350 | How to Audit Your Product Line with Katie Hunt

Today's episode is short but very detailed, so find a quiet place to listen and grab a notebook. This is a quick training that I recorded for our LABS members. Our LABS members are Paper Camp alumni, so they have been through our intensive program. This is something that we walk you through in Paper Camp as well, but I wanted to bring it up here publicly on the podcast because I know from the 2024 survey results that many of you need to do a product audit.

In this episode, I walk you through the step-by-step instructions on how to audit your product line, including how to collect the data and what data to collect, analysis and what to look for, as well as how to apply what you're learning from the data to your business moving forward.

Today's episode is brought to you by our Paper Camp program. Paper Camp is our wholesale coaching program where we teach you everything you need to know to build strong wholesale foundations. Over the course of 4 weeks, we tackle your product line, sales tools, and marketing plan, and we even talk about how to exhibit at trade shows if that's what you want to do. We start with your product line and go into everything from how often you should be releasing new products to ensuring that your numbers are sustainable for the wholesale market and their price for profit.

Then we move into sales tools you must have for selling wholesale so you make a strong first impression with buyers like catalogs and your terms and conditions. Then, we cover marketing strategies and ways to reach various store owners.

Each week's teachings build on the previous week, and we host weekly live engaging coaching calls to answer all of your questions. We will open enrollment for our next round of Paper Camp soon, and we sell this program out every time we run it. Join the wait list and you’ll get early access to enroll.

How to Audit Your Product Line

To start an audit on your product line, you will want to pull your sales data. Whether that's from Shopify, your inventory management, or your bookkeeping. You want to review the sales data so that you can get into the details about specific SKUs and specific product categories.

The next step is to identify which product categories and SKUs are your best sellers. We also want to identify which product categories and SKUs are your lowest performers, that don’t sell well.

You’ll want to focus on a few things:

Rank by volume of sales for whatever time period you're looking at. I typically recommend you look at a 6 month or at least a year so you see market fluctuations. Look at how many were sold, what the total dollar amounts were for each product SKU, and then also by category. That gives you what your top and bottom sellers.
Go through and review your production cost for every product category that you sell. The reason for this is you want to streamline your costs. You want to lower your expenses so that you can maximize your profitability. Look at our production costs at least once a year to see how you can lower expenses.
Review your pricing and compare that to the market rates to see if you need to make any adjustments. It might be time to raise your prices. You want to be in alignment with the rest of the market.
Determine if there is any product that you should no longer sell to other sales channels. If you are looking at your cost of goods sold and you see that you can't make a profit when you sell to the wholesale market, you don't need to offer that product to both wholesale and direct-to-consumer. You can offer it only direct-to-consumer.

When you do these audits, see the numbers, and look at the pricing, it can highlight which products should be sold through which channels.

Once you have these data points, what do you do with them?

For best sellers and highest profit margin products, those are like our golden goose. These are the products that you want to focus on and put a spotlight on in your marketing, social media posts, and emails. We want to put a spotlight on the products that are 1) selling best and 2) are making us the most amount of money. When we know what our best-selling product categories are, that is where you should focus when you're deciding what new SKUs to produce for your next release.
Market your best sellers and highest profit margin products. Highlight those products front and center in your catalog. Make those products the hero image in your catalog. Put those in your craft booths and tradeshows front and center in the prime real estate.

What should you do about the lowest-performing products and categories? Before you make any rash decisions, brainstorm why these might be low performers.

Did you just release them and they haven't had any time to catch on with the market?

Have you not given them enough care in marketing around them?

Do you need to give something a little bit more time to catch on in the marketplace?

Every situation will vary slightly, but I do want you to think about why something might be a low performer before you cut it.

Once you’ve brainstormed, then you want to do the following:

Look at whether or not the products and/or category should be discontinued. If the product has been sitting there for a while and people aren’t purchasing: it’s time to discontinue. I did a podcast episode on this exact topic.
Look at what your lowest-performing products are. Knowing that helps drive your decisions for how you continue to release new products and how you market your product.
Review your pricing and production costs. You need to maximize profitability with your product line.

There were a lot of people on the 2024 State of Product Industry survey who have large product lines and that may not be serving their business well, so the fact is, every business should audit their product lines.

You should be auditing your product line at least once a year. The reason you should do this is to maximize your profits, and help you make data-driven decisions for the business, and also to help you gain clarity around where you should be focusing your time, energy, and effort.

If you have hit a plateau with wholesale, I invite to check out our program, Paper Camp. This is our group coaching program that is focused on helping you strengthen your wholesale foundation so that you have stability and profitability in your business.

Connect with Katie Hunt

Katie Hunt is a business strategist, podcaster, mentor and mama to four. She helps product based businesses build profitable, sustainable companies through her conferences, courses and coaching programs.

Website: prooftoproduct.com | Instagram: @prooftoproduct