Build the Cash Conversion View

Outcome: See how inventory commitments, lead times, ad spend, and sell-through affect cash before making commitments.

What to do in this lesson

Watch: start with the lesson video.
Learn: use the summary and key points to capture the operating principle.
Do: complete the action steps against one real product, SKU, campaign, supplier, or workflow.
Submit: write one action card with owner, evidence, next step, risk, status, and review date.

Watch

Hosted on Google Drive.

Lesson summary

This lesson teaches how to use the Scaler-OS Network’s combined rank analysis tool to identify the most profitable products in your Amazon seller portfolio. The key focus is on understanding cash flow versus profit constraints, learning new financial terminology, and using quintile metrics to prioritize your time and effort towards optimizing your top-performing SKUs.\n

Key points

Understand cash flow versus profit constraints to properly use the tool
Learn new financial terminology like quintiles to interpret the data
Identify top-contributing ASINs that drive the most financial impact
Determine which ASINs to keep in stock, optimize, or potentially discontinue
Prioritize your effort to maximize profit and cash flow

Action checklist

Watch the
and
demo videos before proceeding
Analyze your product portfolio at the parent ASIN level first
Determine which ASINs are top contributors, have potential, or should be discontinued
Use the brand growth menu to optimize the prioritized ASINs
Focus your efforts on the products that will have the greatest financial impact

Full transcript

Open transcript

Hello Titans Justin Dyson here and this is the training for the combined rank analysis in Scaler-OS tools and in this particular video we’re going to be talking about the purpose of the training, the intention behind the tool and just some prerequisites so that you get the most out of it. So let’s dive in. So what are we going to talk about as a whole? So this is going to cover the entire training module, not just this video. The first is going to be cash flow versus profit constraints, all right? You have to understand this in order to use the tool properly. So we have to talk about it and make sure you know which problem you have or maybe you have both problems. We’re going to find out. And we need to simplify some fancy financial terms, all right? There’s some new terminology that we’re going to be using that you most likely haven’t heard of before. I know when I was introduced to this and we started developing this for our internal needs. I don’t know what any of them in either. So we’re going to talk about that, break it down, keep it simple and go from there. We’re going to be using quintile metrics to prioritize your time, your cash and the effort you put into skew optimization. Now I know you probably don’t know what a quintile is. For those of you that took really high level math classes, you probably do. I didn’t. So it is a new term that we’re going to have to break down and we will do that later on. And finally, the actual strategic approach here, which is going to be going over the Scaler-OS operating system and combined rank analysis. So a brand new tool just came out within the past week. So looking forward to diving to that. And then tactically speaking, we also have to talk about what to do with the prioritization of effort that we are going to uncover. So tactically speaking, we’re going to be using the brand growth menu to figure out how to get the results that we want to improve either CM3 or profitability, whatever you want to call it, and cash flow. So who is this training for? It’s not for everyone. If you don’t have at least five ASINs, ideally five parent ASINs, this is not going to be super beneficial. And that’s because we’re going to be splitting your product portfolio into quintiles. It quintiles a group of five. If you have less than five, we can’t make a group of five. So if you don’t have five ASINs, this is not something you really should be focused on. You should be more focused on launching more products so that this analysis will actually become useful. So if you are a seller who has a very large product portfolio, whether it’s variations or parent ASINs, it doesn’t really matter. The bigger your product portfolio is, the more impactful this training is going to be because it’s going to really help you analyze the data faster and with much more clarity. So ultimately the goal of the combined rate analysis is the pinpoint exactly which ASINs you need to focus on to solve whatever specific financial need you have in your business. Okay, that’s the ultimate goal here and that’s what we’re going to uncover. So intended uses, right? We need to identify which products are contributing the most to our financials, all right? There’s various components of financials. So we need to, we’re going to talk about that in detail. This is going to help us determine which ASINs must stay in stock because they’re at top priority. These are the ASINs that are literally driving the most financial contribution to your business. We need to know exactly which ones those are. This is not, and usually is not revenue based, okay? This is the one kind of drawback that most of us sellers make. We want to focus on our top sellers, but a lot of times our top sellers are actually not always the products that are delivering the highest financial impact. So we want to make sure we know which ASINs are actually delivering high profit, high cash flow into our business. We also need to determine which ASINs could be a top contributor, but currently aren’t. So if we know we have some ASINs that are doing all right, but if we just make a few small tweaks, we could actually make them a big contributor to profit and cash flow, then we want to know which ones those are. We also need to know which ASINs we need to ignore. So again, if you have a large product portfolio, the whole point of this is to prioritize your effort. And if we know that there are some ASINs where we can literally ignore them and it won’t hurt, nor help us, then let’s do that for now. Let’s ignore those and then focus on the things that are going to actually have a positive financial impact. And then fourth here, and we need to determine which ASINs we need to let go of. Okay, this analysis is going to make that pretty darn clear. If you have stuff that you’ve been selling for, you know, a year, two years, three years, it’s not profitable, doesn’t have good cash flow. Why do you keep it around? Why do you keep putting cash into a product that isn’t going to give you much cash back? All right, that’s kind of the point here. So ultimately, everything that we’re doing is trying to figure out how do we prioritize the effort to maximize our profit and or cash flow? All right. Now, there’s a few expectations we need to talk about. Okay, this is meant for established products. If we know that a product that is launching, we know that bundles and we know that discontinued products are not things that we want to necessarily prioritize for skew optimization. Remember, everything is about how do we improve this skew? How do we make CM1 better, CM2 better, CM3 better, conversion revenue, whatever? We know that launches have a CM123 in revenue problem. That’s why they’re in launch mode. We generally don’t focus on as Amazon sellers because Amazon doesn’t really put much weight behind them. And then if you’ve already slated something to be discontinued, you don’t really need to analyze what to do about it. You already know because you’ve already made that decision. All right. And then we are going to be analyzing at a parent ASIN level first. I’m going to reiterate this later on, but it’s super important to understand. The analysis from a parent level is the first priority here. Okay. We are focused on casual and profit at a parent level first, not per child. There’s many reasons why a child ASIN could be negative in terms of profitability. But at a parent level, that’s pretty much never true. Okay. You can use child ASIN to be a loss leader. It’s not going to be true for every brand or every product line. But that’s why we have to look at it at a parent level. If you are only running ads on one child ASIN, it’s going to look really horrible compared to the other children within that parent tree. However, that’s why we’re looking at at a parent level, okay? So again, parent ASIN should pretty much always be profitable. There are very, very few exceptions. We’re going to then analyze at a child ASIN level to understand why a certain parent ASIN may or may not be successful, right? This is technically not required. You generally don’t even have to go this deep into the analysis. But for those of you that have parents with, you know, 5, 10, 20, 30 plus variations, then this could be incredibly useful to figure out, okay. Which of the children within this parent child relationship ASIN are actually the top contributors? Which ones are not? Which ones can we discontinue and replace with something that’s going to have a much higher return on cash or profit, okay? So again, just reiterating the point here. Not everything is advertised at a child level. So your metrics are going to be kind of all over the place. And that’s why the analysis must be done separately, all right? So understanding this training kind of last bit here, a lot of what we’re going to talk about is going to be confusing until you understand everything as a whole. So I would recommend after watching this video that you watch the setting up the combined rank analysis and the navigating the data demo videos before moving forward with the rest of the training. Now you won’t get a full understanding from those videos, but you will at least know what in the world we are talking about to a much larger degree than you’re going to just going through slides. So I’d recommend watching those videos after this one and then diving into the rest of the training and basically just saying what I just said here. So after you watch those videos, come back to the slides to get more of a detailed understanding of each of the metrics, how they’re meant to be used, and all the nuance in between. So that’s it for this video. I will see y’all in the next one.

Resources

Source lesson: Cash Flow vs Profit Constraints
Resources: none attached yet.

Track: 05 — SKU Growth & Cashflow Operations
Module: Inventory & Cash Decisions