Here is our base case:
And here is what happens when new merchandise productivity improves to flat performance - notice that demand from new items does not grow.
And here is what happens when new merchandise productivity increases by $30,000 per month.
New merchandise no longer declines ... and existing items sizzle. The improved assortment appears to generate cross-shopping activity that benefits existing items.
These relationships exist in every business. Frequently, new merchandise performance is a catalyst that fuels the rest of the business.
And yes, when we multiply our forecasts out month-after-month, we get errors similar to the spaghetti plot used by hurricane forecasters.
But we at least get to see what "can" happen ... and that's pretty important ... in both hurricane forecasting and in e-commerce.
Contact me (email@example.com) if you want a comparable analysis run for your business!