Using In-Depth Reporting to Improve Profit Margin

This is the second post in our blog series exploring how in-depth reporting, automation and customising systems to align with your business processes can improve net margin and positively impact bottom-line profitability.

As companies endure the market pressures of 2023, in order to capitalise in 2024, being aware of net profit margin is fundamental in overall business health and sustaining profitability.

The Relationship Between Reporting and Net Margin

In this post, we discuss how robust business reporting and analytics can help protect and grow net profit margin.

As we embark on another financial year of unpredictable ecommerce behaviours, very few businesses have the luxury of large-scale product testing or reliance on gut feeling. What’s important in this financial climate is identifying which products are scalable, and which aren’t. This is not a time for product sentimentality, this is a time for cold hard data. Reporting can improve your net profit margin by identifying leaks in the bucket, isolating revenue growth opportunities and using this information to make informed buying decisions.

Identifying Leaks in the Bucket

By adopting a reporting strategy that tracks product and supplier performance across all selling channels, you can quickly identify areas of escalating costs. If your business were a bucket of water – the bucket being your business structure, the water being your profits – poorly performing products are the holes that need to be identified and sealed before they become a financial drain. Unfortunately, identifying these products is not as straightforward as understanding which products aren’t selling well.

Good reporting can identify negative trends in product performance by considering additional information, such as, costs of goods, costs of processing, velocity of sales and return rates. By getting a firm grasp on what products are wasting money, you can protect your margin before it becomes beyond your control.

Isolating Revenue Growth Opportunities

Reporting not only draws attention to areas of escalating cost but also areas of high performance. Just as poorly performing products are the leaks in your bucket, well-performing products are the tap that fills it. Success is built upon learnings from past experiences. Identifying strong performance-based data results in isolating and enhancing the pockets of growth and profitability.

Recognising the products and product placements that are profitably scalable can be hugely beneficial in protecting and growing your margin.

Informing Purchasing Strategy

Identifying areas of poor performance and isolating growth opportunities not only provides a basis of information for immediate revisions, but also supports your long-term purchasing strategy. With the right information on your buying and selling performance, you’re launched into the powerful position of locating and retaining the best and most reliable suppliers of products that sell quickly at a good profit margin.

The cost-of-living crisis has resulted in consumers who are increasingly focused on competitive pricing and finding a bargain. When providing consumers with a low-cost product, you still need to sell at a considerable margin to be profitable – to sell at a considerable margin, you need to purchase at a low cost. An informed purchasing strategy is therefore the single most important consideration when trying to improve your margins.

We know that a strong reporting system enables us to identify leaks in the bucket, isolate and enhance areas of revenue growth and create an informed purchasing strategy. However, creating a relevant reporting dashboard is time-consuming. Often the day-to-day business needs take precedence and reporting takes a back seat. Software that builds in-depth intuitive reports, such as Volo Vision, can streamline the reporting process and help you identify this information time-efficiently.

Where to start

Identify the data specifically relevant to maintaining your margin whilst growing profitability. This complimentary ebook on what’s important to measure is a good place to start. Armed with this information, you can then define what your analytics requirements are.

Interested in improving your ecommerce margins with great reporting analytics? Talk to us via our contact page for more information.