When a product line fails, the post-mortem usually blames the market.
Competitors undercut us on price. Customer preferences shifted. The category matured. Demand weakened.
Rarely does anyone mention the 600 variants.
Or the fact that 400 of them sold fewer than 50 units last year. Or that maintaining the tooling, inventory, supplier relationships, and documentation for those variants cost more than the revenue they generated.
The product didn’t die because the market killed it.
It died because internal complexity made it unprofitable to keep alive.
The Pattern That Repeats
I’ve seen this play out across consumer goods, jewelry, and industrial products.
A product launches. It performs well. Someone suggests a variant to capture an adjacent segment.
Makes sense. The incremental opportunity looks attractive.
Then another variant. And another. Each one justified by a customer request, a regional preference, a competitive response, or a sales team promise.
Five years later, you have a portfolio that:
- Requires three times the supplier relationships you started with
- Maintains inventory across hundreds of SKUs with unpredictable demand
- Forces procurement to negotiate minimum order quantities that don’t align with actual sales
- Creates quality complexity because each variant introduces failure modes the others don’t have
- Demands sales team attention that gets spread thin across products that individually don’t justify the effort
And when leadership asks why margins are eroding, the answer is always external: “Pricing pressure. Market commoditization. Competitor aggression.”
No one mentions that we did this to ourselves.
What I Walked Into
When I took P&L responsibility for a jewelry business across EMEA, I inherited a portfolio that had grown organically over years.
Different metal types. Different stone qualities. Different designs for different markets. Seasonal collections. Regional exclusives. Exclusive designs for major retail partners.
We had over 600 active SKUs.
Six hundred.
Each addition had made sense in isolation:
A retail partner wanted exclusive designs for their market. Revenue opportunity: significant. Incremental cost: manageable.
A customer segment preferred different metal finishes. Revenue opportunity: moderate. Incremental cost: minimal.
Seasonal demand required limited editions. Revenue opportunity: attractive. Incremental cost: reasonable.
Every single decision was rational.
Every single decision added complexity.
And complexity has a cost that doesn’t appear in the initial business case.
The Costs No One Had Calculated
When you add a product variant, the analysis focuses on incremental revenue and direct costs.
What it misses:
Procurement impossibility. Six hundred SKUs meant managing suppliers across precious metals with volatile pricing, different stone grades with inconsistent availability, packaging variations for different markets, and seasonal materials with lead times that never aligned with demand windows. Each variant required separate minimum order quantities that we couldn’t meet at profitable volumes.
Inventory catastrophe. Demand forecasting for core products is difficult. For 600 variants—many seasonal, many regional, many requested once and never again—it’s pure speculation. We either understocked and missed the brief sales window, or overstocked and wrote off inventory that wouldn’t sell next season. Most variants fell into the second category.
Quality fragmentation. Six hundred variants meant six hundred potential failure modes. Different quality standards for different stone grades. Different plating processes for different metals. Different packaging requirements for different markets. Our quality team couldn’t possibly stay ahead of the problems. Issues surfaced as customer complaints, not internal catches.
Sales paralysis. How do you train a sales team on 600 products? You don’t. They learned 30-40 core items and guessed at the rest. Customer meetings became overwhelming. “Let me check if we have that” became the standard response. The breadth that was supposed to be our strength had become our liability.
Strategic blindness. Leadership meetings focused on firefighting: which seasonal collection was underperforming, which regional variant had inventory issues, which supplier was late on which obscure specification. We spent zero time thinking about the 20 products that actually mattered.
Each variant had looked like growth.
Together, they created the conditions for collapse.
The Analysis That Revealed Everything
I spent three months building the actual economics of the SKU portfolio.
Not the simple analysis: revenue per SKU.
The comprehensive one: fully loaded cost per SKU, including procurement time, inventory carrying cost, supplier minimums we couldn’t meet, quality management effort, sales complexity, and the opportunity cost of leadership attention.
The results were devastating.
Of our 600+ SKUs:
- 25 generated 65% of revenue and nearly 85% of profit
- 75 were marginally profitable
- 500+ were actively destroying value
Five hundred variants.
They generated revenue, yes. But maintaining them—the procurement relationships, the inventory risk, the quality management, the sales confusion, the strategic distraction—cost more than they brought in.
They weren’t unprofitable because the market was tough.
They were unprofitable because we’d built complexity into our business model that the revenue could never support.
The math was brutal: we were maintaining 500 SKUs that collectively lost money to serve customer requests that mostly never materialized at profitable volume.
The Decision No One Wanted
We killed over 400 SKUs in eight months.
Not gradually. Not tentatively.
Deliberately.
The resistance was fierce:
“But customers ask for these designs.”
“Our competitors offer more variety.”
“This retail partner expects these regional variants.”
“Sales won’t have anything to show certain segments.”
“We spent years building these supplier relationships.”
Every objection assumed that having the variant was better than not having it.
None of the objections accounted for what maintaining those variants actually cost.
What Happened Next
Revenue declined 12% in the first quarter after the cuts.
EBITDA increased 30%.
Not because we raised prices. Not because costs magically fell elsewhere.
Because we stopped bleeding money on complexity we couldn’t afford to maintain.
Procurement negotiated 40% better terms with fewer suppliers handling significantly larger volumes.
Inventory turns improved from 3.2x to 6.1x because we were forecasting demand for products that actually sold consistently.
Quality defect rates dropped 60% because the team could focus on fewer specifications and build genuine expertise with remaining suppliers.
Sales effectiveness doubled because the team could master 150 products instead of pretending to know 600.
And customers? Most didn’t notice.
The variants we killed were the ones they occasionally asked about but rarely purchased. When we tracked lost sales—customers who specifically wanted a discontinued variant and walked away—the number over 18 months was 34.
Thirty-four lost sales.
We’d been maintaining 400+ SKUs to serve 34 transactions over 18 months.
We’d confused customer curiosity with customer demand.
What My Research Later Confirmed
Years later, doing my PhD research on product policy in European e-commerce companies, I saw the pattern everywhere.
I studied the top 10 European e-commerce firms. Every one struggled with SKU proliferation.
The successful ones weren’t the ones with the largest catalogs.
They were the ones with the most disciplined catalogs.
They understood something most traditional retail misses:
Every SKU you add has a break-even volume. Below that volume, the SKU destroys value rather than creating it.
The companies that tracked this religiously—that knew their SKU-level economics including all the hidden complexity costs—were the ones with sustainable margins.
The companies that only tracked revenue per SKU were the ones slowly drowning in profitable-looking products that collectively made them unprofitable.
The jewelry business experience taught me to see this pattern.
The research confirmed it was universal.
The Uncomfortable Truth About “Customer Service”
Here’s what makes variant complexity particularly insidious:
It feels like customer service.
A customer requests something. You can deliver it. Why say no?
But “can deliver” and “should deliver” are different questions.
Of the 400+ variants we discontinued, customers had “requested” nearly all of them at some point.
Someone, somewhere, once asked for that specific combination of metal, stone, and design.
But asking once doesn’t create sustainable demand.
And maintaining a SKU costs the same whether it sells 5 units or 500 units.
The procurement relationship still needs management. The inventory still needs carrying. The quality still needs monitoring. The sales team still needs training.
Every year. Regardless of volume.
We’d been treating every customer request as if it created an obligation to maintain complexity forever.
What Complexity Actually Costs
The economics of variant complexity are simple in theory, invisible in practice.
Direct costs are easy to see: materials, manufacturing, logistics.
Indirect costs are where complexity kills you.
When I later rebuilt an e-commerce ecosystem for a consumer goods company—tripling digital revenue within months—the key wasn’t adding products.
It was integrating demand forecasting with supplier coordination. Making sure procurement and sales were optimizing for the same things.
That integration only worked because the portfolio was manageable.
If we’d had 600 SKUs with unpredictable demand patterns, the forecasting models would have been useless. Supplier coordination would have been impossible. The complexity would have made the digital growth unachievable.
The portfolio discipline from the jewelry business taught me something fundamental:
Complexity is a tax on every business process.
Procurement, operations, sales, finance, strategy—everything gets harder as variants multiply.
Most companies don’t see this because the complexity cost is distributed across functions that don’t talk to each other about it.
So leadership only sees the revenue side.
And keeps approving variants that look profitable in isolation but collectively make the business unmaintainable.
The Reframe
Here’s what twenty years across sales, procurement, and P&L management taught me:
Saying yes to a new variant isn’t a growth decision.
It’s a complexity decision.
And complexity is a cost center that grows exponentially while revenue grows linearly—if it grows at all.
The question isn’t: “Will this variant generate revenue?”
The question is: “Will this variant generate enough revenue to justify the organizational complexity it creates—forever?”
Most variants fail that test.
We launch them anyway because:
- A customer asked for it (once)
- A competitor has it (but we don’t know if it’s profitable for them)
- A market seems to want it (but one inquiry isn’t market validation)
- Sales thinks it will help close a deal (but can’t commit to volume)
We confuse one-time requests with recurring demand.
We mistake competitor offerings for market requirements.
We treat every variant as additive when each one is actually multiplicative in its complexity cost.
What I Watch For Now
In my current role managing procurement for high-tech projects, variant complexity manifests differently.
Not product SKUs. Project configurations. Engineering specifications. Supplier qualifications.
But the pattern is identical:
Each addition makes sense in isolation.
Collectively, they create complexity that makes programs harder to manage, slower to execute, and more expensive to deliver.
When I see a specification that requires a unique supplier qualification, I ask: “How many times will we use this capability?”
When engineering proposes a component variant for a specific project, I ask: “What does maintaining this variant cost us across the portfolio?”
Not to say no reflexively.
To make sure we’re choosing complexity with intention rather than accumulating it by default.
Because I’ve seen what happens when you wake up one day and realize you’re managing 600 variants that collectively destroy value.
When a product line fails, we write case studies about competitive dynamics.
We analyze pricing pressure, market shifts, customer behavior changes.
We rarely count the variants.
Or calculate what 600 SKUs actually cost to maintain once you include all the hidden complexity.
Or admit that we killed profitability ourselves through hundreds of small decisions that each made sense in isolation.
The market didn’t fail us.
We failed to recognize that complexity is a tax on the entire organization—and that most variants don’t generate enough value to pay that tax.
The companies that win aren’t the ones with the most options.
They’re the ones disciplined enough to say no to variants that would make them unprofitable to maintain.
Even when—especially when—saying no disappoints someone who requested that variant.
Because disappointing 34 customers over 18 months is better than building a business model that slowly becomes impossible to operate profitably.
Most products don’t die in competition.
They die in the complexity we build around them, one variant at a time, each one justified, none of them worth the collective burden.
And by the time we realize you’re managing 600 SKUs when 150 would be more profitable, the complexity is so embedded that unwinding it feels harder than just blaming the market.