January 21, 2015

Hippoman's Big And Tall: New Item Development

Well, we identified a big problem with new items.

Now let's look at new items offered during the past four years. We'll borrow a table from my Merchandising Forensics framework.


In 2011, there were 732 new items introduced, generating $10.1 million in demand (average = $13,786 per item).

In 2012, there were 724 new items introduced, generating $10.4 million in demand (average = $14,363 per item).

In 2013, there were 622 new items introduced, generating $8.9 million in demand (average = $14,235 per item).

In 2014, there were 567 new items introduced, generating $7.0 million in demand (average = $12,323 per item).

Remember, in 2013, the increase in promotions (free shipping) masked the new item issue. New items were cut from 724 to 622 in 2013 ... and these items essentially maintained productivity per item.

In 2014, new items were cut back significantly, once again, from 724 to 622 to 567 in 2014. And without the increased glow of free shipping, productivity slumped to $12,323 per item.

In reality, without the free shipping bump in 2013, we'd observe two big trends.

  • New item offerings cratered ... 724 to 622 to 567.
  • New item productivity cratered ... $14,363 to $14,235 to $12,323 ... with the $14,235 in 2013 likely being $13,235 without the glow of free shipping increases.
Look at where demand came from (the bottom three rows of the table). Doesn't 2013 look like an outlier? It does to me. It looks like Hippoman's terminated a veritable plethora of old items, and instead featured items 1-2 years old, found that the strategy didn't work, and then held on to more of the older items in an attempt to grow productivity.

If you were me, what would you tell Mr. Hippoman?