Why has REI's online bike accessory revenue decreased by 20% year-over-year despite increased website traffic?

Introduction

REI's 20% year-over-year decrease in online bike accessory revenue, despite increased website traffic, presents a complex challenge requiring thorough analysis. To address this issue, I'll employ a systematic approach to identify, validate, and resolve the root cause while considering both immediate and long-term implications for REI's e-commerce strategy.

Step 1

Clarifying Questions (3 minutes)

• Looking at the timing, I'm thinking there might be a seasonal component. Has this 20% decrease been consistent across all quarters, or is it more pronounced during certain periods?

Why it matters: Seasonal patterns could indicate changes in customer behavior or market trends. Expected answer: The decrease is more significant in Q2 and Q3. Impact on approach: If seasonal, we'd focus on those specific periods for targeted interventions.

• Considering the increased traffic, I'm curious about conversion rates. Has there been a change in the conversion rate for bike accessories specifically?

Why it matters: This helps isolate whether the issue is with attracting customers or closing sales. Expected answer: Conversion rates for bike accessories have dropped by 15%. Impact on approach: A conversion rate drop would shift our focus to the purchase funnel and user experience.

• Given the specificity to bike accessories, I'm wondering about inventory levels. Have there been any significant changes in the availability or variety of bike accessories offered?

Why it matters: Stock issues could directly impact sales, regardless of traffic. Expected answer: Inventory levels have remained stable. Impact on approach: If inventory is stable, we'd look more closely at pricing, presentation, or competitive factors.

• Thinking about the broader market, has there been any shift in the competitive landscape for bike accessories online?

Why it matters: New competitors or changes in competitor strategies could be drawing customers away. Expected answer: A major competitor has recently launched an aggressive pricing strategy. Impact on approach: This would lead us to analyze our pricing and value proposition more closely.