Imagine if you could figure out, well in advance, what your customers are likely to buy and at what price point you should be selling in order to maximize your profits?
Imagine getting advanced insights into what issues are likely to crop much before your customer brings it to the notice of the customer service department. As an online retailer, not only would all this information allow you to be forewarned, it would also help you determine the best product mix, marketing strategies and sales promotions to be deployed.This is where ecommerce analytics comes in.
Think of analytics as a magic wand. It helps your business spot gaps and issues, lets you know what’s working and lets you make better decisions much faster.
Benefits of Ecommerce Analytics
#1: Helps to build a robust supply chain
Customers shop online for two reasons – convenience and better prices. This is why your supply chain needs to be robust. Are the products being advertised on your site available in adequate quantities in your inventory? If not, it will result in slower delivery and the level of customer satisfaction is bound to drop and the customer lifetime value will be negatively affected. On the flip side, having too many units in stock will take up space in your inventory and increase your costs. Striking this balance, between supply and demand is tricky, and this is why using analytics to forecast future sales is vital.
#2: Analyze information to detect fraud
Analytics plays a key role in the detection of fraud. Since analytics can detect patterns based on customer behavior, it can warn you when an aberrant transaction is detected. As an ecommerce business, you can send a notification to the customer asking them if it is really them who are trying to conduct a particular transaction and await their express approval before processing the transaction.
#3: Predicts what’s in store for you
Analytics for ecommerce merchants helps them determine future trends based on several factors including the size of transactions, the season, category of products and so on. Such analysis is useful in determining what future sales will look like and helps the merchant in determining what products they need to focus on, whether they need to readjust their inventory, what marketing tactics they need to deploy to promote certain products and what promotions to offer on different products.
#4: Personalize recommendations for your customers
Selling to the same customer is much easier than acquiring a new one – any sales person will attest to that. This is why when you can sell to the same customer more than once, you are optimizing the value you can get from them. Personalized recommendations are a great way to do that.
Every time someone clicks on a product, if they see what other products are recommended, there is a chance they will want to explore and buy something in addition to their original purchase. Recommender systems are also great because when the same customer returns to the retailer’s website, they can see upfront what’s new and relevant for them, based on their previous shopping history.
#5: Forecast inventory for the next season
As a retailer, you need to know whether having a particular product on your virtual shelf is worth the cost of maintaining it in your inventory. Ecommerce Analytics helps you determine the volume of sales of a particular product, what sales are predicted for the future, what has been the customer satisfaction rate, among other factors.
Ecommerce analytics helpful in determining which products you need to continue stocking and which might need to be reconsidered for sale in the next season.
#6: Measure your marketing
Information related to online marketing analytics is very important to a retailer. You may pour in hundreds or thousands of dollars in online marketing campaigns, but if you are not able to determine its effectiveness, you will never be able to figure out whether or not your marketing strategy is working.
Analytics takes care of this by measuring ad clicks, engagement time of the visitors on your site, channel data and promotion effectiveness. By measuring these metrics, you can determine your return on investment and fine-tune your marketing strategy for the future.
#7: Personalize the customer’s shopping experience
Different customers engage with an ecommerce website differently. Some love to constantly check out the “deal of the day” while others are only looking to shop for books and dive straight into that section, ignoring even the home page. When a particular customer visits your site, what is the first thing you would like to show him/her?
Ecommerce Analytics helps retailers study the users’ behavior and determine how the site should be structured based on a customer’s preferences, the product landing page most likely to engage the customer and convert them by getting them to make a purchase.
#8: Lets to know your customers better
Retailers need to understand the types of customers, their demographics, their behavior as well as the churn cases. All such analysis is useful in determining the product strategy and any realignment needed in order to meet revenue and business goals. Such analysis can also help you in deciding what promotions to launch in order to maximize conversions of visitors who are visiting your website.
#9: Optimize pricing of the products
In the ecommerce industry, the price of a product is determined based on the demand for a product, its availability in the market and how competitors are pricing the same product. You can use predictive analytics to analyze pricing trends and determine what the optimum price for a product should be in order to maximize profit. Amazon is a classic example of an online retailer that uses predictive pricing.
The use of analytics to drive business is on the rise, across industries. The senior management through the ecommerce dashboard gets the insights on the business objectives, product managers get the insights on the product sales and whether the sales are drawing an optimum profit, ecommerce analytics find favor across the entire organization.
Want to know how your e-commerce business can benefit from analytics in particular? Contact ComTec to find out.