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Graded inventory analysis

 

Graded inventory analysis displays a bar chart [displaying total value (price) by product grade] to help you get an overview of the distribution of product values at different levels in your current inventory. This report can help you understand which products you should prioritize when replenishing your inventory, and which products you shouldn’t overinvest in. If you sell out of Grade A products, you may be missing out on sales. If you have a backlog of C-grade products, you may be spending more unnecessary costs on warehousing.

 


 

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Product grade classification

In inventory management, the classic "Pareto Principle" holds that most of the system's output is produced by a small amount of input. "ABC Hierarchical Analysis" follows the Pareto Principle, divides products into three levels, and ranks each sub-style based on its sales proportion in the past 28 days of supply. Product grades are classified as follows:

  • Grade A - Best-selling products that account for a combined 80% of all merchandise sales.
  • Grade B - Products with sales totaling 15% of all merchandise sales.
  • Grade C - Products with sales totaling 5% of all merchandise sales.

 


 

ABC level product strategy

Grade A

Grade A products account for 80% of all merchandise sales and are your market's top performers. You should pay the most attention to Grade A products, as having insufficient inventory of Grade A products can severely impact your sales. For these products, consider using the following strategies:

  • Better control and protection of Class A product inventory to avoid damage and theft.
  • Grade A products should be kept in stock at all times. Consider keeping a back-up inventory of
  • Grade A products and reordering these products early before you estimate your inventory will be depleted.
  • Make Grade A products more visible in marketing content and promotions.

 

Grade B

Grade B products represent a moderate percentage of your product sales. These products are not as valuable as your Grade A products and will often fluctuate between Grade A and Grade C products. For these products, consider using the following strategies:

  • Class B products should be kept in stock at all times. Please reorder these products in a timely manner so that new stock can arrive before you expect your stock to be depleted.
  • Promote Grade B products as bundles or add-ons to Grade A products.
  • Consider using an A-grade strategy for products that occasionally become A-grade.
  • Consider using a C-grade strategy for products that occasionally become C-grade.

 

Grade C

C-grade products make up a small percentage of your merchandise sales. They are often considered "dead stock" or "slow-moving" inventory. However, they still have some sales, and selling them all could result in a poor customer experience. It's often more profitable to sell inventory and remove products from your product catalog. For these products, consider using the following strategies:

  • Sell C-level product inventory at a discount and remove the product from the product catalog when sold.
  • Boost sales by giving away free C-grade product inventory with other purchases.
  • Donate C-grade product inventory to charity.
  • Order C-grade product inventory less frequently, or order “just in time” to reduce warehouse costs.
  • Stop ordering C-level product inventory unless it serves another purpose for your business.

 


 

Graded inventory analysis

The report displays a "Total value (price) by product level" bar chart to help you get an overview of the distribution of product values at different levels in your current inventory. This report can help you understand which products you should prioritize when replenishing your inventory, and which products you shouldn’t overinvest in. If you sell out of Grade A products, you may be missing out on sales. If you have a backlog of C-grade products, you may be spending more unnecessary costs on warehousing.

This report only analyzes products that have generated sales in the past year, and sales are calculated based on the past 4 weeks (i.e. 28 days). Data is updated daily to provide the latest information.

Here are the field descriptions in the ABC Stratified Analysis report:

Field Definition
Product name The latest title of the product.
SKU specification The specification style of the sub-style. If you do not enter the information, it will be empty.
SKU The item number of the sub-style. If you do not enter the information, it will be empty.
Product grade Ratings based on the percentage of sales each sub-style accounted for over the past 28 days.
Created in last 28 days

Identifies whether the variant was created within the past 28 days.

Tracked inventory Identifies whether the product has traceable inventory. If you have not checked Tracking Inventory in Product Management, it will be No.

Ending cost

The latest cost price of the sub-style.

Ending price Latest prices for sub-styles.
Cost recorded Identifies whether the product has recorded costs. No if you did not enter costs in item management.
Sales quantity Product sales in the past 28 days. If you edited the order to reduce the number of products in the past 28 days, the sales volume may be negative.
Ending quantity The latest trackable inventory quantity for the substyle (may be negative).
Average pieces sold per day

Average pieces sold per day of the sub-style sold per day during the reporting days. Average pieces sold per day = sales quantity /reporting days

Total value(cost)

Calculate total product inventory value based on cost. Total value (cost) = Ending cost * Ending quantity

If the value of the final quantity is less than 0, the total value (cost) is 0.

Total value(price)

Total value of product inventory calculated based on price. Total value (price) = Ending price * Ending quantity

If the value of the final quantity is less than 0, the total value (price) is 0.

 


 

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