Sales channel analysis with dollars and units as a dimension

Description

eCommerce, Retail, Wholesale, and some Manufacturing businesses often sell through multiple channels. These might include their own website, FBA, Walmart, Kroger, eBay, Value-Added Resellers (VARs), and so on. When analyzing these channels, using a dimension called “Channel” makes looking at sales, margins, and other KPIs per channel dramatically easier. This feature is essential to analyze sales trends, identify profitable channels, and make informed strategic decisions for the business.

Example Use Case

Scenario: A product-based company uses CPM software to track its sales performance. Two significant dimensions used in their system are SKUs and units sold. These dimensions are critical, especially when examining sales through various channels such as physical stores, e-commerce, and partner businesses.

Solution: The CPM software allows the company to track dollars and units separately, or side by side, for every sales channel. Consequently, the company can distinguish profitable channels and underperforming ones. For instance, if the brick-and-mortar stores show high units sold but low dollars, it indicates low profitability, signaling the need for review and action.

Considerations

If you are a product-based company and have not had this requirement yet, you probably will soon. The biggest challenge for most CPM systems is not necessarily the dimensionality needed to support this requirement, but the quality of the customer's data that will be imported into the CPM tool. Sales channel information may be stored at a summarized level in a general ledger (the top source system for CPM tools) but the best data is usually in an operational system like an ERP or dedicated supply chain system. Make sure you can access that data without excessive manual work, especially if you plan to run these analyses monthly. Having to invest time manually collating data every month will get burdensome, and in some cases result in the customer giving up on it over time.

It is important to note that CPM systems are NOT transactional reporting and analysis systems. That is the function of a BI tool. CPM systems will thrive when bringing over summarized unit volume data as a dimension of product, SKU, item, or whatever the business calls it and then slicing that by sales channel.

Questions to Ask a Vendor

• Report Customization: Can the reports be customized to display the specific sales channels and dimensions a business needs to focus on?
• Planning Granularity: Similar to the above, can the system accommodate these dimensions if they come from a system that is not the general ledger?
• Transactions: Is there a capability to drill through on units by sales channel into a source system?