Cannibalization Risk Explained

Cannibalization happens when a new product steals sales from your existing products rather than bringing in new revenue. Example: If you launch a 2L cooking oil and your 1L sales drop by 50%, you've cannibalized yourself.

AskBiz rates cannibalization risk as low, medium, or high for each expansion candidate.

• Low risk — the new product serves a different need, format, or customer segment. Adding it grows your total revenue.
• Medium risk — some overlap exists. You may see a dip in a related SKU, but the net effect is positive because the new product captures additional demand.
• High risk — the new product directly competes with an existing one. Only launch if the new product has significantly better margins.

Don't avoid all medium-risk candidates — some cannibalization is acceptable if total revenue grows. The key question is: will total margin increase?

AskBiz shows estimated margin alongside risk so you can do this calculation. A medium-risk candidate with 34% margin replacing a low-risk product at 19% margin is a net win.