Big data is changing the face of eCommerce by making inroads into every aspect of business, whether it is inventory management or pricing. Dataquest talks to leading eCommerce CIOs/CTOs to know their key priorities where analytics can deliver value.
Personalized Offers: Personalized engines are enabling eCommerce players to better target their audience by providing accurate search results in real-time. This helps the customers to find exactly what they are searching for and thus, results in faster sale. Nidhi Agarwal, Founder and CIO, KAARYAH adds, “Big data makes a lot of relevance for eCommerce companies who want to stay agile and relevant to their customers. The companies are monitoring customer consumption patterns and convert them into product level inputs to improve products and introduce new products. Also, the speed of consumption
combined with our agile production system leads to large working capital efficiencies.”
“The major role of data analytics tools is helping users find what they want to buy, ie, personalization recommendation. We have a total of 14 properties like ‘Viewers also viewed,’ ‘similar products,’ ‘trending now,’ etc, on the site and all the big data platforms when put together
influence 40% of the orders we receive today,” informs Amitabh Mishra, CTO, Snapdeal.
In case of CouponDunia.in, which is deriving huge benefits by analyzing interests and shopping patterns of consumers based on their past browsing history, as well as the consumer segment they fit into.
“While analyzing the redemption behavior of the consumers, ie, when and how the audience avails coupons, we found that recharge offers are availed maximum during noon while restaurant offers are availed in large numbers during Fridays and weekends. So, we uploaded the similar kind of content on all our social media channels to increase conversions and our strategy really worked,” states Sameer Parwani, CEO and Founder, CouponDunia.
Inventory Management: One of the most significant benefits that big data analytics is offering eCommerce players is the ability to manage an inventory on the basis of real-time data. For instance, Flipkart has been able to improve its inventory utilization by 5% by using analytics to manage its inventory. ShoppersStop is also using a stack of BI tools
to optimize merchandise allocation.
In addition, companies are using predictive analytics to minimize the required inventory for a product that sees no immediate sales. This helps retailers to allocate their funds to buy products that have a higher demand and greater profit potential.
Real-time Decision Making: Another significant advantage of big data is that it allows merchants to make more informed decisions. For instance, an online retailer by leveraging big data solutions found that email or phone calls were its most effective marketing channels as opposed to social media. As a result, the company strategized its marketing efforts on running email campaigns and offers, instead of blindly investing on social network ads. These real-time decisions help the marketers to decide the best day to launch a promotion, identify products that will attract maximum sales, etc.
“Right from how customers navigate the site, to the products they choose, and their action/response to visual and technical triggers, these BI tools have a big role to play in all operational and planning needs. For instance, the analytics engine can predict when an order can potentially be a ‘return’ based on historical data mining of customer behavior, logistics, geography and several other factors. They help in tracking insights on various products categories and hence help take better decisions on what products to showcase. The deployment of analytics tools has increased our conversion rate by 30-40%,” adds Sundeep Malhotra, Founder and CEO, HomeShop18.
Managing Frauds: Online retailers are also exploring the power of predictive analytics in detecting and reducing frauds by analyzing browsing patterns, purchasing patterns, and payment methods. Although, using analytics to detect frauds is not currently top of mind for many retailers. A report by Aberdeen analyzed the different types of fraud and the readiness to fight them. It highlighted that only 16% of the respondents say that detecting fraud was a primary use for their analytics suite.
Optimize Pricing: eCommerce sites need dynamic pricing as the products today compete on prices listed on other sites. Predictive analytics plays a huge role in this by building a model which supports real-time pricing that uses inputs from various sources like customer activity, competitor pricing, available inventory, etc.
At American Swan, we leveraged the collected customer data
to create five different offer categories, namely 10% off,
15% off, 20% off, 25% off, and `300 off on new products.
Later we sent an individually-tailored email to each of its customer, determined by customer profiling engine to be more relevant to their preferences and past behavior. As a result, we registered a 3X increase in its sales and 2X increase in its user on-site engagement, adds, Anurag Rajpal, CEO and Director, American Swan.
Better Customer Service: Excellent customer service is critical to the success of an eCommerce site. Companies are using big data techniques to personalize content and promotion for specific customers and increase their conversion rates. Sharing his views on how big data analysis can dramatically improve customer service, Rajiv Kumar, CEO and Founder, StoreHippo.com says, “The customer today
is very demanding and expects personalization and convenience. And eCommerce companies are left with no other choice but to embrace big data to service its online customers better. The companies are collecting data through various touchpoints and then process this information to carry out customer segmentation and thus push out personalized content and promotions too. The tools are helping us increase conversion rates by better identification of sales transactions.”
In the last two years, the growth of eCommerce industry has been terrific. There is cut-throat competition among companies to acquire more customers. In such a case, harnessing a data-driven business approach is no more an option, but a business necessity. “eCommerce companies will never be able to effectively compete in a fast-paced, dynamic environment if they don’t use the BI tools available,” warns Sameer Parwani of CouponDunia.in.
The success of an eCommerce site today, depends largely on the big data platforms they use. Going forward, eCommerce companies need to focus on industrialization of analytics to get long-term benefits.