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eCommerce Facebook Group![ABC/XYZ analysis for online retailers with DataWow [Werbung]](https://ebakery.de/wp-content/uploads/2021/03/abc-xyz-analyse-mit-datawow.jpg "ABC/XYZ analysis for online retailers with DataWow [Werbung]")
ABC/XYZ analysis for online retailers with DataWow
How to manage your portfolio with this analysis tool [Werbung]
In this DataWow tutorial we will explain how to perform an ABC/XYZ analysis for your online store or other sales platforms such as Amazon or eBay. We’ll explain what it is theoretically and apply it practically in the DataWow analytics tool for online stores.
ABC/XYZ analysis for online retailers with DataWow - the analysis tool for online retailers
This video is once again about the analysis tool for your online store and all other sales platforms – namely DataWow. If you’ve missed the other screencasts so far, feel free to catch up by checking out the DataWow playlist.
ABC/XYZ Analysis for Online Retailers - What is it?
We will now familiarize you with the ABC and XYZ analysis in DataWow, which is a very very important analysis for managing the portfolio.
We will start with the ABC analysis. This is used to illustrate which items account for the highest proportion of value. We have illustrated here all four article types that are considered in this analysis. A+ items account for only 10% of sales, whereas A products account for 10-80%, B products account for 80-95%, and C products account for the rest.
ABC Analysis Facts
Experience shows that the distribution is ultimately such that 5 – 10% of all products available and for sale are A-items. A+ items are in fact usually only 5 – 10 products in total.
Let’s take a look at how such an ABC analysis can look like in DataWow.
Practical application of ABC analysis in DataWow
As you could already read, the evaluation can be done according to the turnover or the contribution margin. In our example, we did this once according to the contribution margin. What can we read from this now. You see here there are 216 products that make up 10% of the total items, which in turn is shown here on the X axis, which is why these are considered A products and ultimately make up almost 78% of the total DB 1. 649 items are considered B-products, as they account for 30% of the total items. These account for 97.6% of total DB 1. The entire remainder then accounts for only 2.4% of the total contribution margin. From the shape of the curve that overshoots here at the end, you can see that there seem to be products that have a negative contribution margin. These should then, of course, be removed from the portfolio or priced in such a way that they ultimately show positive contribution margins.
ABC/XYZ Analysis for Online Retailers - The XYZ Clustering
So that was the ABC analysis. In addition to that, there is also the XYZ clustering, which shows the popularity of the items. In simple terms, these indicate in how many months of the past 12 months these items were sold.
If in 10 – 12 months of the last 12 months these products were sold, they are considered X products, and in 4 – 9 they are considered Y, which are mostly seasonal products.
For 1 – 3 months, they are considered Z items, which are sold more sporadically and project business, and Z* items have not been sold at all in the last 12 months. Furthermore, it is possible to perform a classification using the coefficient of variation.
On the one hand, you have the average consumption in the last 12 months of this product and look at what the standard deviation of this product is, from which the coefficient of variation is then formed.
The higher this is then the more likely it is a Z item and the lower it is the more likely it is an X item.
What may sound very theoretical and probably confusing for some people, let’s have a look at the practical side of DataWow an.
Practical application of XYZ analysis in DataWow
We see here now exactly these XYZ clusters, here above left then the number of variants. So as we’ve just established, the 6 are the A+ items, then we have just under 300 items added as A items, even more B items, then just under 700 C items and unfortunately the largest block with just under 1300 C* Z* items alone, which absolutely do not sell and alone account for a relative share of 44%. Below that, we have the inventory value, which is also the largest share in absolute terms, whereas the A+ X products account for only 4,500 compared to 55,000.
You can subdivide this here at the bottom into the individual warehouses to see what is still in which quantity in which warehouse.
ABC/XYZ Analysis for Online Retailers - A Detailed View
In order to now check the inventory in detail, e.g. in order to to know which products are mandatory to reorder, we can go into our important items so our A+X products, these 6 items would then also be found here and we can already see that the range in the last 12 months for the first 4 products are less than 1 month, so it’s time to trigger the reorder, which can be done easily with DataWow.
On the other hand, we can look in detail at the products that sell more sporadically and we see that we have both items with positive DB balance and negative DB balance.
I sort that now times after the range and would have here now starting points which products I should sell off from my portfolio then nevertheless better times, that applies to products with large stocks we now here.
For questions about the analysis tool for your online store contact us or DataWow
That was the ABC-XYZ analysis at a glance in DataWow. A very useful tool to manage your portfolio. If this has piqued your interest, feel free to check out DataWow for yourself or learn more about it in our DataWow category archive.
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