How Big Data is Changing E-commerce in 2023
According to a study by Zippia, many mid-level companies, including those in the e-commerce industry, only process 37-40% of the information they receive. However, statistics claim that retailers who maximize the use of big data can increase their operational profit by 60%. The experts at GetTrusted became interested in big data in e-commerce and decided to delve into this issue.
From the article, you will learn how big data helps retailers promote their businesses and why collecting and processing information is necessary in the modern world. We will also discuss the essential data that must be analyzed for success and the relevant sources entrepreneurs can utilize.
How Is Big Data Analytics Used in E-commerce Today?
Big data refers to vast arrays of diverse information companies collect and process daily. However, working with big data is a labor-intensive process. According to estimates from the LinkedIn platform, over 1.7 megabytes of data are produced worldwide every second. People generate around 2.5 quintillion bytes of data daily. Such enormous volumes of information are impossible to handle manually, so computer technologies come to the rescue.
For example, specialized programs based on artificial intelligence with machine learning help gather the necessary data, process it quickly, and segment it effectively.
In the e-commerce industry, big data can include information about customers, products, sales, competitors, etc. This is an excellent tool for business development and entering new markets. Furthermore, data analytics in e-commerce enables enterprises to enhance their performance and develop effective marketing and business strategies.
Today, this is particularly essential for internet retailers. It improves practically all business processes, from operational activities and customer interactions to exploring new online platforms for commerce and analyzing competitors.
Why Is Big Data Becoming an Integral Part of E-commerce?
Big data in e-commerce allows you to analyze all processes in the company, identify weaknesses and predict the path of further development. In addition, working with information enables you to be aware of your customer’s needs and provide personalized service. Thus, you attract more customers, which increases conversions, sales, and company revenues.
Handling information is one of the key factors in the success of your business. That is why big data and e-commerce are closely related. Studying various information allows you to take a holistic approach to improving your online store and gain a competitive advantage. Also, such research helps you make important business decisions and conduct planning based on reliable facts and statistics.
Let’s examine a few advantages that make big data popular in online commerce.
Understand their customers
Gathering information helps to get a complete consumer portrait. Analyzing data is also a great way to better understand your customers’ pains, needs, motivations, and interests. Based on this information, you and your employees can establish a trusting relationship with your audience. Thus, you get a pool of loyal customers with a high level of trust in your company.
Improve marketing campaigns
Big data analytics is essential for improving and evaluating the effectiveness of marketing campaigns and promotional channels. Collecting information about clicks on ads or website visits will show where your potential customers will most likely be found. Based on this data, you can divide your marketing budget more rationally and expand the reach of your target audience.
Personalize service
Data on items in the shopping cart or favorites, previous purchases, preferences, and more can help improve customer service. It also allows you to offer the right products at the right time to the right customer. By creating such a personalized shopping experience, you increase loyalty. Not only are consumers likely to keep coming back to you, but they will also tell their friends and family about you.
Reduce costs
You accurately assess your online store’s operational performance by analyzing the resources spent and comparing them to revenues. This information also helps you identify the best ways to optimize your company’s costs and increase profitability. Also, working with big data enables you to test and evaluate the feasibility of innovations and tools implemented in your store to improve its performance.
How Is Big Data Used in the E-commerce Industry?
Big data is an indispensable thing for an entrepreneur. This data gives an understanding of where to go, which segments of the target audience to target, and how to stand out from the crowd of competitors. Regardless of the direction of activity – B2B or B2C – working with information is necessary for every online commerce business. We have collected several key ways to use big data in the e-commerce industry.
Customer analytics
Collecting information about your customers (gender, age, education, place of residence, nationality, etc.) provides a comprehensive picture of your average consumer. Based on this knowledge, you can reinforce a positive image and create an attractive brand image. You will also need customer data sets to form product lists, improve customer service, select advertising platforms, and more.
Personalization
Big data helps optimize the functioning of an online store. One way to use it is by tracking customer behavior on the internet and social media. This allows you to create personalized offers and develop targeted advertising.
Here are several useful ways to leverage big data:
- Tracking behavioral signals.
- Customizing recommendations based on purchase history.
- Sending messages to the most interested customer segments.
By implementing these strategies, your customers will be motivated to buy on your site. Thus, you will increase conversions.
Offer optimization
Analyzing prices, popular products, competitor offers, and other factors will help you formulate the best trade proposition. You will get a competitive edge. This information will also come in handy when expanding your product range and launching new categories on your website. Additionally, big data facilitates determining the optimal pricing for your products.
Expanding marketing efforts
Data analytics in eCommerce allows for developing more personalized advertising campaigns and effective SEO strategies to promote your brand online. This leads to increased traffic to your website and contributes to optimizing the conversion rate (CRO).
Based on customer information, market conditions, and competitors, individual marketing campaigns can significantly increase your company’s profitability and scalability without excessive effort.
Enhancing security
Big data analytics automation enables the swift detection of suspicious activities. For example, detecting multiple transactions from a single credit card within a short period or attempts to pay using various methods from a single IP address. You record these incidents and can share them with your customers as an alert for suspicious activity.
Doing so protects your customers and demonstrates your care and trustworthiness. Additionally, big data is utilized to determine the best payment options for different types of online stores.
Improved customer service
Information about the most common customer problems will help you create ready-made templates for solving them. Based on them, your employees can serve your customers quickly and efficiently. Besides, analytics can help you expect and prevent potential issues or shopping difficulties before they arise.
Big data is designed to improve service and make it easier for employees to do their jobs by eliminating mundane tasks. This means they will have more time to compile answers to customer queries.
Forecasting
Predictive analytics in E-commerce significantly influence a company’s strategic planning, scaling, and promotion. Big data allows you to analyze market trends, track patterns, and anticipate changes. You will be ready for any events in advance. Based on such forecasts, you also plan purchases of goods and the sale of remaining units in stock.
Predictive analytics is built on all the information on online store sales for previous years. Thus, you will predict what your consumers want to buy and when. You can fill your warehouses with the right products in time. Thus, you will ensure a fast fulfillment of orders and a high level of service satisfaction.
What Data Does E-commerce Use?
Using big data in business, including e-commerce, has many approaches, as there are different types of information to be processed. Depending on your goals and needs, you can focus on one or several variants of the collected information.
Let’s discuss the main practices used for big data analytics.
Customer data
One of the key metrics retailers need. It gives you a complete portrait of your consumer. This data includes demographic, geographic, and other information. By identifying your typical customer, you can build an effective marketing strategy. You can also customize advertising campaigns to attract as many potential customers as possible.
By managing this data, you will know your customers’ interests, motivations, and concerns. This information is also essential for building a positive and memorable brand image. This approach will significantly increase your online store’s loyalty and trust. As a result, your profitability will also see a great boost.
Product data
Collecting information on Stock Keeping Units (SKUs), prices, descriptions, features, and availability of products. As a rule, this data is generated by manufacturers. Retailers can use it to compile, update, or detail product listings in their online stores.
In addition to the raw data of released products, this parameter includes information on the number of units sold, returns, and more. Consequently, you can track the most popular products and display unpopular categories. Also, when working with product data, it is advisable to collect customer feedback and evaluations to provide only quality products and increase revenue.
Vendor data
This practice focuses on supplier information. It includes various descriptions, catalogs with product photos, and videos about the items. The metrics also encompass data on delivery times, prices, payment terms, and more.
Supplier information helps you establish seamless supply chains, control inventory levels, and replenish them promptly. It allows you to track delivery expenses and calculate procurement budgets. By working with this information, you can easily plan seasonal purchases and introduce new categories or product lines to your store’s assortment.
Sales data
An essential metric for e-commerce enterprises, it enables comprehensive sales analysis. It provides data on the quantity of each product sold in your store. It also collects information on prices, discount rates, average order values, and more. This is necessary for effective business management and identifying ways to increase profitability.
Working with sales data also improves website conversions and, consequently, increases the number of purchases. You can calculate the conversion rate for each visitor interaction on your site, track typical behavior scenarios, and identify trends and purchasing patterns among consumers.
Sources of Big Data Used in E-commerce
Big data in E-commerce is primarily gathered from the company’s own sources. They best represent the current state of the business, contain information about every stage of development, and provide up-to-date insights about customers for further processing.
Corporate data can be extracted from the following:
- Transaction processing systems: Here, data on average order values, seasonal revenues, total processed payments, most frequently used payment methods, and more are collected. Operating with this information lets you understand when and how to conveniently charge customers, how much they spend on average per transaction, and which product categories yield the highest profits.
- Customer databases: These databases hold all available information about potential and loyal customers. Therefore, they are essential sources for processing to expand audience reach, increase engagement levels, and create effective marketing campaigns.
- Mobile applications or websites: Information about the number of users/visitors, their actions, behavioral patterns, conversion rates, customer satisfaction levels, and more is collected here. You can enhance your digital products by processing these data sets to attract even more customers.
- Reports from various company departments: The data contained in these reports demonstrate the efficiency of each department’s work. Analyzing and comparing information from different reporting periods provides an overall understanding of how productive the company is at present. Processing such data is also critical for identifying weaknesses or issues in work organization within marketing teams, sales agents, and other employees.
- Archives and other documentation: Information in archived corporate documents helps analyze the company’s developmental path and identify periods of growth and decline. By analyzing past experiences, you can establish a reliable development strategy to avoid previous mistakes.
In addition to corporate sources, there are many other places to gather information. However, it’s important to realize that not all the data you receive can help grow your business. Selecting the right resources to obtain relevant and valuable insights is crucial.
We have identified four of the most popular sources for extracting information for e-commerce enterprises:
- Search engines: Tools for tracking and analyzing the most common queries and search results provide you with more knowledge about customers and their interests. You can improve your marketing strategy by exploring available online data about competitors, their offerings, and advertising activities. Additionally, search engine data is crucial for SEO optimization. By analyzing what users search for and how you can identify key and additional keywords to use in your website content.
- Social media: Data on user activity in social networks helps you better understand their interests. This source is vital for stores that have their own accounts on platforms like Instagram, Facebook, and others. You can identify the most popular product categories by analyzing customer interactions, their reviews, and the number of likes and shares. You gain insights into what users want to see and which advertising initiatives they respond to more frequently. Social media is also an excellent resource for recruiting bloggers and influencers whose audience is interested in your products.
- Google tools: Google Analytics and Google Trends gather and provide data to track actions on your website and across the e-commerce industry. Additionally, you can utilize information from similar platforms specifically tailored to your business sphere. This way, you can build a comprehensive model of your regular customers’ purchasing behavior.
- Comparison websites: There are numerous online resources where reviews, ratings, price comparison tools, and more are available. Data from such sources help shape current pricing policies, study negative customer experiences, and avoid service errors. These websites are also useful for gathering information about competitor companies.
The Final Thought
Using big data in e-commerce helps retailers improve service, increase audience reach, promote their business on new platforms, and increase conversions and revenues. But there’s too much information out there, so it’s important to collect and process it smartly.
When planning to apply big data to your business, remember that your main goal is to collect only the reliable, relevant information you need to outperform your competitors and take your place in the market.
