Did you know that more than sixty percent of the world population has access to the internet?
According to Broadband Search, 4.79 billion people worldwide use the internet on a regular basis.
It has changed the way we order dinner, buy pet food, access entertainment, and, yes, even the way we look at business data.
This digital transformation presents e-commerce companies with a massive opportunity to build and grow successful businesses.
But, that opportunity is not without challenges. Customers have thousands of e-commerce businesses to choose from, and they are bombarded with ads on social media, streaming videos, and targeted emails.
There is a silver bullet that could make all the difference for your e-commerce business — and it is business intelligence.
Here’s what you need to know about using business intelligence — even if your e-commerce business is still growing.
What is Business Intelligence?
Business intelligence, often shortened to BI, is the practice of leveraging tools to access and sort data to present actionable insights about a business’s strategic and tactical goals.
For example, a banking company might use a BI dashboard to analyze data about complaints they receive and sort them by location, account type, or time period. This would highlight shifts in the frequency of complaints, such as an increase in a specific city, and allow the business to investigate the causes.
Business intelligence can be leveraged to better understand a massive amount of data from a variety of tools, including sales automation, chatbots, logistics, inventory management, or any other number of data-generating actions.
Business Intelligence vs. Data Analytics
Although business intelligence and data analytics are often used interchangeably, some nuances set them apart.
According to Mark van Rijmenam, the CEO and Founder of Big Data-Startups, the main difference between the two is the time the data is used to inform.
“The difference between Business Intelligence and Data Analytics lies in the fact that Business Intelligence helps in making business decisions based on past results while data analytics helps in making predictions that are going to help you in the future.”Van Rijmeman
This chart provides a quick rundown of the difference between business intelligence and data analytics.
There are four main aspects of overall data analysis. Below is a quick primer on the stages and whether they fall under business intelligence or data analytics.
1. Descriptive analytics
The first stage of data processing designed to answer the question, “What happened?” It is used in both business intelligence and data analytics.
2. Diagnostic analysis
Analysis of the data to determine why certain events occurred. It answers the question, “Why did it happen?” It is used most often in BI, but may have applications in data analytics.
3. Predictive analytics
The analysis of data to answer the question, “What could happen in the future?” Predictive analytics falls under data analytics.
4. Prescriptive analytics
A deep dive into the data to determine, “How should we respond to events in the future?” This is the core of data analytics.
5 Main Business Intelligence Functions
How is business intelligence used? Well, it all depends on your business, the data you have access to, and what information you want. The five main functions of BI include reporting, OLAP, analytics, data mining, and benchmarking. Here is what those mean for your e-commerce business.
The process of gathering data and using tools to extract relevant insights and business trends.
Online Analytics Processing is a powerful technology used for complex calculations and predictive forecasting.
The process of collecting and sorting both current and historical raw data to deliver insights about the business and future opportunities.
4. Data mining
The collection and processing of data (often from multiple sources) to find and analyze patterns in data from several databases.
The process of comparing data metrics to industry standards. It is often used to compare costs, time, and quality between different companies and departments within the same industry.
Business Intelligence For All Business Sizes
Business intelligence is not just for large companies. In recent years, cloud computing has made business intelligence far more affordable for small companies. Using BI dashboards and analytics can give smaller businesses the insights they need to scale faster — and make them more competitive.
For example, a small company could gain insights into:
- Use a BI dashboard tool to track how many products were sold in a specific time period and the total profit generated by the product.
- Use an email tracking tool to see how many emails were opened, then import that data into a BI dashboard to see how a high open-rate impacts sales.
E-commerce Businesses Are Adopting Business Intelligence
In 2104, 1.5 billion people shopped online. By 2021, there will be an estimated 2.14 billion online shoppers around the world.
That explosion of online shopping provides e-commerce companies with an opportunity — but not all businesses will be able to rise to the occasion.
However, the most successful e-commerce businesses are already leveraging BI to help:
1. Accurate decision-making
Business Intelligence allows e-commerce businesses to make decisions based on statistical facts, rather than guesses. For example, a company could see how many customers abandon their cart and analyze data to understand why.
2. Drive revenue
BI gives access to sales trends based on customers’ preferences, reactions to promotions, online shopping experiences, purchasing behavior, and other patterns and trends that impact sales. All of this information can help e-commerce stores maximize revenue.
3. Operational efficiency
Business intelligence looks at all types of data and can help the e-commerce businesses uncover errors and quality issues that result in lost productivity in sales, customer attrition due to call center dissatisfaction, higher bounce rates, and so forth. This data makes it easier for companies to uncover — and fix — bottlenecks.
4. Gaining a competitive advantage
Data helps companies understand what strategies work— and what doesn’t. Using reports and benchmarking, e-commerce businesses can uncover opportunities for improvement, providing them with a competitive edge.
5. Managing business and spotting problems
BI allows businesses to get a high level or detailed view of data. This makes it far easier to spot challenges as they arise — but before they impact the bottom line. For example, a rise in churn may be noticed when it first starts to increase, rather than after the company has lost half its income.
Using Business Intelligence in E-commerce
E-commerce is fast becoming a critical component of our global economy, and business intelligence can be leveraged to help your company take advantage of that growth.
Here are a few of the most useful reports to better understand your business and your customers.
1. Inventory report
BI powered inventory reports can track not just what you have in inventory, but also where that inventory is located, how long it will last, and the overall value. Reports can be sorted by day, week, month, or year to inform critical supply and ordering decisions.
2. Sales report
When it comes to sales, data can make all the difference. BI can help your business track the performance of individual salespeople, the number of total leads, qualified leads, where those leads come from, and which months most sales are made.
3. Margin analysis
If you are wondering how much a specific product makes you, then you will look at data about profit margin. Using BI, you can see how margin applies across accounts, locations, channels, and much more. This data can help businesses hone in on their most profitable customers and build a business plan to increase overall profit.
4. Marketing report
Marketing strategies like PPC and SEO create a ton of data. However, that data often remains siloed in the tool that gathers it. BI allows brands to pull all that data into one tool where it can be analyzed and leveraged.
Tips For Integrating Your Business Intelligence Tool
To be successful with BI, businesses need to make sure that their entire organization is committed to using BI and understands how — and why — it matters. Here are five tips to streamline the implementation process.
1. Business needs
Before launching, make sure your business needs match the features BI can provide. If you need access to specific data or to pull data from specific tools, such as a PPC platform, make sure the tool you select will work.
2. Amount and quality of data
Where will your data come from? Is there an error margin? Remember that poor data will lead to poor decisions, so data quality is important.
3. User experience
When comparing platforms, consider user experience carefully. Seamless user experience can promote user adoption and ultimately drive more value from BI products and initiatives.
BI tools can provide a wealth of information — which can become a challenge when users don’t know how to use them. Create a training program to ensure people know how to access the data they need and make sure they understand not just how to access data, but how to apply it. This can be especially useful when looking to hire freelancers or bring in outsiders to your team.
5. Get buy-in
Everyone in the business — from executives to customer service providers — needs to be on the same page about the importance and use of BI. Focus on how tools will make their job easier and help the business grow not just the type of data it provides access to.
Choose The Right Business Intelligence Tool
You want to find the right BI tool for your e-commerce business. But, there’s a problem — there are dozens of tools on the market all with different price points and features. How do you know which will give you access to the data you need to scale?
Here are a few features you will want to look at.
1. Ad Hoc analysis
Ad hoc analysis is a process designed to answer a single business question. For example — How much did we sell last month? Or How many sales did our new influencer campaign bring in?
Dashboards allow users to view overall metrics and drill down to a more granular view. For example, a sales dashboard might show overall sales metrics but also allow a sales manager to see detailed data about a specific salesperson, time period, or region.
3. Real-time analysis
In addition to past data analysis, real-time reports give businesses access to data about what is happening right now. This allows businesses to make critical decisions faster as trends develop.
4. OLAP Tools
OLAP tools allow businesses to aggregate and analyze data from multiple sources, including marketing tools, sales tools, CRM, and e-commerce platforms. This function creates a more complete picture of the overall trends of a business.
Visualization turns overwhelming amounts of data into more digestible formats, allowing users to see changing trends and better interpret raw data. For example, displaying sales trends in a line graph allows executives to easily understand how sales have increased or decreased over time.
The Future of Business Intelligence
BI is already helping e-commerce businesses make strategic business decisions faster. However, as technology continues to evolve, what can businesses expect? According to SelectHub, Machine Learning and AI will allow BI software to become increasingly self-sufficient in the coming years.
Other trends e-commerce companies should be on the lookout for include increased collaboration, integration, data usage, and the ability to store far more data than ever before using cloud-based storage solutions.
Business intelligence involves gathering and processing large amounts of complex data for the purpose of supporting strategic business decisions. It provides structured, data-driven answers to questions like “What happened?” and can help e-commerce companies make more strategic decisions about future growth.
Business intelligence is not just for large e-commerce companies — even small and growing e-commerce businesses can use BI to better understand how marketing, sales, AP, and other data-generating departments are impacting growth.
Successful BI implementation requires looking for an easy-to-use tool, getting buy-in from stakeholders, and ensuring staff has adequate training.
Ecommerce companies that want to stay competitive in the coming years should look to implement BI today.
About the author
Beatriz Estay is a Small Business Content Marketing Specialist at BigCommerce and the fashion and lifestyle influencer behind The Letter Bea, an Austin, Texas-based blog. She holds a B.A. in Communication and Sociology/Anthropology from Lake Forest College and specializes in e-commerce, marketing and merchandising strategies, influencer and branding work, and social media. When she’s not curating content, Beatriz loves to travel the world, share her journey with Type 1 Diabetes, and find Austin’s most Instagram friendly spots.