The spread of the Internet has had an enormous impact on how most businesses are now run.
The growth of eCommerce is one of the most significant effects of the Internet on any business involved in sales. With little overhead costs, merchants can now have access to an estimated one billion online shoppers, across the globe.
Despite the huge customer base, scaling up can be a challenge for eCommerce merchants. Most businesses have the same basic constraints; how to improve service while reducing costs. But the scaling strategies recommended for most businesses don’t work as well for eCommerce businesses.
In eCommerce, the advice typically given would be to fix site navigation, find cheaper suppliers, improve branding and so on. While those methods can help, merchants are also finding success by simply looking ‘inwards.’ The well-known saying goes “What gets measured, gets managed.”
By tracking the key metrics peculiar to eCommerce, sellers can find areas where a few tweaks can increase profits.
- Do you know the shopping cart abandonment rate for your SKUs?
- Do you know your cost per acquisition?
- Customer lifetime value?
These are a few metrics that eCommerce merchants must know to create a lasting business.
A few years ago, only the largest businesses could afford to track big data. But these days, data accumulation has become so easy that even the smallest companies can gather data.
Data analysis can help merchants identify new customers, track costs, make pricing changes, and more.
Wondering where to find all this helpful data?
Online consumers generate a ton of data with their actions, just look around you at their:
- product purchases
- Facebook likes
- Pinterest pins
- links clicked on your site
Every action (event) can be recorded and analyzed for intent.
Free analytics tools like Google Analytics and Quantcast, can help you gather visitor data like age range, location, level of education etc.
Using social media platforms, you can collate more granular details like name, sex, relationship status, interests and so on.
We all know how important order fulfillment is in eCommerce, so can we use data to improve it?
Yes, we can.
For businesses aiming to achieve high perfect order metrics, data gathering and analysis can help improve the following:
Better Branding Decisions
Merchants entering new, cross-border markets struggle with the type of branding to use.
Everything from packaging, brand image to website colors must be closely analyzed.
One example is with choosing color, the deep red that signifies love in the USA, is perceived as unlucky in Germany.
Knowing your customer’s location can create branding (packaging) that won’t offend the target audience.
Unlock hidden Opportunities
Studying the demographic data of customers can also help with making product decisions.
- What do they buy often?
- What SKUs do they buy together?
For instance, if a certain demographic orders more bundled kits than individual items, a new SKU can be created by bundling items.
By catering directly to that demographic from the onset, sellers save money from the economies of scale generated.
Better Inventory Management
Regular delivery of goods to customers is impossible, if your business frequently runs out of stock.
The revenue lost from abandoned shopping carts, due to out-of-stock products, is an avoidable business cost.
By collecting and studying customer buying data, an eCommerce seller can predict the demand for a product; invaluable knowledge for handling inventory management.
Access to real-time inventory data also gives eCommerce merchants the best chance to quickly process orders and returns.
Remember we said social media data can offer detailed targeting options?
With tools like Twitter’s Tailored Audiences, merchants can also build look-alike audiences. These are consumers that share traits with a brand’s existing customers. This allows sellers target their ads at prospects more likely to buy their product.
Without collecting data on existing customers, there’s no way businesses can ‘acquire’ these new customers.
Increase Customer Loyalty
Free shipping is often used by bigger brands as an incentive to attract repeat sales. And why not? Customers love free shipping; one Morgan Stanley study shows that 80% of respondents would buy more if free shipping were provided.
Poring through customer purchase data can help identify customers that buy the same product often.
To increase loyalty–and get more sales–merchants can offer these customers coupons. Whether it’s free shipping, discounted shipping or BOGOF offers, your customers will appreciate any savings they get.
Big data has been used by the largest retailers to fine-tune their supply chain, marketing and business models for years. Now, smaller eCommerce merchants can also tap into this and use data to improve their business. By compiling (and analyzing) data from multiple sources, eCommerce sellers can make more informed decisions when tweaking their supply chain.
- What do you think?
- Do you think data gathering and analysis is a waste of time?
- Should businesses only focus on customer acquisition?
- Do you agree with our conclusion?