CASE STUDY

How Product Bundling Analytics Helped CPG Retailer Improve its Profit Margins in the Post-Pandemic World?

Aug 21, 2022

Highlights of the Case Study: 

Particulars Description 
Client A major CPG retailer struggled with decreasing profit margins in the post-pandemic world. 
Business Challenge Our client wanted to identify assortments that regularly co-occur in transaction data and discover associations between the products customers buy to create new product bundles, pricing models, and generate a new revenue source.
Impact Quantzig offered the client a product bundling analytics solution that helped the client increase per-transaction revenue. The client could use these insights to increase unit sales.  

Game-Changing Solutions for the Retail Industry   

First, let’s take a look at the need for product bundling analytics. The generation of new revenue streams in the existing customer base is a key to growth in the retail business, as customer acquisition cost dents profit margins. Retailers must maintain their stock-keeping units (SKU) for uncleared inventory. Retailers must adopt a new approach to increase their margins with the existing customer base due to rising acquisition costs and SKU maintenance costs. However, market basket analytics solutions help retailers understand and assist in providing offers that complement customer needs and wants by forecasting their purchasing behavior. The adoption of market basket solutions in the retail industry is gaining prominence as it tracks customer purchasing trends to gain insights and determine product bundle configurations. These solutions, thus, help to boost sales and enable retailers to increase their margins and maximize their cross-selling opportunities.

The Challenges of the Client 

Our client is a major CPG retailer that wanted to scale up its margins across all its stores. The client struggled with decreasing profit margins, saturation in average order value, increasing inventory waste, and rising distribution and marketing costs.  

The client approached Quantzig for tailor-made market basket analytics and product bundling analytics solutions capable of increasing profit margins, creating new product bundles and pricing models, and generating a new revenue source. 

 

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Quantzig’s Product Bundling Analytics Solution for Retailers 

Quantzig experts deployed a market basket analytics solution that determined bundle configuration and recommended products frequently bought together with the optimal sequence. Additionally, the solution created by our experts performs bundle mining with transaction data in conjunction with item grade. The client used the market basket analytics solution to select bundles with the optimal sequence by determining the best order in which items can be put together and sold. 

Impact Analysis of Quantzig’s Product Bundling Analytics and Market Basket Analytics for CPG Retailers 

The solution offered by Quantzig helped the client increase per transaction revenue and increase unit sales growth. In addition, our combination of strategies, including category management analysis, customer analysis, and market basket analytics solutions, enabled our client to achieve economies of scale. Besides these benefits, Quantzig’s solution impacted the client’s business in the following ways: 

  • Increased sales by 10% 
  • Increased average value order by 86% post launching bundles 
  • Launched and increased mix-and-match sales accounting for 50% of online sales 
  • Increased profit margins with the same cost structure 
  • Increased share of inventory clearance bundles in sales by 40% 

Looking to emulate similar results in your organization? 

Key Outcomes:

Quantzig’s market basket analytics solution helped the client to increase its profit margins across all its stores. We offered market basket analytics solutions that helped the client identify the bundle configuration and the products frequently bought together with the optimal sequence. Our solution enabled the client to identify assortments that regularly co-occur in transaction data to discover associations between the products customers purchase and create new product bundles and pricing models to generate revenue. Our solution enabled the client to develop new product bundles and increase product sales and margins within the existing cost structure. We were able to help the client in achieving economies of scale.   

A Broad Perspective on the role of Market Basket Analytics and Product Bundling Analytics Solutions in the Retail Sector: 

The use of market basket analysis has grown significantly in the retail industry due to the number of retailers struggling with declining profit margins. Transaction data is crucial for retailers to maintain a competitive edge over their competitors. Market basket solutions are essential to capture, process, stream, and store this data. Most consumer-focused companies use transaction data to receive real-time insights on purchase behavior to understand a single and unified customer preference view. Retailers combine the online and offline purchase data to create customized offerings for their current customer base and provide incentives to attract a whole new customer segment. Therefore, retailers have started implementing Quantzig’s market basket analytics solutions to increase sales, create new bundles and assort products for existing and new customer bases, and increase their profit margins. Quantzig’s market basket analytics solutions also effectively create new pricing models, scale up per transaction revenue, and achieve economies of scale. 

Key Takeaways of Product Bundling Analytics: 

  • Increased client’s profit margins  
  • Increase in sales turnover 
  • Launch mix-and-match product bundles 
  • Decrease distribution and marketing costs 
  • Decrease inventory waste 
  • Helped in creating new pricing models 
  • Helped in launching new bundles 

Whether you’re looking to improve your profit margins or reducing marketing costs, Quantzig has something for you!

Related Articles: 

How AI Pricing Analytics Improved Store Performance by Analyzing the Competition and Adjusting Pricing Strategies? 

Market Basket Analysis Helped A Food and Beverage Manufacturer to Optimize Product Placement and Increase Sales By 54% 

A Marketing Mix Modeling Case Study on How Marketing Roi Was Optimized for an Insurance Company 

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