2 Days Left To Join!!

You still have time to join this run!!

Our #subscription based program continues to evolve. With this run, I am going to shift focus just a bit.

Here's what you will get:

• Your standard comp segment analysis.
• Your standard comp new + reactivated analysis.
• A continuation of a handful of rolling twelve month metrics.
• Your annual repurchase and file composition table.

Here's two new things added for this run:

• A "grid" that illustrates where changes in your customer file generate the most "leverage" ... similar to stuff we've been talking about over the past two weeks.
• Rolling Price Point Information ... one of the biggest problems I've observed in 2017 projects is that changes in price point strategy (i.e. making items more / less expensive) is generally hurting businesses. We'll explore how price point changes are impacting your business.

Cost?

• First-Time Participants = $1,800.
• Existing Participants = $1,000.

Contact me right now (kevinh@minethatdata.com) to join the program and for file requirements.

Key Dates:

• Payment is due by October 10, 2017.
• Data is due by October 15, 2017.
• Analysis will be received by October 31, 2017.

P.S.:  E-commerce is more about merchandising than technology (click here). Also notice in that article that Nike calls Amazon "soulless" ... speaking of soulless, the Feds subpoena Nike's elite basketball program (click here). Choose your partners carefully.

P.P.S.:  If half of Macy's customers are part of a loyalty program, why are retail + online sales continually shrinking (click here)?

Sierra Trading Post: They're Doing Something

I didn't expect this to pop up on my TV screen this evening:

This is a company with a strong catalog heritage (click here) ... sure they're not an independently operated cataloger, but as you know, that's a dying breed. Catalogers (and increasingly e-commerce brands ... my how things have changed on that side of the aisle) have to pick their path.

• Find a Partner.
• Find a Buyer.
• Do it Yourself, Low-Cost / No-Cost Customer Acquisition.
• Do it Yourself, Pay Tolls.

I keep getting tactical questions ... "68 pages vs. 64" ... ". The time for tactical questions is over. It's time to do something.

P.S.: I'm not saying that their TV ads are going to make a bit of difference. They may make 'em a fortune, or they may be feckless. It doesn't matter. They are doing something.

P.P.S.:  Yes, you are correct ... you saw what I was watching ...

Then The Business Really Takes Off!

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 (kevinh@minethatdata.com) if you want a comparable analysis run for your business!

What Happens When New Merchandise Productivity Flattens Out?

Here is the base forecast for the business we are analyzing.

The forecast demonstrates that declining new merchandise productivity is a problem.

What does the forecast look like when new merchandise productivity flattens out?

Two things stand out:

1. New item demand does not grow ... there is negative momentum that has been slowed, but not stopped. We're going to need a productivity improvement in new items to fuel new item growth.
2. Stopping the new item productivity slide, however, caused existing items to sell better ... up to $144,195,740 from $132,257,778.

Now, these forecasts are subject to the same issues that the "spaghetti plots" are for hurricane forecasts "x" days out. Errors tend to pile on top of each other, and the forecasts become more and more erratic.

But our modeling process suggests something important:

• If we want existing items to sell well, we need to improve new item productivity.

Tomorrow, I'll run a forecast showing what is needed to get new merchandise totals to grow again.


P.S.:  On Monday, I talked about the four paths we'll take as we move into the future.

• Find a Partner.
• Find a Buyer.
• Do it Yourself, Low-Cost / No-Cost Customer Acquisition.
• Do it Yourself, Pay Tolls.

So read this ditty (click here). Where does this fall on the continuum? And what business cannot make money on $3,000 a square foot? I have retail clients earning $150 a square foot and they're making money. You can try clever stuff ... but for crying out loud, get the CFO involved early on, ok?

Impact of New Items

When a hurricane is out in the ocean, meteorologists produce what are called "spaghetti plots" that indicate possible trajectories of the storm. This was Irma a week +/- before landfall. 

By varying initial conditions and running the simulation out in time, meteorologists get to see who might be in danger. As you can tell, there was a reasonable probability that the hurricane would hit Florida. The hurricane eventually hit Florida.

In e-commerce, comparable techniques can be applied. I like to use a time-series modeling process incorporating lags and current merchandise productivity. I'll spare you the math ... if you want to see the math, send me an email (kevinh@minethatdata.com) and I'll share the technique with you.

Here's the forecast for new/existing items, showing past year trends (black), monthly merchandise productivity (red), and future projections (green).

Each month, this company is losing nearly $28,000 of demand from new items ... in other words, new merchandise productivity is poor. Each month, this company is gaining $106,000 of demand from existing items ... in other words, existing merchandise productivity is good!

Here is the equation for the forecast for next month's new merchandise rolling twelve month total:

• 94167 + 0.988*Lag(New Item Demand) + 1.566*(Monthly New Item Productivity).

Here is the equation for the forecast for next month's exiting merchandise rolling twelve month total:

• -56,920,972 + 1.348*Lag(Existing Item Demand) + 3.470*(Monthly Existing Item Productivity) + 0.953*Lag(New Item Demand).

There are two important findings that we can derive from the equations.

• New Merchandise is not impacted by Existing Merchandise.
• When New Merchandise Productivity Improves, Existing Merchandise Sells Better.

Tomorrow, we'll investigate what happens when new merchandise productivity flattens out (instead of the current trend of negative performance).


P.S.: Yesterday I spoke of 4 options you'll have going forward.

• Find a Partner.
• Find a Buyer.
• Do it Yourself, Low-Cost / No-Cost Customer Acquisition.
• Do it Yourself, Pay Tolls.

So read this ditty about Levi's (click here). Where does this tactic fall on the continuum?

When It's Over

No, not the song from the 90s by Sugar Ray (click here) or the song from the 80s by Loverboy (click here).

An era ended in 2017 ... when it's over, something new begins. As we head to 2018, e-commerce and cataloging are going in four different directions.

1. Find a Partner (think Kohl's taking returns from Amazon).
2. Find a Buyer (think Wal-Mart buying companies like ModCloth or the QVC empire or Catalog Holding Companies).
3. Do it Yourself (with low-cost / no-cost customer acquisition programs and new merchandise brilliance ... think Duluth Trading Company).
4. Do it Yourself (tied to Google / Facebook and for catalogers the catalog co-ops ... and too often, this is the outcome - click here).

Yes, we get to pick the path we want to take. I've promoted (3), through there's nothing wrong with (1) (2) (3). But make no mistake, in 2017 folks began choosing their dance partners ... choosing too late in 2018 defaults you to (4), and you don't want to be there, now do you?

My most popular project in July - September has been my Seller / Private Equity Evaluation (click here). It's obvious what is happening as we head into 2018. If you want to know if you should pursue (1) (2) (3) (4) (5) above, send me and email (kevinh@minethatdata.com) and we'll get started figuring out what your customer file is capable of supporting, ok?

9 More Days To Join!!

You still have time to join this run!!

Our #subscription based program continues to evolve. With this run, I am going to shift focus just a bit.

Here's what you will get:

• Your standard comp segment analysis.
• Your standard comp new + reactivated analysis.
• A continuation of a handful of rolling twelve month metrics.
• Your annual repurchase and file composition table.

Here's two new things added for this run:

• A "grid" that illustrates where changes in your customer file generate the most "leverage" ... similar to stuff we've been talking about over the past two weeks.
• Rolling Price Point Information ... one of the biggest problems I've observed in 2017 projects is that changes in price point strategy (i.e. making items more / less expensive) is generally hurting businesses. We'll explore how price point changes are impacting your business.

Cost?

• First-Time Participants = $1,800.
• Existing Participants = $1,000.

Contact me right now (kevinh@minethatdata.com) to join the program and for file requirements.

Key Dates:

• Payment is due by October 10, 2017.
• Data is due by October 15, 2017.
• Analysis will be received by October 31, 2017.