As a founder of a D2C brand, you know that driving sales and growth is critical to the success of your business. However, it is equally important to understand the economics of your products and channels. By analyzing your product-level profit economics, you can make informed decisions about your marketing strategy that will drive profitability and success.
At Tradexa, we run two marketplaces (Imaginext and Ruswic) and serve around 20 thousand SKUs. We have matured our machine learning algorithms and built the decision support systems to guide us in selecting products for marketing, discounting, product and advertising channel-level budgeting. This has made us profitable and has helped us scale at the same time. We offer these systems to our partner brands as well and offer them as a service also.
One of the key areas to focus on when analyzing product-level profit economics is advertising channels. Different advertising channels have different ROAS (Return on Advertising Spend) and contribute differently to each stage of the funnel. It is important to understand which channels are driving the most traffic and conversions, and at what cost.
For example, if you are running Facebook ads, Google ads and Amazon ads, you need to track the ROAS of each channel separately. You also need to understand which channel is driving traffic at the cheapest rate. By analyzing this data, you can allocate your budget to the most effective channel and optimize your campaigns for maximum ROI.
Moreover, different channels can serve different marketing purposes. For instance, social media channels are great for building brand awareness and driving consideration, while search ads are more effective at driving conversions. By understanding which channels work best for each purpose, you can tailor your marketing strategy accordingly.
Another important aspect to consider is which channel and products are contributing to better consideration. By tracking customer behavior, you can identify which channels and products are driving customers to consider your brand. This information can help you allocate your marketing budget towards the most effective channels and products.
In addition, it is important to track which advertising channels are driving sales with better ROAS. This information can help you identify which channels are most effective at driving sales and allocate your budget accordingly. By understanding which channels are contributing to better ROAS, you can optimize your campaigns and increase your profitability.
Finally, it is essential to have a clear understanding of the marketing budget for each stage of the funnel for each product. By analyzing the data, you can determine which products require more budget to drive awareness, consideration, and conversion. This information can help you allocate your marketing budget in the most efficient way possible and maximize your ROI.
In conclusion, understanding product-level profit economics is critical to the success of your D2C brand. By analyzing your advertising channels, their ROAS, and customer behavior, you can make informed decisions about your marketing strategy that will drive profitability and success. Take the time to analyze your data, and optimize your campaigns for maximum ROI.
Authored by: Mr. Ramesh Jhajharia, Co-Founder and CEO at Tradexa
