Identifying your low-performing products isn’t always simple or easy. A product might sell well but still lose money, or generate impressive revenue while high costs quietly erode profitability.
Analytics is the key to uncovering these hidden inefficiencies and optimizing your ecommerce strategy. Yet, with so much data available, knowing where to focus can feel overwhelming.
By zeroing in on the right metrics and trends, you can cut through the noise to identify and address underperformers, setting the stage for sustained growth.
Cost Reporting
Do you know exactly how much you're spending on keywords, ads, or individual channels? Tracking your ad spend isn’t just about monitoring costs—it’s about understanding profitability at the product level.
By integrating cost reporting into your analytics dashboard, you can gain a clear view of how much you’re spending on specific products or campaigns. Tools like Google Analytics 4 (GA4) now offer custom event tracking, making correlating ad spending with product performance easier. Additionally, platforms like Shopify Analytics, WooCommerce Analytics, and BigCommerce Insights provide built-in cost tracking to help you visualize which products drive returns—and which might be costing you more than they’re worth.
With cost reporting in place, you can quickly identify high-spend, low-return products and take steps to refine your strategy for improved profitability.
Conversions
A sudden drop in conversions can be a red flag, signaling issues like shifting customer preferences, ineffective marketing strategies, or product problems. However, not every dip requires panic—it might simply mean that a product is no longer in style.
Tracking conversion rates allows you to pinpoint which products are underperforming and helps you decide where to focus your efforts. For instance, if conversions for a particular item are declining, it might be time to stop allocating budget toward its promotion or consider alternative strategies, such as retargeting campaigns or shifting ad focus to better-performing products.
Platforms like Meta Ads and Google Ads offer detailed conversion tracking tools to help you monitor and optimize campaigns in real-time. Understanding these trends not only prevents wasted ad spend but also ensures your resources are focused on high-potential products.
Return Rate
A high conversion rate and low costs might make a product seem like a winner, but the return rate can tell a very different story. Products that sell well but are frequently returned often give the illusion of profitability while quietly draining your resources.
Tracking return rates allows you to identify products with recurring issues—whether it's quality concerns, inaccurate descriptions, or unmet customer expectations. High returns not only impact your revenue but also add hidden costs like restocking, shipping, and customer service efforts.
To stay ahead, analyze return data through tools like Shopify Returns Analytics or Returnly. By addressing the root causes of high returns, such as improving product descriptions or enhancing quality control, you can turn a perceived liability into an opportunity for growth.
Return on Ad Spend (ROAS), Customer Acquisition Cost (CAC), and Customer Lifetime Value (CLTV)
Understanding how much you spend to achieve a sale is essential for optimizing profitability. Metrics like Cost of Sale Percentage (COS%) and Cost per Acquisition (CPA) have traditionally been used to evaluate product performance, but modern ecommerce strategies place greater emphasis on Return on Ad Spend (ROAS) and long-term metrics such as Customer Lifetime Value (CLTV).
ROAS provides a clear picture of the profitability of your advertising efforts by measuring how much revenue is generated for every dollar spent. Shifting your focus from COS% to ROAS helps you evaluate ad performance with greater precision and align campaigns with your business goals.
In addition, tracking Customer Acquisition Cost (CAC) alongside CLTV ensures you're investing in customers who will bring value over time—not just one-off transactions.
[For actionable strategies to enhance customer value, check out 7 Actionable Tips for Improving Your Ecommerce Customer Lifetime Value]
[Additionally, ensure your tracking is optimized with this guide: How to Add UTM Tracking to Google Shopping Campaigns]
3 Ways to Cut Ad Spend Loss
Once you’ve pinpointed low-performing products, the next step is to take decisive action. Here are three effective strategies to reduce ad spend losses while optimizing your product offerings:
1. Adjust Your Ad Spend
Evaluate the specific problem with each underperforming product. For some, reducing ad spend or reallocating budgets may be the solution. For others, doubling down with optimized keywords or shifting focus to a more suitable channel can yield better results. Platforms like Meta Ads and TikTok Ads offer flexibility in targeting and bid adjustments to help you refine your campaigns.
2. Lower Prices Strategically
If a product’s conversion rate is low, consider a price adjustment to make it more competitive. Positioning the item as the best-priced option in a marketplace can help move inventory. In some cases, clearing out stock—even at a loss—may be the most cost-effective approach, freeing up resources for higher-performing products.
3. Suppress Underperforming Products
If neither price adjustments nor ad spend optimizations yield results, it may be time to suppress these products from your advertising feeds. This prevents further investment in listings that aren’t converting, helping you focus on products with higher potential.
By proactively addressing ad spend inefficiencies, you can maintain profitability while keeping your inventory strategy agile.
Or do you?
With GoDataFeed, you can go beyond simply setting up alerts. Its robust automation tools allow you to create rules that help spot underperforming products and take proactive steps when specific thresholds are met. From identifying products that fall short of profitability targets to suppressing them from your feeds, GoDataFeed simplifies performance management so you can focus on growing your business.
What’s more, you remain fully in control. Customizable performance alerts ensure you’re always informed about the actions being taken, allowing you to refine rules or step in manually whenever necessary.
For busy ecommerce merchants, this level of automation turns tedious, repetitive tasks into a hands-off process, enabling significant revenue gains without the heavy workload.
