The Situation
How a skincare brand discovered that its most successful product launches were quietly destroying profitability.
The founder believed manufacturing costs had risen. The team blamed ad spend. Operations pointed at shipping. Everyone had a theory — and nobody had looked at the data.
The Approach
GrowthBridge ran a full SKU-level margin analysis across all four channels: D2C website, Amazon, Nykaa, and offline retail. We mapped contribution margin per product, per channel — then overlaid it against revenue share.
SKU Category — Gross Margin vs Revenue Share
Revenue shareGross margin
Key Finding
42% of revenue was coming from SKUs generating less than 21% gross margin. The 12 new product launches the founder was most proud of were the primary cause of margin compression.
The Recommendations
- 01Retire 12 low-margin SKUs — all FY24 launches below 20% gross margin. Free up working capital and manufacturing capacity.
- 02Shift budget from Amazon to D2C — Amazon generated 38% of revenue at 18% net margin. D2C generated 29% at 44%. The margin differential was clear.
- 03Double down on the core 6 SKUs — 31% of revenue, 61% margin. These were the business. The rest was noise.
The Outcome
The founder could see, for the first time, which products were funding the business and which were diluting it. The decision to rationalise the SKU range was not obvious from revenue numbers. It was only visible when margin was mapped by product and channel together.
Business names, individual identifiers, and certain operational details have been changed to protect confidentiality. The analytical methodology, data patterns, and strategic findings are real. Specific figures are indicative of the patterns identified.