Effective product portfolio management requires regular review of sales and behavioral data. Here’s a practical guide on how to quickly identify products for development, optimization, or removal.
What to Look for During Portfolio Review
1. Identifying Products with the Best Dynamics
What to analyze:
- Compare the last 30 days with the previous month and the same period last year
- Pay attention to products with sales dynamics above 20%
- Check if the growth has been maintained for at least 2-3 months
Practical example: In the home accessories category, scented candles showed a 27% increase in sales compared to the previous quarter. Looking at historical data, you can see a stable upward trend over the last 4 months, suggesting a genuine change in consumer preferences rather than a temporary anomaly.
2. Analysis of View and Add-to-Cart Metrics
What to analyze:
- Products with a high view index (above 1.5)
- Ratio of add-to-cart to views (above 10%)
- Ratio of purchases to add-to-cart (below 20% indicates a potential problem)
Practical example: Urban Backpack X has a view index of 2.3 (more than twice the category average), a high add-to-cart rate (17%), but a low completion rate (only 12% of add-to-carts result in purchase). This signals high interest but some factor blocking the purchase – likely the price.
3. Assessing Price Elasticity
What to analyze:
- Products with price elasticity below 0.7 (potential for price increase)
- Products with price elasticity above 2.0 (high sensitivity to promotions)
Practical example: A premium face cream shows price elasticity of just 0.6 – a 10% price reduction increases sales by only 6%. At the same time, the margin on this product is below the category average. This is an ideal candidate for a gentle price increase.
Data Analysis Periods
For Quick Optimization (Weekly/Monthly)
30 days vs previous 30 days:
- Identifies sudden changes in sales trends
- Allows quick response to changing preferences
- Helps detect conversion issues
When to use: At weekly operational meetings, for inventory management and advertising campaigns.
For Strategic Decisions (Quarterly)
90 days vs previous 90 days and year-over-year:
- Eliminates anomalies and short-term noise
- Takes seasonality into account
- Allows for identification of true trends
When to use: During quarterly portfolio reviews, purchase planning, decisions on expanding or limiting the assortment.
Criteria for Developing vs Removing Products
Products to Develop:
- High sales dynamics (>20%) maintained for at least 3 months
- Growing view trend (>30%) with good conversion (>category average)
- Price elasticity index >1.5 (potential for promotions)
- High conversion rate compared to the category average
Practical example: The “organic hair care products” category shows a 42% year-over-year increase, a view index of 1.8, and price elasticity of 1.6. Additionally, it’s a category with high potential for repeat purchases. This is an ideal segment for expanding the assortment and increasing marketing investments.
Products to Remove:
- Sales decline >25% over the last 6 months
- Low view index (<0.7) and continuing to decline
- Conversion rate <50% of the category average
- Low and declining margin
Practical example: A series of phone accessories shows a 23% sales decline over the last 6 months, the view index has dropped to 0.5, and the conversion rate is 60% lower than the category average. At the same time, the margin has fallen from 42% to 28% over the year. These products should be removed or significantly discounted.
Regular portfolio reviews using the above framework allow you to quickly identify products that require attention and make decisions based on data rather than intuition. This 60-minute process can radically improve the efficiency of assortment management, controlling the portfolio on one hand and finding opportunities for growth on the other.