Can we improve our sales by analyzing sales/demand ratio? Well, in a perfect world, where every inquire is a real need, product is always in stock and price is unbeatable, we have that sales are same than demand, that is sales=demand. Since we are not living in the perfect world, this is not the real situation.
In order to find out real sales/demand ratio for an automotive aftermarket distributor, we chose a wholesaler that sells around 10.000 pcs/year as a case study.
We monitored the wholesaler’s ecommerce website during 6 months in order to know how many times every product was demanded by customers and during the same period we also noted how many sales the wholesaler did.
We identified first product missing in the wholesaler’s product catalog in the 749th position (ordering products by demand volume) and we analyzed all products that had the same demand level than this missing product on the wholesaler’s product catalog. These were the sales and demand figures:
Total sales for these 7 articles were 30 pieces with a 17% sales/demand ratio.
The most surprising thing was the big differences between sales/demand ratios, but, why?
We found out four different main reason:
Article-1 had out of stocks, thus product could not always be delivered.
Article-4 was not available.
Article-6 was not manufactured with the most demanded technology by market.
Article-7 had a non-competitive sale price.
After analyzing the causes, the wholesaler took following actions:
Minimum stock quantity for Article-1 was raised.
Article-4 was added into stock.
Article-6 was changed for an equivalent product with the most demanded technology.
Sale price of Article-7 was reduced.
As a result of all corrective actions taken, three months later the semestral sales projections on these 7 products raised to 57 pieces, 190% more!, with a 33% sales/demand ratio.
As we see, product catalog gaps, out of stocks and non-competitive prices, cost many sales and poor customer experience, as easy as this.
Unfortunately, we can’t change what we don’t know, this is why Big Data analysis delivers insights into customer behavior.
Big Data technology is driving revenue because it is able to deliver insights into customer behavior.
Market Expert: demand-driven assortment analysis and planning platform for automotive aftermarket parts.