What Happens When You Sell 100 Items And You Can't Fulfill 40 Of Them?

A few days ago I shared with you how many of my items in my "shopping list" on Amazon are no longer available ... the logical outcome of tariffs ... some items will be more expensive, and when tariffs are too high other items simply aren't available anymore.

Hopefully you aren't exposed to China. Some of you are woefully exposed.

In my project work, I'm sometimes asked to demonstrate what might happen if items are simply no longer available. If a brand had 100 items and our geopolitical environment took 40 of those items away, would sales drop by 40%?

Probably not. There's a lot of product overlap.

On one recent dataset, the relationship was noisy. By product category, I measured total annual sales and total skus sold that accounted for 90% of total sales in the category (to eliminate onesey-twosey issues) ... the relationship looked like this:

It's not a perfect relationship by any stretch of the imagination (an R-Squared of about 0.50). But the relationship suggests the following:

• If you could only sell 20% of your skus, you'd generate 32% of sales.
• If you could only sell 40% of your skus, you'd generate 53% of sales.
• If you could only sell 60% of your skus, you'd generate 70% of sales.
• If you could only sell 80% of your skus, you'd generate 86% of sales.

If you worked for this brand, you'd have a reasonable idea what would happen if your exposure to China created a nightmare for you.

Of course, your mileage will vary. That's why you'll contact me (kevinh@minethatdata.com) and have me run an inexpensive pricing/forecasting project for you.