The client and their team have struggled to analyze relevant e-commerce data effectively, often relying on intuition over empirical evidence. LABHYANSH has recently been engaged to provide Analytical Services, focusing on data analytics for revenue-generating activities.

Initial Findings

Our analytics team conducted sessions to understand the client's business model and data sources. We gathered extensive data from e-commerce platforms and financial and sales data from the client. Key issues identified include:

• Lack of a Consolidated Data Repository: Data remains unexplored and unorganized.
• Inadequate Data Organization: No effort to structure data into meaningful performance indicators.
• Absence of a Structured Management Reporting System: No real-time data for timely decision-making.
• Limited Analytical Capability: The business team lacks the skills to interpret data effectively.

Analytical Outcomes

After structuring the data into interactive reports with key KPIs and conducting an in-depth analysis, we identified several actionable insights:

• Data-Driven Decision Making: Decisions should be based on data rather than intuition. For example, management had reduced promotional spending based on a belief that costs were too high. However, data showed that higher promotional spending correlated with increased revenue, indicating a positive return on investment for promotional activities.
• Identification of Hero Products: Focusing promotional efforts on high-performing products can maximize impact.
• Detailed Margin Analysis: Analyzing margins helps identify top contributors and underperforming products, enabling targeted efforts to improve profitability.
• Optimizing Logistics and Delivery Costs: Analyzing these costs revealed opportunities for optimization, such as consolidating delivery hubs and optimizing product weight.

Conclusion

By transforming raw data into meaningful KPIs, the client has identified bottlenecks and made informed decisions to enhance revenue, profitability, and operational efficiency. These efforts must be sustained to ensure ongoing data-driven decision-making.

At LABHYANSH, we believe that data has the power to shape your business, and we are committed to empowering you with the information you need to drive growth and success.

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