What it means when your revenue becomes more concentrated in fewer products

Three products now generate 60% of revenue. A year ago, that same 60% came from eight products. Your bestsellers are bestselling more while everything else fades. Concentration might feel like success—you know what works. But dependence on few products creates vulnerability that can crash revenue overnight.

Revenue concentration increasing means either your top products are performing exceptionally or your other products are performing poorly. Both scenarios have different implications and require different responses.

Why revenue concentrates in fewer products

Revenue distribution reflects both product performance and discovery dynamics. Concentration increases when some products pull away from the pack or when other products fall behind.

Bestsellers captured more attention

Your merchandising, marketing, and algorithms increasingly feature top products. Bestseller badges attract more clicks. “Popular” filters surface the same items. Email campaigns feature proven performers. Success compounds as visibility concentrates on what already sells.

Check your marketing and merchandising allocation. What percentage of promotion, email features, and homepage space goes to top products versus catalog breadth? If attention concentrated, revenue concentration follows naturally.

This happens with algorithmic recommendations too. Systems trained on conversion data recommend products that already convert well, creating self-reinforcing loops. Popular products get recommended more, become more popular, get recommended more.

Long-tail products became less discoverable

Products beyond your bestsellers are harder to find. Navigation changes buried niche categories. Search functionality degraded for specific queries. Product pages for lesser-known items get less SEO attention. Customers who might want these products can’t find them.

Analyze traffic to product pages across your catalog. If traffic to non-bestseller products declined while bestseller traffic grew or held steady, discovery problems explain concentration. Products aren’t failing—they’re invisible.

Product catalog breadth decreased

You discontinued products, didn’t replenish inventory, or stopped adding new items. Fewer products available means fewer products can contribute revenue. Concentration increased because alternatives disappeared.

Compare active product count over time. If catalog shrank significantly, mechanical concentration explains the shift. Same demand distributed across fewer products means higher percentage per remaining product.

Customer preferences narrowed

Market trends shifted toward specific products or categories. What was once diverse demand consolidated around particular styles, features, or solutions. Your bestsellers align with current preferences while other products don’t.

Check if concentration reflects category-level shifts. If entire categories of products declined together while others grew, market preference changes drive concentration. You’re selling what customers want—they just want fewer different things.

Pricing or promotions favored specific products

Discounts, promotions, or pricing changes made certain products dramatically better value. Customers rationally shifted toward promoted items. Concentration increased because some products became obviously better deals.

Review promotional history for concentrated products. If they received disproportionate discounting, price-driven demand explains concentration. Remove the promotion and see if concentration persists.

Risks of revenue concentration

Concentration creates specific vulnerabilities:

Single product failure becomes crisis

If one product generates 30% of revenue and that product fails—supplier issue, quality problem, competitive displacement, trend ending—you lose 30% of revenue instantly. Diversified revenue absorbs single-product problems; concentrated revenue doesn’t.

Supplier and inventory risk compounds

Concentrated revenue means concentrated supplier dependence. One supplier’s problems become your problems. One inventory stockout affects massive revenue percentage. Diversification spreads these risks across more products and suppliers.

Growth becomes harder

Bestsellers have limits. Market saturation, production constraints, or competitive pressure eventually cap any product’s growth. If most revenue comes from few products, those products’ limits become your limits. Diversified revenue has more growth vectors.

Customer relationships narrow

Customers who only buy one or two products have weaker relationships than customers who buy across categories. Concentrated revenue might mean concentrated customer needs—fewer reasons to return, fewer products to explore, weaker loyalty.

Diagnosing your concentration increase

Understand what’s driving the shift:

Revenue distribution over time: Track what percentage of revenue comes from top 3, top 10, and top 20 products. Increasing concentration shows in rising percentages for smaller product groups.

Product page traffic distribution: Is traffic concentrating like revenue? If yes, discovery problems might exist. If traffic is more distributed than revenue, conversion differences explain concentration.

Product-level conversion rates: Do concentrated products convert dramatically better? High conversion concentration suggests those products genuinely outperform. Flat conversion with revenue concentration suggests visibility or traffic differences.

Catalog size trend: Did available products decrease? Mechanical reduction in options concentrates revenue by default.

Marketing allocation: Where do promotional resources go? Concentrated marketing produces concentrated revenue. Track cause, not just effect.

Addressing unhealthy concentration

Diversify strategically based on diagnosis:

If visibility is the problem

Help customers discover more products.

Improve site search: Customers searching for specific products should find them. Audit search functionality for long-tail queries.

Enhance navigation: Category structures and filters should surface catalog breadth, not just bestsellers. Make exploration easy.

Diversify recommendations: Balance “popular items” with “you might also like” personalization that surfaces relevant non-bestsellers.

Feature catalog variety in marketing: Email campaigns, social content, and ads should showcase product range, not just proven performers.

If products underperform

Improve or remove weak products.

Audit non-performing products: Why don’t they sell? Poor product pages, wrong pricing, insufficient demand, or quality issues have different solutions.

Improve struggling product presentation: Better images, descriptions, reviews, or positioning might unlock latent demand for good products poorly presented.

Discontinue genuine losers: Some products shouldn’t sell. Don’t diversify into products without demand. Focus diversification on products with potential, not products padding catalog count.

If promotion concentrated revenue

Rebalance promotional strategy.

Rotate featured products: Don’t always promote the same items. Give different products promotional attention.

Limit bestseller discounting: Products that sell well at full price don’t need discounts. Save promotional budget for products that need help.

Create category-level promotions: “20% off all kitchen items” spreads promotional lift across category rather than concentrating on single products.

When concentration is acceptable

Not all concentration is problematic:

Early-stage focus: New businesses often rightly concentrate on proving few products before expanding. Concentration is appropriate until core products are established.

Niche specialization: Some businesses deliberately specialize. A business focused on one product category will naturally have concentrated revenue. That’s positioning, not problem.

Genuine bestseller excellence: If products are truly exceptional and concentration reflects market preference, forcing diversification might mean pushing inferior products. Let excellent products succeed.

The question: is concentration strategic choice or accidental drift? Intentional focus is strategy. Unintentional concentration from neglect is risk.

Frequently asked questions

What level of revenue concentration is concerning?

Depends on catalog size and industry. For stores with 100+ products, top 3 products generating over 50% of revenue is highly concentrated. For stores with 10 products, concentration is inevitable. Track your own trend—increasing concentration matters more than absolute level.

Should I stop promoting bestsellers?

No. Bestsellers earn promotion through performance. But balance bestseller promotion with catalog exposure. Promote what works while also helping customers discover alternatives.

Can product concentration actually be good?

Yes. Knowing what sells enables efficiency. Focus on proven products reduces waste. But good concentration is chosen and managed. Bad concentration happens accidentally and creates vulnerability. The difference is awareness and intentionality.

How do I measure concentration risk?

Calculate revenue percentage from top products and assess what happens if each disappeared. If losing your top product would be catastrophic, concentration risk is high. If you could absorb the loss across remaining products, risk is manageable.