CASE STUDY
Optimizing Pricing and Markdown Strategies Using Accurate Inventory Cost Tracking
5 Stars United is a global e-commerce business generating nearly $30 million in annual revenue. With a product catalog of over 50 SKUs and variations, the company sells primarily on Amazon and has recently expanded to TikTok.
Operating across multiple countries—including the USA, UK, Canada, Mexico, Australia, and Europe—their supply chain involves multiple vendors and third-party warehouses located in different regions.
To remain competitive in the global market, 5 Stars United needed a robust inventory and financial management system to eliminate inefficiencies, streamline cost tracking, and empower data-driven pricing decisions.
Operating across multiple countries—including the USA, UK, Canada, Mexico, Australia, and Europe—their supply chain involves multiple vendors and third-party warehouses located in different regions.
To remain competitive in the global market, 5 Stars United needed a robust inventory and financial management system to eliminate inefficiencies, streamline cost tracking, and empower data-driven pricing decisions.
Challenges
Before adopting NeonPanel, 5 Stars United relied on spreadsheets to track the costs associated with purchasing, storing, and transporting inventory. This process presented several challenges:
- The team struggled to accurately allocate shared costs, such as shipping expenses, across SKUs. This lack of precision led to inconsistent cost-per-unit calculations.
- "Ballpark" estimates were often used for cost of goods sold (COGS), resulting in unreliable P&L statements and profitability analyses.
- Without clear visibility into inventory costs, the company found it difficult to optimize pricing strategies or implement precise markdowns, reducing profitability and revenue potential.
- Additionally, the accounting team faced significant inefficiencies, manually calculating COGS, asset values, and sales channel data to sync with their QuickBooks Online (QBO) account. Often working with unreliable spreadsheet data, this led to further inaccuracies in financial reporting.
Before adopting NeonPanel, 5 Stars United relied on spreadsheets to track the costs associated with purchasing, storing, and transporting inventory. This process presented several challenges.
Solution
To address these issues, 5 Stars United integrated NeonPanel into their business processes, leveraging its powerful inventory management and cost-tracking features to solve their most pressing challenges. Key aspects of the solution included:
1.Automated Cost Allocation
1.Automated Cost Allocation
- NeonPanel streamlined the allocation of shared costs, such as shipping, storage, and customs fees, across individual SKUs.
- The system integrated data from vendors and warehouses globally, providing a precise view of inventory costs, including landed costs for products sold in multiple regions.
- NeonPanel seamlessly pushed sales and expense data from sales channels, as well as COGS and asset values, directly into QBO. This eliminated the need for manual calculations by the accounting team.
- Real-time reporting tools enabled the accounting team to calculate accurate COGS, ensuring that P&L statements and profitability analyses were reliable.
- With precise cost data at their fingertips, 5 Stars United could confidently set competitive pricing and markdown strategies for their Amazon and TikTok marketplaces
Result
Within the first six months of using NeonPanel, 5 Stars United achieved measurable improvements:
- Time Savings: Automated cost tracking and QBO integration saved the accounting team over 25 hours per month, freeing them to focus on strategic tasks.
- Accurate Pricing Decisions: With reliable cost data, the team implemented a dynamic pricing strategy that increased profitability for key SKUs by 15%.
- Error Reduction: Eliminating manual spreadsheet calculations reduced errors in cost allocation and COGS reporting by 85%.
- Improved Cash Flow: Clearer cost visibility allowed the company to optimize inventory purchasing and markdown schedules, improving cash flow by 20%.
- Revenue Growth: Optimized pricing and better markdown strategies contributed to a 10% increase in revenue from Amazon sales and a 7% boost on TikTok within six months.
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