The Economics of Color in Retail

ONLINE Sales Trends * SHOPPING CARTS * * MARKETPLACES * PRODUCT COLORS INCREASE SALES. MAXIMIZE REVENUE. THE COMMERCE INDUSTRY CONTRIBUTED $427T TO THE U.S. ECONOMY IN 2013. THE FAST GROWING E-COMMERCE SECTOR IS SLATED TO INCREASE BY 15.5% IN 2014. TO HELP BUSINESSES KNOW WHICH COLORS TO CARRY IN A PRODUCT MIX, STITCH LABS ANALYZED $75M WORTH OF ORDERS AND 2.5M UNITS SOLD THAT HAVE A VARIANT OF COLOR. CHROMATICS vs ACHROMATICS CHROMATIC CHROMATIC CHROMATIC ACHROMATIC BLACK CHROMATIC CHROMATIC CHROMATIC CHROMATIC CHROMATIC ACHROMATIC ACHROMATIC ACHROMATIC ACHROMATIC ACHROMATIC RED ORANGE YELLOW GREEN BLUE NAVY PURPLE PINK GREY WHITE CREAM NATURAL BROWN Chromatic means being or having or characterized by hue. For the sake of this study we define chromatic hues with colors of the rainbow such as red, orange, yellow, green, blue, purple and pink (primary and seconday colors). Achromatic means having no hue, such as black, grey, and white. For the sake of this study, we stretched the definition and grouped achromatic colors with natural hues such as brown, natural and cream. Color mix is important for retailers to more options for their customers, but there are implications of introducing new colors into the product mix. PROPORTION OF SALES $26 $30 AVERAGE REVENUE As a group, achromatic products make up nearly two-thirds of all units sold. PER UNIT 37% 63% These graphs represents the average revenue per unit for products sold online, typically sold directly to the consumer. CHROMATIC ACHROMATIC CHROMATIC ACHROMATIC THE ECONOMICS OF COLOR Ultimately, it is critical for retailers to analyze each group of colors and each color individually to understand the revenue and unit implications. AVERAGE REVENUE PER UNIT BY COLOR iirtiiniini $35 $32 $34 $32 $35 $29 $20 $26 $28 $25 $27 $28 $22 $23 COLOR POPULARITY OF THE WORLD'S POPULATION CHOOSES AO 70 ITS THE 3RD MOST POPULAR COLOR SOLD DLUF AS THEIR FAVORITE COLOR. ALTHOUGH, PERCENTAGE OF TOTAL UNITS SOLD BROWN BGREY WHITE BLACK 2.4X GREEN PURPLE Y RED 34% BLACK OF ALL UNITS SALES OF COLORS ANALYZED IS A KEY COLOR TO ANY PRODUCT'S COLOR MIX. COLOR MATTERS. KNOW YOUR DATA. MAXIMIZE YOUR PROFITS. It is important to note that this data is merely a guide for businesses to make smart manufacturing and/or purchasing decisions about the colors of the products they are selling. By no means is this an exact guide to accomplish this. Each business should take care to analyze its own data to determine precisely what the appropriate color mix should be in order to maximize revenue, decrease costs, and increase inventory turn. Data used for this analysis is based on orders synced into Stitch via an online channel (shopping carts and marketplaces) from August 1, 2013 through July 31, 2014. This dataset is an aggregation of over 2.5M units sold, totalling over $75M from thousands of different businesses, spanning a wide range of products. Each product in this analysis had a color in its name and/or variations; this analysis only focuses on high volume colors from a representative set of businesses. While there is no formal definition of how many units are in an online order, typically these consumer transactions consist of 1 or 2 products per order. SOURCES: STITCH LABS • SCORE: INVENTORY CONTROL • DATAMONITOR • RESEARCH AND MARKETS EIU CHESKIN, Ostitchlabs MSI-ITM, AND CMCD/VISUAL SYMBOLS LIBRARY • EMARKETER DESIGN BY STITCH LABS [1] http://www.emarketer.com/Article/Total-US-Retail-Sales-Top-3645-Trillion-2013-Outpace-GDP-Growth/1010756 WITH OVER OVER BLUE YELLOW NATURAL PINK