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How to use Power of Analytics to grow Your E-commerce Store?

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e-commerce analytics

Introduction: The Current State of E-commerce

In 2019, 2 Billion people together made online transactions worth $693.35 billion. Amazon alone has 25 million registered sellers, India and China account for 1 billion shoppers and Amazon alone made $200 billion in online sales last year.

Every time these 2 billion people shop online, they are creating data. The data created alone by e-commerce marketplaces is equal to data created by multiple industries put together. E-commerce businesses require competent analytical tools and methodologies to harvest these data for offering better product recommendations and customer experience.

The current state of e-commerce landscape is both exciting as well as scary, while the e-commerce industry continues to grow annually at 23%, the return rates are somewhere near 30%. Like all businesses, e-commerce receives its share of ups and downs. In 2018, Amazon touched the 100 million prime users in the United States and lost 5685 crore INR in India. (Source)

E-commerce players are losing money but there’s a silver lining. Every newly acquired user brings a set of data with themselves and their every interaction creates data. The increasing user base is offering organizations with enormous data to analyze and predict customer behavior. By leveraging improved analytical tools and methodologies, enterprises can get rid of data silos and work towards growing profitable.

Understanding the need for Analytics in E-commerce

Big Data Analytics has been a saving grace for marketplaces, through enhanced shopping pattern analysis, it has helped businesses understand customer’s preferences and discover popular brands. Such meticulous insights anchor greater business success.

“Micro-Moment” behavior which includes quick actions like “I want to know” and “I want to buy” has helped marketplaces predict customer behavior and drive sales. Amazon has relied heavily on big data analytics to predict customer behavior and recommend products accordingly.

Today, Amazon is the undisputed king of e-commerce, it has not only ruled the landscape on its home turf but in European countries too. In India, Amazon has paced ahead of the country’s native e-commerce unicorns. Amazon’s 29% of sales come from products it recommends to its users.

Also Read: How to Optimize E-commerce Search for better Customer Experience?

Amazon drives 29% sales from existing users by analyzing metrics like:

  • Customer’s purchase history
  • Customer’s wish list and review history
  • By matching customers purchasing pattern and recommending a similar product

Amazon has leveraged the power of data by building an in-house analytics platform. While it is tough to replicate the analytics model Amazon follows but it has shown the way for sure. Amazon has shown that just by analyzing customer behavior, e-commerce stores can drive sales.

E-commerce Functions Supported by Analytics

Operations: E-commerce stores spent extravagantly to acquire customers and now they are analyzing the data created by these users. Stores are now analyzing the available data to find what are some products that are most searched but missing from the site. When they have a list of most searched but missing assortment, they run another analysis to identify sellers who can offer missing items. By identifying categories that are closest to missing assortment, it gets easier for stores to identify sellers who can take up the task.

In case, Bluetooth keyboard is one of the most searched but missing items then stores will run an analysis to identify sellers who are selling Bluetooth mouse. Once top sellers are identified, e-commerce platforms can offer them support to start selling the Bluetooth keyboard as well. Such usage of analytics is the need of the hour.

Marketing: 64% of users spend time researching for the best products on online stores, unknowingly these people are creating data. This data is leveraged by online stores for marketing. E-commerce stores start targeting users on Social Media and other sites through Facebook and Google Ads. The stores show descriptive ads of products that were added in the cart by users on the web and we already know that retargeting ads receive 76% more clicks.

Supply Chain: When people shop online, they want their products to reach them at the earliest. A huge percentage of people want their products to be delivered within 48 hours. With warehouses located in remote corners of a country, sometimes it is tough to meet the expected timeline. Lack of fast delivery is one of the biggest reasons for cart abandonment and return requests.

To minimize losses, online stores ran an analysis of the available data looking for products popular in specific areas. For example, stores started looking for areas where Yoga mats are popular. Once they identified areas with huge demand for Yoga mats, they urged the sellers to shift their inventory in fulfillment centers near to areas with high demand.

By leveraging intricate analysis of available data, online stores not only reduced the delivery time but also saved enormous money that was going waste.

Challenges of growing E-commerce Marketplaces & How Analytics can help?

From the first transaction 25 years ago, the e-commerce industry has come a long way. Cash on Delivery, one-day delivery, no-cost EMI and Pay Later are some innovative features that have got the world hooked with online shopping. While the advancements are tangible but it’s not the end of challenges, rather a beginning.

With new players leveraging technology to garner growth that took Amazon achieved in a decade, the challenges have only increased and the store that analyzes the data in the best possible manner will win.

Also Read: Challenges of E-commerce Catalog Management

Offering Omnichannel Experience: Some tech pioneers have mastered the art of customer experience and customers now expect every business to offer a similar experience. With customer experience emerging as the key differentiator among brands, enterprises are diverting their 50% budget towards CX innovations.

Customers today want to interact with businesses via phone, chat, email, and social media and expect organizations to offer a similar experience on all channels. Also, the customers want businesses to continue the conversation from where they left it last time, irrespective of the channel they are using. Such intricacies require next-level analytics.

Interaction Analytics is one solution that is helping businesses remove data silos and bring an analysis of call transcripts, emails, social media and chats to understand customer demands better. Such a nuanced application of analytics will help organizations offer better customer experience and save costs at the same time.

Improving Customer Loyalty: In countries like India, the Philippines, and China, e-commerce stores are facing a tough time retaining customers. The increasing competition has spoiled people with choices, which is affecting Customer’s Lifetime Value immensely.

With multiple marketplaces offering cashback as bets, it has got tough for existing players to retain customers. While new players are continuing with their customer acquisition phase, existing players can rely on abundant data created by their users. By leveraging analytics on user-data, marketplaces can decode patterns their users follow. Once the patterns are identified, stores can create campaigns, create theme-based bucketing and drive cross-sales.

Ensuring Price Competitiveness: As mentioned earlier, the emergence of new players has changed the dynamics of the online market. While the growth has been exceptional but the losses incurred by online stores have also increased.

Competitor benchmarking is becoming a necessity because customers are jumping sides like never before. With customers expecting the best price, earliest delivery and hassle-free experience every time, it gets necessary for e-commerce players to spy on their competitors.

Through competitor benchmarking, online stores identify top sellers and high-selling products. Such identifications can help businesses offer a wide assortment and earliest delivery option. Benchmarking competitors against price will help enterprises ensure customer loyalty.

Decreasing Return Rates: Be it Amazon or any other online store, increasing return rates is an issue for everyone. While 22% of people return products because they weren’t portrayed online correctly, a huge percentage of people return it because they found it cheaper somewhere else. The increasing return rates are a menace that e-commerce players need to tackle at the earliest.

Also Read: 10 Customer Delight Ideas For eCommerce Industry You Must Try in 2019

Effortless Customer Service: Passé is the days when chat and email were the only channels of communication. Twitter, WhatsApp, and Facebook are now the most preferred channels of communication between customers and businesses. Tweets, WhatsApp chat, and Facebook Status have replaced traditional calls, emails, and chats.

Also, the need for offering a similar experience on all channels is an added challenge. While businesses are spending millions of dollars in customer service, they are failing to satisfy customers and retain them because they are not understanding their customers better.

With social media analytics, organizations can leverage power analysis tools and understand their customers better. Social Media Analytics not only offers great insight into falling channels, and customer needs but also offers insight into what industry leaders are doing. Such meticulous analysis of competitors and available data will open doors to insights that can prove to be game-changing.

 Conclusion

The E-commerce industry has grown beyond people’s imagination. In the last two decades, online shopping has not only replaced retail shopping but offered an experience that everyone loves. The upcoming challenges are coaxing thought leaders to think out of the box and innovate.

The future of e-commerce is bright and but the contemporary challenges are going to render a lot of players obsolete. It is only with analytics-based innovations that e-commerce players can aim to survive the game and emerge as a winner.

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