How To Use Brand Portfolio Optimization To Increase ROI

Having multiple brands under one roof can be a good way to mitigate risk and reach different customer segments, but only if each has enough attention and budget to compete in its market. Brand portfolio optimization is a strategy used by companies with more than one brand to allocate resources effectively. 

Razvan Romanescu built three beauty brands under one holding company, Underlining. Together, the brands have processed more than two million orders. Speaking on the Shopify Masters podcast, Razvan says the company takes a merit-based approach to prioritization, with resources flowing to whichever brand is performing best. 

“Wherever the data is showing us the majority of the energy should go, we go there,” he says. 

Read on to learn what this looks like for ecommerce businesses and how to put a brand portfolio strategy in place.

What is brand portfolio optimization?

Brand portfolio optimization occurs when a business with multiple brands allocates resources across those brands. They decide which brands deserve additional investment, which need repositioning, and which might be candidates for sunsetting (phasing out). 

For ecommerce businesses, the optimization process becomes relevant as soon as you’re managing more than one brand or thinking about launching a second. It involves looking at sales data, customer segments, distribution channels, and market trends across your portfolio, then deciding where to focus. If you’re noticing uneven performance, unsure where to earmark budget, or your team is stretched across too many priorities, brand portfolio optimization can create a more structured approach.

Brand portfolio vs. brand architecture

A brand portfolio is the collection of brands a company owns and operates. Brand architecture is the structural framework that defines how those brands relate to each other and their parent brand (i.e., the company that owns them). This includes whether they connect, overlap, or are independent. 

There are three primary types of brand architecture:

• Branded house, where all brands share the parent brand identity (e.g., FedEx Express and FedEx Office) 

• House of brands, where each brand operates independently (e.g., Procter & Gamble’s portfolio)

• Hybrid, which combines both approaches (e.g., Apple, which brands some products under its own name while also owning independent brands like Beats by Dre)

Brand portfolio optimization vs. product portfolio optimization

Brand portfolio optimization involves sharing resources across multiple brands, each with its own identity, audience, and brand positioning. WIN Brands Group is a good example. CEO Kyle Widrick acquires direct-to-consumer brands that have found success on Shopify and decides where to invest across the portfolio. His first acquisition, Homesick Candles, was primarily a single-channel ecommerce brand when he bought it. After expanding into new channels, the company’s revenue grew 10 times. 

A product portfolio optimization strategy, on the other hand, is about choosing between products within a single brand. Take men’s accessory brand Ridge, which expanded beyond wallets into rings, luggage, and other categories as a way to increase customer lifetime value. Speaking on the Shopify Masters podcast, CEO Sean Frank describes how Ridge entered large, growing markets where even a small share would translate to meaningful revenue. As Ridge’s product portfolio grew, wallets dropped from being its whole business model to accounting for less than half of revenue.

The two disciplines often overlap, and many companies practice them simultaneously—optimizing which brands to keep while refining product lines within each one.

Best practices for brand portfolio optimization

• Use data to drive resource allocation
• Diversify across channels, not just brands
• Give each brand room to operate

While the involved elements and associated data can be intricate, the actual optimization process breaks down to a few simple best practices: 

Use data to drive resource allocation

Brand portfolio optimization starts with visibility. Without centralized reporting, you can’t accurately compare brand performance. The goal is to get a single view of revenue, contribution margins (revenue minus variable costs like manufacturing and shipping), customer lifetime value, customer acquisition costs, and growth rate by brand. 

For Shopify merchants, Shopify Plus offers multi-store reporting, meaning you can compare sales, orders, and other metrics across brands, regions, and stores. Whatever tools you use, aim for reporting that lets you compare brands side by side rather than tracking each in isolation.

Once you can see how each brand is performing, allocation decisions for resources like additional investment get clearer. At Underlining, one of the brands significantly outperformed the other two. Razvan redirected most of the company’s portfolio budget, staffing, and attention to the top performer. For a brand that isn’t performing, Razvan says the options are to pivot or sunset it. From a portfolio perspective, sunsetting means shutting the brand down and redirecting your resources to a stronger brand. 

Plotting each brand on a simple growth-versus-profitability matrix can clarify which to invest in, which to maintain, and which to cut. Pair that with market research to forecast where consumer needs are heading, and direct resources accordingly.

Diversify across channels, not just brands

A single-channel brand carries concentrated risk. If one platform changes its algorithm or fee structure, revenue takes a direct hit. Spreading sales across multiple distribution channels cushions that exposure. 

Channel expansion also compounds across a portfolio. A centralized team that has already built the playbook for launching a brand on Amazon, for example, can apply that playbook to every brand in its portfolio. This makes each subsequent brand expansion faster and cheaper. The playbook might include listing optimization guidelines, ad creative templates, fulfillment setup, and pricing strategy for the channel. 

When sequencing your channel expansion, start with the brand that has the strongest product-market fit and margins to absorb the upfront costs of entering a new channel. Use it as a test case, work out the logistics and listing strategy, then roll that playbook to the next brand. Expanding into multiple sales channels can unlock new customer segments without requiring a new brand.

That’s the approach Kyle Widrick takes at WIN Brands Group. He turns single-channel brands into multichannel businesses that run on Shopify, Amazon, and wholesale. 

“Wholesale can actually be your best net contributing revenue channel,” Kyle says on Shopify Masters.

Give each brand room to operate

Brand portfolio management doesn’t necessarily mean giving your best brand all the resources while forcing another brand to go without. As a brand portfolio grows, each brand will need dedicated resources, including its own team, storefront, and creative direction. If two of your three brands are seeing increased social media engagement, both may need a marketing associate, for example. 

Toronto-based Compound Studio has incubated four jewelry and accessories brands. As its portfolio grew, employees and customers began to identify with specific brands rather than the umbrella company. So the company built separate teams to represent each brand’s distinct identity. 

When launching the newest brand, it brought in a dedicated president and creative director from day one. “It’s the first time where we’re rolling out a brand from the jump that’s completely siloed in terms of the team,” CEO Shane Vitaly explains on Shopify Masters. 

Shared infrastructure behind the scenes can be used to keep costs low. From an ecommerce angle, look into your platform’s ability to run multiple storefronts with independent themes, pricing, and inventory while centrally managing users, billing, and reporting. Shopify Plus expansion stores let you create up to nine additional stores within one organization, but each must operate under the same brand. That makes them a fit for extending a brand into new markets, languages, or B2B operations, each with its own theme, currency, inventory, and customer experience. 

For a portfolio of separate brands with distinct identities (similar to the Compound Studio model), Shopify Plus supports multibrand agreements: separate subscriptions per brand, managed under one organizational umbrella.