CASE STUDY – SPORTS AUTO PARTS
Like many Amazon Sellers, this auto sports parts brand was struggling with not knowing whether they were profitable. Through our custom reporting and insights, we were able to identify that, although they were profitable, there were ways to optimize their offerings and drive up overall earnings.
Why Profit Reporting?
As a business, not knowing if you’re profitable holds you back from making key business decisions that can mean the difference between long-term success or failure. It’s obvious why it is important to know if you are making money, but understanding the specific breakdown of profits is vital to help you grow your business. If you know which products actually increase your overall profits, you’ll be able to know where to invest, where to cut costs – and where to cut your losses. Once you know which products are worth your time (and how much of it), you will be able to streamline your offerings to your benefit.
By combing through all the profit data, we were able to work to optimize the brand’s inventory and focus on the products that were driving profit, leading to immediate improvements to their overall profit and gross margin.
“Profit is not the explanation, cause, or rationale of business behavior and business decisions, but the test of their validity.” –Peter Drucker
Analyzing Our Problem
In this situation, we delved into the data to determine that the cost of some of the client’s products combined with the Amazon selling fees were too high for them to ever be profitable. Some products were not worth promoting in Sponsored Ads but were worth focusing on for organic ranking. Other products were very profitable and were worth investing in more inventory. The problem then was that Amazon’s dashboard did not give the client enough insight into this breakdown.
Creating A Custom Solution
The solution was to create custom profit reporting on an ongoing basis to keep the client in the know about where they were making money and how to continue improving profits and gross margin. Directional Cue’s profit reports led to over 100% increase in these categories while bringing down COGS and time spent muddling through sales figures in Amazon’s confusing dashboard. In this case, it was vital to use supplemental reporting to be the most successful on Amazon.
PROFIT REPORTING CLIENT
Directional Cue has given us deeper insight into our products’ profitability, so we have more to invest in those that are really driving up our gross margin. We’re in a much better place in terms of understanding which products will truly grow our business now that we have
custom profit reporting.”
The key takeaway from this case study is the importance of insightful reporting for business success. If you know that you’re making money, but you don’t know exactly where it’s coming from and which products are driving that revenue, you’ll have a much harder time maintaining momentum and getting the most out of your SKUs. With custom profit reports, the client saw meaningful improvement in their Amazon business and can work smarter to make more money.
Increase in Profit
Increase in Gross Margin
Decrease in COGS
Hours Saved per Week