Cash Cows, Discounts, and Delays
Discounts above 10% damage both revenue per order and margin.
A retailer wanted to know whether their discount strategy was actually doing what they thought. The answer changed how they planned the next quarter's promotions.
The dataset was 34,500 retail transactions covering 7 categories with full revenue, discount, profit, returns, and delivery data.
On revenue, Electronics dominates: RM3.3M, nearly three times the next category (Home at RM1.1M). Sports, Fashion, Beauty, Toys, and Grocery follow at progressively smaller scale. Grocery is the smallest at RM82k, and the only category running at a loss (-RM9k profit).
On discounts, the pattern was telling. Discounting was spread evenly across categories at about 5% — not strategically applied where weak categories needed help. Strong categories like Electronics were discounted just as often as weak ones like Grocery.
The discount-vs-revenue relationship was the headline. Orders without discounts averaged RM178.9 revenue per order. As discounts rose, revenue per order dropped: RM163.9 at 0–10%, RM152.3 at 10–20%, RM132.5 at 20–30%. Margins followed the same pattern: 30.1% at full price down to 19.4% at the deepest discount.
Higher discounts didn't drive bigger orders. They drove smaller ones at thinner margins. The breakpoint was clear — anything past 10% discount damages both revenue per order and profit.
On returns and delays: Fashion and Electronics carry the highest return rates (8.3% and 7.3%) and the highest delivery delays. Since they're also the biggest revenue drivers, fixing logistics here matters more than fixing it for smaller categories.
The recommendation: limit discounts to 0–10%, reposition Grocery (or scale it down), prioritize Fashion and Electronics for logistics improvements.