Which Products Bike Shops Should Worry About. You'll Thank Me Later.

So many retailers struggle with what to order and when to have it in stock. Here is a simple trick to help retailers understand what really moves their business forward.

The Pareto Principle, or the 80/20 Rule, teaches us that 80% of our results come from 20% of the effort. For example, 80% of profit will come from 20% of the products offered. 80% of a technician’s time is spent on 20% of the services offered. Even 80% of sales are attributed to 20% of the staff. The percentages may not always be as clear cut as 80/20 but the idea that a large percentage of results come from a small percentage of work holds true.

Before retailers place an order it is a healthy exercise to run a Pareto analysis of the products they sell. This will help determine where to place focus.

Here is a Pareto analysis that was performed for a bike retailer. It shows that nearly 83% of their profit comes from 4 of the 12 bicycle categories they sell. They earned the bulk of their money, $152,895 dollars, from the sale of 555 bikes and building and extra 189 bikes only brought in $32,016. 

Here is a tutorial on how to perform a Pareto analysis of your own. 


Thanks for taking the time to read this far. If you found value in this piece would you please consider sharing it on social? Thanks again. Donny