In the following "mini project" is a series of graphics of which I created from a dataset on sales information for a store chain. The goal of this project is to utilize elementary data, organize it into a usable format utilizing R programming software, and create a story to which we can provide insight with the graphics. In addition to the visuals, I also provide a bit of dialog on actions the firm may want to consider moving forward, this could be through the cumulation of more data in order to make further informed decisions or could also be as an exercise of caution. Enjoy!
In solving this question, we first need to understand how much we are making in gross income and where is this money coming from. In essence, we need to paint a picture as to where financial flows are coming in from to find a "hole" that could be filled. To begin, we can first place our attention on product categories. More specifically, what products are providing us with the majority of our profit? By answering this question we have the ability to see what products are in higher demand by consumers.
Above is a chart representing just that, the value of income each product group is providing the firm. As we can see, electronic accessories surpasses all other product categories with the next most profitable group, health and beauty, raking in just over $50,000 less throughout the three year period. This signals that through our consumer base, there is a higher demand for electronic products, but why and how?
Aside from product line information, we also need to know out of what locations the firm is selling out of, what are their individual contributions. We need to understand this first in order to conceive which store is having a greater impact. Now the pie chart above looks rather even at first glance. However, when we look at the additional information on total gross income per location as well as the percentage of the total profit they represent, we can see that Yangon produces more profit than its two counterparts.
Taking the prior pieces of information and putting them together, we're able to see what each stores sales look like per product line and astoundingly we can see that while yes, electronic accessories account for the majority of profits in every location, for Yangon this contribution is significant. With total gross income for electronics reaching $94,761 over the three year window, the next best product line, sports and travel, is a whopping $44,239 behind. Now aside from a pure profit perspective, we also need to account for why we are stirring so much demand in Yangon for electronic sales.
The above graph depicts what the average price per unit of each product line is and how these price variations stack in relation to each location. What we can pull from this image, taking into consideration the previous observations, is pretty significant. Yangon has high profitability in their sale of electronic accessories because taking into consideration that there is more demand for this product than all others, and in every location, we can see that by charging a lower price the firm is also attracting more customers. Also striking is that despite stores in Naypyitaw and Mandalay charging more per unit for their electronic accessories, they've still managed to hold higher profitability out of electronics. Especially in Mandalay, with electronics being the second most expensive item, we would normally assume this would create a drawback in demand.
Now we need consider what this market has looked like over time, and despite their best efforts to increase sales through lower rates on electronics, we can see here that historically the contribution electronic accessories has made towards total gross margin is diminishing. In the graphic above, since the beginning of 2017 in January, the firm has gone from a profit of $9,977 to $2,438 most recently in December of 2019.
This isn't to say, however, that his trend is being assumed in all locations. Contrary to the prior we can actually see here that the store in Yangon is really the only one seeing this dramatic runoff in profit earnings from electronics. In Mandalay and Naypyitaw, while they are experiencing decreases, they are doing so at a more gradual pace. So where is the profit potential then?
In the following charts we were able to look at an overall big picture story of the relationships present with product lines, store locations, time spans, and gross income. While in the beginning we started with a very generic finding that electronic accessories account for more contribution to gross margin than any other product line. By the time we got to our final graph we were able to see that in Yangon, a prime location for the sale of electronics, that over time they were beginning to see a drop off in this productivity. In fact, over time there was actually a decent amount of volatility in this contribution. Its appropriate here to acknowledge that Yangon had very low prices for electronics when compared to its sister stores. One could infer that we saw the increased profits in Yangon due to these lower rates.
For the firm moving forward some things are going to have to be observed and considered very carefully. While one would think that every store should just cut costs in order to increase profits, we can see here that this wasn't entirely successful for Yangon over time. As for my recommendation, despite what we thought to be a clear answer, we rather need more information. Particularly, why is it that we are seeing a drop off in electronics sales in Yangon and why are they beginning to decrease for the other two stores? We know that the lower prices can cause decreases in profits, yes, however, when analyzed alongside quantities sold, they assumed a similar trend. Additionally, we also need to know what costs are for the firm aside from general costs of the goods. What is the breakdown and where is there potential to cut costs in order to motivate higher profit productivity in other locations and product lines?