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Year-End Product Line Assessment

Positioning your product line for profits and growth in the coming year

Measuring success: It’s the only way to know what’s working or not working in your business.

A year-end product line assessment will measure the success of your product line’s performance over the previous year. Once you know where you stand, you’ll be able to:

  • Plan successfully for the coming year
  • Spur creative, “out of the box” thinking and sourcing strategies in the year to come
  • Avoid repeating costly mistakes
  • Identify the areas of opportunity for next year

When working with clients and students to do a product line assessment, we look at several key metrics to determine where their product lines come up short or strongly deliver.

Below are seven of those metrics to get you started with your product line assessment.

1. Look at the product line numbers

It seems like an obvious step, but you’d be surprised at the number of business owners who never take a hard look at the product line numbers.

While they may know how much revenue they generate each year, they don’t know specifically where that revenue came from—which products made them money and which ones took a loss.

While they may know how much revenue they generate each year, they don’t know specifically where that revenue came from

Now, hopefully throughout the year, you’ve been keeping track of the numbers. If not, identify these data points as best you can. Block out some time to sit down and go over these key indicators:

  • What products are selling well
  • What products have not sold or are slow sellers
  • Which of the products that are selling bring the highest profit margins
  • Which products have the lowest profit margins

2. Get laser focused on product line margins

Now that you know what’s selling and what’s not, it’s time to focus in on which products bring the highest profit margins. When you link your highest margin products directly to revenue generated, you might be surprised. Often, online merchants equate sales volume with profits. Yet, the two often don’t go hand in hand.

You may sell thousands of a low-margin item and, when you look at the numbers, realize that it was the lower volume, higher margin merchandise that brought in the most revenue.

When you’ve identified your high margin items and aligned them with total sales volume, you’re in a powerful position to be able to expand upon these types of items next year.

3. Selling slow? It must go

While identifying your top sellers and slow sellers, make a list of the slow sellers. This will be the batch of products to tag for year-end clearance.

For independent online merchants, being overstocked on dead inventory is the kiss of death for cash flow. Yet far too many online merchants hang on to slow-selling stock for too long. Now is the time to take a tough love stance with your product line, and clear it out to free up inventory capital and space for new growth!

4. Identify average order value

The easiest way to increase your income in the coming year is to map out ways to increase your average order value (AOV). Even a slight increase in AOV (achieved by selling more products or higher priced products with every order) can give a big boost to your bottom line.

Your order tracking/bookkeeping may be able to provide a report of AOVs. If not, you can calculate it yourself with this simple equation:
Total revenue generated / number of orders processed = average order value

For example:
$125,000 in sales / 5,000 orders = $25 AOV

But—and this is important—keep in mind that when looking at average order value, you’ll likely find multiple AOVs within in your product line. You may find that you have two groups of customers—one segment who regularly buys your lower-priced products up to an AOV total of $40, and another group who routinely buys your higher-end products, with an AOV of $90.

Trying to bump a $40 AOV customer to a $90 AOV customer may prove tough. You’re more likely to boost a $40 AOV customer up to $50, and a $90 AOV customer past the $100 mark.

Knowing your average order value, grouped by customer segment, is vital to your product line planning.

Your target market, and the viability of that target market, should be under constant scrutiny

5. Identify your high-growth product lines

Knowing where the product line sales and growth took place this year will help you identify new areas of growth for the coming year. For example, did your line of women’s dress shoes far surpass sales expectations? Did sales of casual flats disappoint?

Every online business has surprise growth areas. By spotlighting these growth areas, you’ll be able to plan for expansion next year.

6. Reassess your target market

When doing a product line assessment, you not only have to look at what you sell, you have to evaluate who you sell to. Your target market, and the viability of that target market, should be under constant scrutiny.

Markets change, consumer buying patterns change, trends regularly cause target markets to heat up and cool down. So before you build your future product line around your existing target market, ask yourself these questions:

  • Is your market still a profitable one?
  • Does your market have money to spend?
  • Are shoppers spending?
  • Will your market grow in the coming year?

If the answer to any of these questions is “no,” then the first order of business is to determine what new markets you’ll expand to in the coming year.

7. Get up to date on niche and product trends

Part of assessing your market is getting up to speed on your niche and product trends. Hopefully, you’re staying updated on a monthly basis. If so, this step will be easy:

Compile your year-end summary of product trends in your niche and use this to create your sourcing strategy for the coming year.

If you haven’t been keeping up on product trends, now is the time to start. Hit the Web and do some research. Look through the new supplier catalogs, catch up on your trade magazine reading, and find out what’s new, up and trending in your niche for next six to 12 months.

Putting your product line through this seven point product line assessment will empower you to make informed product sourcing business decisions.

Keep in mind that the money is in good sourcing skills. So block some time out this year and put your product line to the test.

If you’re ready to improve your product sourcing skills, Power of 10 Product Sourcing will show you how to build a successful, profitable product line, no matter what you sell or where you sell it.

About the author

Lisa Suttora
Lisa Suttora is an internationally known e-commerce expert, internet marketing strategist and veteran trend spotter. As founder and CEO of, Suttora has helped thousands of enterprising entrepreneurs build successful, niche-based online businesses. Since 2004, has provided premier education and a global community for online retailers. To get the latest on hot product niches and trends, subscribe to Suttora's free trend sheet Hot Trend Alerts. Suttora also has a 15-day e-course to help sellers make money on today's eBay. Opinions expressed here may not be shared by The Online Seller and/or its principals.

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