How to Compete with Analytics: Making E-Commerce Data Predictive and Prescriptive
It’s been two months since Catalyst Americas, but we’re still reflecting on something Retail Prophet Doug Stephens mentioned during his keynote to e-commerce sellers:
“We’re just at the end of the beginning of e-commerce growth.”
Which is kind of crazy, when you consider how many people already have more meaningful relationships with Amazon (58%) than they do with churches (51%), according to L2’s Maureen Mullen.
With Amazon’s vast stores of intel, it would be easy to assume it’s practically impossible for smaller-scale retailers to compete anywhere close to the same plane.
This simply is not true.
In assessing the biggest e-commerce industry disruptors, L2 found that few were filling an unmet need. Instead, they exploited competitor weaknesses.
How? With data. Small data, to be exact.
“There are a lot of initiatives to unlock big data. But this makes it difficult to unlock insights in real time,” Mullen explained during her Catalyst keynote.
To understand what can be accomplished using smaller chunks of data, consider what Mullen had to say about The Ordinary. This branded skincare manufacturer noticed that most search activity for beauty products had far less to do with actual products than active ingredients. By using this insight to guide its digital marketing, the company has managed to attract 79% of its search traffic through unbranded terms — a strategy that put the company at the same level as big-budget sellers like Clinique and Olay.
You can achieve similar results.
It all comes down to leveraging the right data. If you’re ready to move beyond reviewing reports to conduct analysis that’s predictive and prescriptive, here are two effective, manageable ways to do just that.
2 Actionable Ways to Compete with E-Commerce Analytics
1. Benchmark your competition
With new sellers entering the e-commerce landscape every day, it’s more important than ever to gain a deep understanding of your products’ overall performance — not just by measuring your own year-over-year growth, but by comparing your metrics to those of your competitors and chosen marketplaces.
The challenge? With millions of online retailers competing across more than 100 e-commerce marketplaces, the data can be overwhelming. Unless you have an in-house team of data scientists committed full-time to aggregating, analyzing and reporting, you’ll need an automated system to do the job.
For example, by using a tool like ChannelAdvisor Benchmarking, you can quickly answer important questions such as:
- How are company sales doing compared to overall sales on Amazon?
- Is the marketplace growing at a faster rate or bigger margin than my own business?
- How are other sellers in my category performing?
- How do my YoY sales compare to those of similar sellers?
These small data insights will allow you to understand how your product performance stacks up to your peers’ and, more importantly, identify where you may be losing market share. You can then use that intel to determine which competitors to research or what marketplaces hold even greater potential for your products.
2. Forecast Product Demand
Keeping your inventory aligned with real-time consumer demands is critical to competing on promotions and pricing. But accurately predicting demand is a big challenge faced by most e-commerce sellers. And unfortunately, this lack of reliable forecasts can increase your risk of over- and understocking, and make it incredibly difficult to plan for peak seasons.
For this reason, it’s a good idea to regularly review your SKU-level data when deciding how much inventory will be needed to meet upcoming sales volume.
This small data approach will not only lessen your risk of racking up fulfillment center holding fees and inflated delivery costs. You can also use it to maximize profits with sufficient supply during times when demand is high.
If you use ChannelAdvisor’s Demand Forecaster, you can also use this data to decide which sales channels will be most profitable for your products based on current consumer demand.
The sheer volume of e-commerce data that’s available today can put some amazing insights at every online retailer and manufacturing brand’s fingertips.
The problem? It can take years to rifle through it all and put insight into action. For the time-strapped seller in need of accurate, actionable forecasts that can be applied across sales channels, that’s just not an option.
Thankfully, a few key insights and a couple of reliable automation tools can go a long way in staying ahead of competitors — without having to blow your budget on dedicated data scientists or costly consultants.