September 23, 2016
People who have worked in the ecommerce arena long enough are aware of the fact that ecommerce is equal parts science and art. On one hand, it is governed by some very basic economic principles and much of it can be predicted by cold, hard science. On the other hand, it can be fickle, fluid and, at times, all too human. As a result of this, it sometimes requires a more artistic approach.
When all is said and done, ecommerce will still be more science than art and those people who wish to succeed in this particular business arena will want to rely more on facts. This is exactly where big data comes in, staking its claim as an inseparable part of ecommerce’s future.
The concept of big data has been covered extensively here on Business 2 Community and there is really no point in rehashing what so many people have written so well. Instead, we will look at specific ways in which big data can help ecommerce businesses become more successful and why these huge sets of data will stay relevant for ecommerce for years to come.
To the end consumer the ecommerce experience may seem impersonal and random, but in reality, large ecommerce companies are spending serious time, expertise and money to make their experience as personal as possible.
Ecommerce companies do not send the same promotional emails to everyone, for example. They have different types that they send to certain groups of customers that were formed by big data analysis. This is just one example of how big data can help personalization of promotional material.
It is a well-known fact that pricing is one of the most important aspects of running any kind of an ecommerce business. If the consumers are feeling like they are not getting a fair price, they will go elsewhere to get it. If the prices are too low, the company is losing money.
Manually following how the competition is adjusting their prices would be an exercise in futility, especially since your dynamic pricing needs to be as responsive as possible. Because of this, all of the big players use big data analytics to crunch insane amounts of data pertaining to what their competition is doing, how the market is shifting and much more.
In the world of ecommerce, it all boils down to conversions, i.e. turning visitors into customers. Tomes have been written about how to increase conversions and ensure that people come back for more. Before big data, however, most of these tactics relied on A/B testing, surveys and certain subjective opinions.
With big data, it is possible to track the visitor’s journey from start to end and compare the experiences of those who became customers to the experiences of those who didn’t. This can unearth obvious patterns that can improve conversion rates and also help ecommerce companies forge lasting relationships with returning customers.
Efficient Inventory Management
Another huge part of ecommerce is inventory management where ecommerce companies have to walk the fine line of stocking enough of a product but not wasting their storage space on products that are simply not selling. Doing this the wrong way can result in unnecessary expenses that often get out of hand very quickly.
With big data and predictive analytics, ecommerce companies can predict how much of any product to keep in store without extending themselves. For the biggest ecommerce stores, big data-driven inventory management can also make country-wide and regional warehouse dynamics far more efficient.
Why not the Present?
There are many reasons as to why smaller ecommerce players will have to wait for a while before they can truly benefit from employing big data. For one, surveys and polls can still do a good job in gauging what the customers think. There is a good reason we still have presidential polls and surveys. More importantly, taking full advantage of big data requires significant investments, both when we are talking money and expertise. The shortage of big data professionals has been lamented for quite a while now, for example.
The good news is that these are issues that will be remedied in time. More and more big data experts will enter the job market in years to come and the costs of data analytics tools and projects will only drop as well.
That is why small companies will have to wait a while longer before they can catch up with the truly big ecommerce players.
One day, they will. There is just so much that big data can do for them that it simply has to be part of the future.Digital & Social Articles on Business 2 Community