A risk-managed investment screen to cut out low-potential growth paths and keep capital tied to actual demand.
GitHub Project Repository: growth-budget-allocation
The Decision
A global e-commerce company operates across multiple regions but lacks clear data on where sustainable demand originates. For 2015, the company set aside an incremental $3M growth budget.
- The money was deployable only if it grew demand without increasing long-term demand risk.
- Markets should be able to absorb more investment without returns dropping off.
- Customers keep buying without constant discounts, and spending builds the core business instead of a temporary bump.
Decision Testing
Assumptions were checked against transaction data.
Market Readiness
Assumption: Spreading the budget across all active markets would maximize growth.
Demand is concentrated. Four regions (APAC, EU, US, LATAM) account for 87% of revenue and 80% of orders. EMEA and Africa lack the volume to justify spend; Canada shows weak demand health.
Insight: Spreading the budget across all active markets is not viable.
Product and Customer Segmentation
Assumption: Concentrating incremental investment on top-selling categories or high-value customers.
Below the regional level, signals break down. Technology and Furniture match Office Supplies in revenue with far fewer orders. The Home Office segment is too small and volatile.
Insight: Picking winners at this depth is too risky for a $3M commitment.
Operational Levers
Assumption: Incentives or operational levers can be used to guide incremental investment.
Discounts did not consistently link to market growth. Some large markets relied heavily on discounts while others did not. Faster shipping did not increase willingness to pay, as 60% of demand stayed in the standard tier. Nearly half of all orders were driven by discounts.
Insight: These levers show a response to incentives rather than underlying demand. This is not a sustainable foundation for spending capital.
Recommendation
The $3M growth budget should not be deployed.
None of the evaluated growth paths showed an ability to handle capital without relying on incentives or losing efficiency.
Future deployment requires:
- Restricting eligibility to APAC, EU, US, and LATAM.
- Finding a growth lever that works without increasing discounts.
