You are the PM for an e-commerce site. You see that sales have dropped 7% in the last few days? What could be wrong?

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Answers (7)

Lets first know a little bit more about the e-commerce website and the event under discussion.

  1. How many geographies is it in? Assuming it is only in the US.
  2. Who are the customers? Assuming no business customers and all in the US only.
  3. Do we know what the website sells? Let’s assume shoes and related items such as Allbirds.
  4. Assuming the drop happened all of a sudden.
  5. Internal factors
    1. User journey – Customers log in, browse through the homepage recommendations or Search for the products of interest, then go to the product page before checking out (which also involves payments)
    2. A ton of factors can go wrong
      1. Log in issues
      2. recommenders not working properly – not showing the right recommendations on homepage
      3. Search not working properly leading to customers abandoning the shopping mission
      4. Checkout 404s
      5. Product OOS
  6. External factors 3. Not getting enough traffic on the website 1. Google search optimization issues 2. Ad budgets depleted 4. Ads not reaching the right audience, therefore conversion is low

Understanding the Problem:

  1. What is the relationship and ratio of Seller to Buyer? (let’s assume its a marketplace – multiple sellers to buyers)
  2. Seasonality in the drop. Are last few days weekdays/weekends? Do Sales usually drop in this timeframe MoM, YoY?
  3. Have key user metrics also dropped – number of site visits, unique first time users, returning users – basically user activation metrics?

Since the problem seems to be sudden and in the sales channel specifically, I would like to start with Internal Factors, then look at Product offerings, then move to External, and finally touch base on User related Factors. Before I begin looking into Internal Factors, I would also ask questions related to significance of the 7% drop.

  1. How young or old is the e-comm site? What is the user and seller base?
  2. What is the average weekly and monthly revenue from Sales?
  3. What is the business model of the site? Sellers sell to Buyers, and pay a percentage to the site?

Internal Factors:

  1. New features rolled out – UI/UX, new offerings?
  2. Increase in incident or bug reports? API or Auth issues detected?
  3. Changes made to sales journey?
  4. Experiments running at present, and their metrics?
  5. Seller Side changes implemented – in interface, permissions, onboarding requirements?

Product Offerings:

  1. Segmentation of sales reduction by product offerings?
  2. Changes in categorisation or definition of product categories?
  3. Addition of new Sellers, new Product Lines recently? or lack thereof and an expectation from consumers. For example Consumers expect sales during Black Friday and absence of such may lead them to other options.

External Factors:

  1. Region and other demographic segmentation of sales drop?
  2. Competition releasing new Product offerings/sales/promotions?
  3. Sentiment changes in the site value/brand?
  4. Factors leading to lower user demand due to seasonality in product offerings – winter wear is only required during winter months, so expectation of fewer sales in summer months.
  5. Shipping delays, quality of product delivered, return policy changes?

Users:

  1. Seller side business drop due to sellers moving to competition?
  2. Cart related metrics – add to cart CTR, time in cart, change in payments methods – focus on user funnel post consideration.
  3. During consideration – if CTR of add to cart is low and site visits are also dropping then product position may be in question.

First, I’d like to ask a few clarifying questions.

  • Are we focusing on a specific e-commerce site, such as Amazon, or are we thinking about this problem more broadly? -> I assumed that we are thinking about this broadly/generally.
  • Have we received any user feedback that might hint at what the problem might be? How did this sales drop come to our attention? -> I assumed that we haven’t yet received user feedback that might indicate what the problem could be and that we detected this drop internally.

So, if I am the Product Manager for an e-commerce site and sales dropped 7% in the last few days, I’d like to examine a few key questions.

First, have we experienced any technical issues that could explain this? For example, are we aware of any downtime, bugs, or other technical issues that could have prevented users from accessing our site or making purchases? If the answer is yes, then we might examine how we can improve the reliability of our site with the SRE or DevOps team. If the answer is no, then we can rule this out.

Second, is this sales drop in line with our forecasts for the year due to seasonality or other factors? I’d want to understand if we’ve seen this trend at this time of year in the past. For example, it might be common for sales to spike around the holiday season and to drop at the beginning of the year and perhaps over the summer. If the answer is yes, we might investigate ways that we can reach users or promote our site during this time of year. That is, assuming that we are looking to improve sales. If the answer is no, then we can rule this out.

Lastly, are there are changes to our product or marketing that could have impacted sales? I’d examine this question starting at the top of the user funnel and work our way down. First, has there been a change that could impact how users discover our site? For example, have we made a change to the way our site appears in search results? Or, have we changed how we advertise on other sites or social media? If the answer is yes, then we might examine how we can adjust our efforts here. If the answer is no, then we can move down the funnel. Next, we might ask this: has traffic to the site decreased? Users can only make purchases if they navigate to our site, so we might see if traffic has decreased. If it has, we might see if there is something preventing them from doing so. Is the link in an ad broken? Or, perhaps there is another reason? If the answer is no, then we can move down the funnel. Our last question might be this: have we introduced a product, feature, or change to our site in the last few days? If the answer is yes, we might examine if that release impacted other key metrics for our business or if this drop is expected. If all “guardrail” metrics indicate that this new product, feature, or change has had a negative impact, we might consider rolling back that change. If this is in line with our expectations, we might closely monitor the situation.

I would explore if this is a global or local phenomenon. Is this across devices or certain platforms only? Assuming global phenomenon and consistent decline across devices. I would explore if there was any massive downtime or data center issues that could impact it. Is there a global phenomenon such as pandemic. Assuming none of this is true. I will check if the number of users getting into my site has changed. If no I would explore the sources from these users reach my site – google searches/native searches or others. If no issues are found there I would go through the funnel and explore where in the funnel is there a drop. From search results to recommendations, pricing, do they add items to the cart. Pay methods etc.

There is drop of 7% in sales in the last few days in a ecommerce website. Based on the question this looks like a dip that occurred suddenly and isn’t gradual. I would like to start analyzing the dip based on 1. Internal factors 2. External Factors

Internal factors:

  1. Do we observe a sudden drop in the user base which is causing the drop in the drop in the sales and does the drop in users due occurring globally across other products related to the e commerce website. For ex: if we take Amazon as a ecommerce website in this example, would like to check to understand if there is a drop in users across all Amazon products globally is the reason why there is a drop in sales.
  2. If there is no change to the global users, the second check is to check the drop in active users for the website and if the drop is specific to a type of news. For Ex: newly registered users etc and see if there is any release / feature launched which is causing the drop.
  3. The other thing to check would the drop in sales is related to a specific geography , specific product, specific device , specific time (one or any of the above combinations) and some of the reasons based on the above combinations could be 1. A technical glitch 2) site down in the specific region

External factors

If none of the internal factors are impacting the drop in sales then some of the external factors could be derived with the analysis from step 3 in internal factors and validate:

  1. Holiday / off peak season – It could be very natural that this drop has been historical / seasonal
  2. Natural causes
  3. New competitor in the space (Product, Price and Processing / shipping time)
  4. Supply doesn’t meet the demand

If none of the internal reasons are the cause and if historical trends do not show this drop and natural cause is not a reason. it could be due to the competitor in the space impacting one of more of the 3P’s (Product, Price and Processing time) or the inventory. Lets assume the reason is shortage in the inventory which caused the dip.

Shortage in inventory could be because the suppliers of the product are short compared to the demand in the market , check with other competitor websites and work on the gap , we can leverage AI/ ML methodologies to identify and map the suppliers that exits and that do not and help the marketing teams to actively recruit to meet the demand.

When are you talking about Sales

  1. Is the Number of Items that have dropped or GMV dropped ?
  • If the GMV has dropped then clearly there is a drop in the Price of Items ? Is there any category or White Goods which have lead to decrease in the Price of Goods ?
  • Is there a Long Term Promotion running By the Marketing and not because of it ?

A customer Journey in a typical Market Place is that customer adds items to car Go To E-Commerce Site —–> Search—>Add Items to Bag Kart——–> Checkout/Make Payment ———–>Deliver—->Return Lets try to understand the Problem in each of the Stages one by one

  1. Has there been a compete which has lead to Reduction in Number of Users who come to E-Commerce Site and thus has lead to less Footfalls on the site
  2. Has the Site Been in a multi geo and has it been shut up due to some regulations
  3. Has the Company been in multi form factors – Website , Mobile App , Voice and has one of them been discontinued in the current scheme of thing ?
  4. Were the majority of the visitors used to come from SEO and our SEO is not performing Well or have we slipped down in the list of SEO or do majority of our visitors came from Social Media [Facebook/Instagram] and our Social Media Strategy has gone for a toss ?

Assumption —>Number of Visitors coming to the Website is the same

  1. Are our SKU’s not Discoverable and hence people come and abandon our Website ?
  2. Were there a discontinuation is one of the categories which was leading to high sales ?
  3. Is there a price differential between us and our competitor that has lead to less sales for certain categories ?
  4. Did we change our storefront which makes our products /impulsive purchase less ?
  5. Didi we discontinue some SKUs

Assumption —>No of Visitors Same , Same Items being Added , Conversion Taking a Hit

  1. While conversion of Items from Cart to Purchase , has our checkout rate dropped due to non success of Payment Gateways ?
  2. Has we discontinues our payment modes ?
  3. Have we applied some additional fees — Shipping Fees , Handling Fees or some weather induced meter?
  4. Have we made some Pincodes/Zipcodes unserviceable ?

Assumption—Visitors , Kart and Checkout Same but returns being large now

  1. Have we changed our return policy due to which ppl can return for a large amount of time
  2. Have we changed our sourcies suppliers due to which there are quality issues and high degree of returns?
  3. Have we changed our couriers due to which a lot of folks are not able to receive the items on item and hence RTO is happening ?