What may surprise new etailers is just how much data they need to get to grips with. There is A LOT of data processing that goes into running a successful e-commerce business. From purchase behaviour to inventory — there is a constant need to process, manage, and interpret data. Luckily, there are many ways to automate and simplify data management, so you don’t have to do ALL the heavy lifting.
As long as you can analyse and react appropriately to the insights gleaned from data, you will be well on the way to running a profitable e-commerce business in 2018. Here are some of the core areas of data management you will need to get to grips with.
Big data for e-commerce explained
Sometimes it seems like big data is everywhere — but what does it actually mean for your business?
In an e-commerce business, computing power allows retailers to sift through a vast amount of data quickly and efficiently. Data in and of itself is meaningless — unless you know what to do with it after it’s been collected. That’s where data management comes in.
As an e-commerce company, you will collect both structured and unstructured data. Structured data follows a set pattern and will include customer names, telephone numbers, and card numbers; whereas unstructured data is more fluid and can include social media posts and review copy.
Etailers need to have a clear idea of what they’re seeing — data visualisation tools can help bring that crucial clarity. Similarly, data management platforms and apps can help bring together disparate data (website tracking codes, social media, inventory systems, geographical location etc) — making your life a lot easier and simpler. They can even integrate with DSP (demand-side platforms) and drive programmatic bidding for your store.
Just thinking about all the different datasets and processes involved in showing a customer a perfect set of “recommended products”, or reminding them to re-order their favourite brand gives you a good idea of how complex data management really can be. It’s a good idea to automate data analysis as much as possible in order to maintain efficiency and accuracy.
Personalisation & re-targeting
Data is a marketing lifeline because it allows you to make more money with less investment. The more data you have, the more accurate your customer profiles and segmentation will be — meaning that the right marketing messages will be heard by the right people.
Especially when it comes to social media advertising — a lucrative channel for e-commerce, the more data, the better. It means that you will be able to create compelling ads to draw users in, but also re-target people that may have engaged with your product, piece of content, or ad before (now you can even re-target people on Facebook based on their dwell time on a previous ad).
Data won’t tell you what marketing messages to put out there, so it’s important that you keep the customer lifecycle in mind. Being too pushy can turn people off — a sequential advertising and marketing approach is the preferred option.
If you have segmented your customer lists and profiles properly, you should be able to entice people with custom deals that make them feel like you’re really ‘listening’ to them.
Some segmentation tips:
- Identify your VIP customers who buy a lot and often
- Target seasonal buyers and shoppers with specific campaigns
- Create location-specific subsets of customers for special local deals
- Show returning customers that you remember them.
Data is essential for efficient inventory management. Without a slick inventory, your business will struggle to meet demand and may even lose revenue due to inefficiencies.
Real-time inventory management is a modern e-commerce must-have — without accurate data, you won’t be able to serve customers properly. Running a sale or driving traffic to a product category that isn’t being tracked in real-time is a disaster waiting to happen.
Data can help you predict and interpret stock levels, including where in the warehouse products should be stocked, and which regional centres need topping up the most frequently. You will need to ensure that handling and shipping costs are tied to your inventory management system so that you can have 100% accurate sales data to hand.
Data and the law
There are some key legislative statutes you need to know in order to safely and securely process customer data. Especially when it comes to email, it’s easy to unwittingly fall foul of data legislation.
The upcoming GDPR has some implications for e-commerce businesses — namely updating privacy policies, obtaining consent, and learning how to box off historical data. There is no reason to panic, but any new business owner does need to spend some time in order to ensure compliance, especially when it comes to marketing regulations.
Predicting the future
Real-time data is a great way to see what’s happening in your business right now, but predictive analytics take things a step further and look into the future. Not quite a crystal ball, predictive analytics are a great way to manage your business budgets across the year.
Looking at previous data will probably show you some key trends — like when staff tend to take their holidays, when you need to hire seasonal help, which months are the slowest from a sales perspective, what a cold August vs a warm August sales figures look like etc etc. Use key information like this in order to predict future behaviour, even down to when you need to start applying for funding, hiring staff, and making website changes.
Use predictive analytics as an important opportunity to optimise your business.
Analytics & results
Data is one of the most reliable ways to take the ‘temperature’ of your e-commerce business. How are your conversion rates looking — are they going down or up? What about bounce rates and dwell time? Are you selling more of product X than product Y? Where are the best profit margins to be had?
A mixture of free web analytics and data dashboards should give you what you need when it comes to evaluating your business and assessing its profitability. Don’t get overwhelmed and overstretch yourself, but focus on a few key areas to improve first. Use hypotheses and A/B split testing rather than ‘hunches’.
More and more people are investing in e-commerce with an exit strategy in mind; your results are what are going to ultimately determine your sales price, so make sure you invest in getting the best possible results before listing your site for sale. There is no arguing with data, and if a potential buyer smells a rat, they will be likely to run a mile.
Don’t get caught out by a sales slump or a slow year — use analytics to squeeze maximum value out of the customer interactions you are having. Data can help make each and every interaction that much more for value for your business.
Getting to grips with data goes beyond just forecasting and results — data goes into the very heart of customer experience. In e-commerce, you need to have eyes and ears everywhere — and that’s what data management allows you to do. It means that you can market and serve customers more effectively, as well as manage stock levels and your financial results more efficiently.
Professional writer turned ecommerce entrepreneur, Vicky hails from the windy city. She loves nothing more than to chat about all things content & marketing on her blog.
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