Top sellers: 4% of our range generates 80% of our turnover
Of the almost 3.5 million products in the Digitec Galaxus range, around 600,000 were purchased at least once in the last three months. The online retailer generates 80 per cent of its sales with just 4 per cent of its product range – the top sellers. Nevertheless, less popular products are almost as important for success.
We humans are simultaneously loners and herd animals; while many of us impatiently wait for the next iPhone, very few are hobby anglers on the hunt for sturgeons. Still, Digitec Galaxus offers both mainstream phones and specialised equipment for fishing fanatics – true to the slogan «Pretty much everything».
An analysis of all sales in the last quarter of 2021 shows just how important top sellers such as iPhones, Pampers diapers and ink cartridges are for Digitec Galaxus. According to the report, the online retailer generated 80 per cent of its sales during this period with just 4.4 per cent of its range.
In Switzerland and Liechtenstein, customers of the consumer electronics provider digitec and online department store Galaxus had a total of 3.4 million products to choose from. Of these, customers looked at only half – or just under 1.8 million. Overall, only one in six available products were purchased at least once. In Germany, the numbers are even more staggering: there, just under two per cent of the product range is responsible for 80 per cent of turnover.
The chicken or the egg? Both!
To a large extent, the top sellers coincide with the products that Digitec Galaxus has in its stock. In Switzerland, namely at the sites in Wohlen, Dintikon, Nebikon and Roggwil, the online retailer had an average of 180,000 different products in stock last quarter; the shelves and pallets were almost completely filled for Christmas shopping. Currently, there are around 170,000 products in stock. In Krefeld, Germany, roughly 35,000 different products were in stock in December 2021.
Does this mean that in-stock products only sell so well precisely because they’re in stock and will be delivered more quickly? «Yes and no,» says Osman Erdogan, who, as Head of Platform Business Management, knows this topic inside out: «We stock products that our experience and algorithms show will sell well – and the short delivery time makes them all the more popular.»
9 out of 10 products are stored elsewhere
What the online retailer stocks also depends on the season. Take outdoor pools, for example. They’re as unpopular in January as ice picks are in midsummer. Regardless, customers can buy either of these year round. Digitec Galaxus owes this mainly to its network of affiliated manufacturers as well as to its intermediary and marketplace retailers, some of which are highly specialised. The latter will soon also be available in Germany and Austria. This network accounted for more than 90 per cent of the entire range last quarter. Many of these products haven’t been viewed or purchased a single time, at least not through digitec or Galaxus.
Even so, these niche products are important for the success of Digitec Galaxus; our fishing fanatic can also pick up a lawn chair and Lego set for her nephew’s birthday alongside the annual bulk purchase of new hooks, lines and sinkers. This is the definition of a one-stop shop; one that meets the most diverse of needs. «The width and depth of our product range is one of the most important reasons for buying from us,» says Osman. A product range is «wide» if it includes many product lines in total; it’s «deep» if it includes many variations within product lines.
Fashion range goes mostly unnoticed
What’s striking at Digitec Galaxus is the ratio between the available products in the clothing and shoes sector and those actually sold. Of the sweaters and winter boots available, only one in ten had been purchased by Swiss customers at least once in 2021. In the case of the aforementioned fishing accessories, the sales rate was as low as nine per cent. An above-average number of these items are stored at marketplace retailers.
It’s a stark contrast to toys, baby supplies and consumer electronics; in the past three months, customers purchased 42 and 37 per cent, respectively, of the available products. Correspondingly, Digitec Galaxus stocks many of these products in its own facilities.
Digitec Galaxus plans to greatly expand its product range in the coming months and years. In particular, outside its home market of Switzerland. But even in Switzerland, an online retailer can’t simply settle for its existing range; currently, around 150,000 products are dropped every month because they’re no longer being manufactured. This is referred to as «End of Life», or «EOL». Not to mention the latest cell phone, in-vogue sneakers or popular card games need to be regularly added to keep the entire range up to date.
What do you buy from Digitec Galaxus? Which hobby do you shop for at Digitec Galaxus? What would you consider to be gaps in our range? Let us know in the comments!
Visuals: made with Flourish.
At Digitec and Galaxus, I’m in charge of communication with journalists and bloggers. Good stories are my passion – I am always up to date.