Helping a user with their magazines department


One user who recently came to us, decided to go over his magazine department to weed out those magazines that are not profitable. He asked me to help. So we decided to use one extremely powerful feature of posbrowser, its profitability section. It has become an interesting exercise.

We immediately identified that this newsagency had over the past year had sales data for 813 magazines. Immediately we saw that six magazines were so badly shoplifted the newsagency lost money on them. In those areas they are displayed, the newsagent is now thinking of putting in security cameras. About another 120 had either no recorded sales. Some the newsagency just returned them without displaying them or they were displayed but never sold. We also found many that had such bad data that we could not work with them. That left us 687 magazines to examine.

We then compared the profit to the average stockholdings using

Return on investment (ROI) = Profit/ (Average stockholding)

The graph is here.

<all graphs have been removed>

As you can see there is very little relation between how much stockholding of a magazine you have compared to the profit. If you look at the right side of the graph, you can see the problem. Many magazines with high stockholding are returning little and are just eating overdraft.

Of these 687 magazines, only 474 made the newsagency more than 10%. The newsagency was paying more on bank interest than in sales on the remaining 213 magazines. You can see the graph of the ROI% compared to number of magazines. Note all magazines with more than 49% ROI are listed here with 50% plus.

Since the newsagent believed a 25% return on investment (ROI) was required, we tested that too and found that only 296 magazines made more than 25% ROI.

He is now in the process of rearranging his magazine section.