SKU-Level Analysis: The Key to Improving Overall Profitability in Retail

Standing out and staying profitable in a saturated digital market is tricky for even the most established retailers. And while every business knows that getting the right products in front of the right customers is critical, doing so isn’t always easy.

It’s all about getting visibility over both your marketing data and your operational data, and looking at your product performance at SKU level. The magic happens when retailers can connect their SKU data with their Google Shopping ads.

Google Shopping can then use the SKU performance data to optimise bidding strategies and generate more profitable return for retailers.

A lot of the most valuable information sits at the SKU level, but many retailers aren’t linking this data to their wider marketing and business decisions.

What is SKU-level analysis?

Before we get started, let’s get to the core of what stock-keeping units (SKUs) really are. Simply put, an SKU is a scannable barcode normally printed on product labels. The code contains the product details, price and manufacturer.

This means retailers can automatically track inventory and discover which products need reordering. They also provide imperative sales data.

Retailers usually use SKUs simply to track movement of inventory, but intelligent SKU-level analysis can transform retail profitability. It’s just about knowing how to interpret the data in the best ways.

Why is focusing on profitability at SKU-level important?

Collating and interpreting information from a thorough SKU-level profitability analysis can highlight vital information around ad spend and its impact. More importantly, these data-driven insights allow you to optimise that spending to maximise profits. 

The challenge is finding ways to actually work with what can be a vast amount of information. While some larger retailers have found ways to collate SKU-level data, the process is technical, complex, and almost impossible to manually replicate and maintain due to a lack of budget and resources.

It’s understandable, though, that retailers don’t often use SKU data to the best of their advantage due to it being difficult to collect and analyse data manually.

In fact, the majority of retailers don’t go into this level of granularity and only assess their product marketing performance at campaign level, meaning there might be several issues with individual products in campaigns that they have limited visibility of.

The question is, then, how can you execute effective SKU data analysis?

Level Upp.

Start making use of SKU-level data to drive profitability with your free intelligent audit.

How to gain SKU-level data

The secret to SKU success is investing in powerful machine learning technology that will automate the hard part of gaining SKU-level data so you can ensure your ad spend is being channelled into the right places.

Upp.’s machine learning technology automatically pulls all the necessary details from your existing Google Shopping Ads and Google Merchant Center integrations, to give you a clear, detailed breakdown of how your campaigns are performing.

But that’s just the tip of the iceberg. A tool like Upp. can also pull all the related costs – both variable and fixed – from your entire retail ecosystem.

As a result, you’ll have a true and complete picture of your SKU-level performance without having to use up precious resources like employee time.

Upp. provides clarity over gathered data but also equips you with insights that you wouldn’t get by manually analysing the data. Upp. automates the whole process for you and gets more intelligent over time.

How using SKU-level data improves profitability

Having SKU-level margin performance provided by an automated platform makes all the difference to profitability. You can have a better understanding of how each of your products are performing and, more importantly, you can understand what you need to do to improve your performance whilst still achieving revenue and profit goals.

SKU profitability analysis gives you a better understanding of how each of your products are performing. But the real magic happens after that, when a platform like Upp. can direct ad spend towards the right products in order to increase visibility, revenue, and profitability.

This happens in real time, meaning your ad spend is always being more precisely optimised to counter both overspending and underspending.

Here’s how that works in practice. If you have a high-margin, best-selling product with little or even no visibility on Google Shopping, Upp. will boost the marketing spend for that particular product to make it more visible to potential customers.

That way, you can be confident that your most profitable and attractive products are being viewed by higher volumes of shoppers – bringing in more sales as a result. 

Alternatively, if you have a product backed by a high marketing spend but that’s low in stock or underperforming, Upp. will pause or reduce that spend to ensure there’s no waste.

Upp. can also take SKU profitability optimisation a step further by aligning all of the marketing adjustments it makes with your overall business revenue and profitability goals.

So if you want to promote certain products or lines, it will automatically target your spend to prioritise them. 

When competition is high, performance analysis makes the difference

Retailers are facing an especially difficult retail climate, where each small improvement adds up to make a vital difference in profitability. 

Analysis is the entry point to those improvements, and technology like Upp. can transform your online presence while increasing revenue and profits by gathering, analysing, and acting on that all-important SKU-level data.