Over the last couple of years, big data has become popular and is being leveraged in various industries. This includes marketing, e-commerce, and information technology. No wonder we see companies that provide business intelligence services pop up here and there.
That’s because big data allows you to make informed decisions. It also comes in handy when identifying and fixing problems in your business.
Simply put, big data enables you to streamline your processes and run your venture efficiently.
But what is big data?
Defining Big Data
In a nutshell, big data refers to collected, stored, and managed comprehensive datasets. You can interpret it with the help of analysis and data visualization tools.
When analyzed, these data sets can reveal patterns and trends in human behavior. And you can leverage these patterns and trends to understand your market or decide whether it is time for your business to pivot.
The Benefits of Using Big Data in e-commerce
In a study by BARC, using big data allows your business to reap the following benefits:
- To make better and more strategic decisions
- Improved control over operational processes
- Cost reduction
- A better understanding of customers
Usually, this is important, especially if you are an e-commerce business. Many data-driven e-commerce businesses are constantly measuring and improving the following things:
- Shopper behavior
- Customer service
- Customer experience
- Online payment processing and security
- Target advertising
Now that you know the definition of big data and why you need to leverage it to grow your business, we have listed nine ways you can maximize them:
1. Predict New Trends
Every online retailer wants to know the best product that they can offer up against their competitors.
For instance, trend forecasting algorithms remove the guesswork in predicting “the next big thing.”
Sure, people are flocking to buy air fryers nowadays. But it might be a different thing next year. However, knowing what the next popular product will be without the help of trend forecasting can be tricky.
Who knows? It might be a solar-powered air fryer or a different product altogether.
You can use various social media listening tools to monitor trends. All you need to do is input a relevant keyword or hashtag and you can generate social media posts related to your brand, the product you are selling, or a product idea you want to build upon.
As for sentimental analysis, you can generate data reports using the same social media listening tools to track what people say about your brand and products. Some tools would even tabulate these sentiments so you can have a general feel of how the market perceived your business.
2. Provide Personalized User Experience
Before, the e-commerce industry lacked a personal touch. This has prevented shoppers from establishing a connection with your business.
Sure, customers can use the search bar or the product categories to look for the products they want to buy. However, there is more to customer experience than making purchasing easy as a breeze.
Through customer analytics, your e-commerce platform can automatically recommend relevant products. As a result, you have the opportunity to increase your online store’s average order value.
Combine that with Google Analytics and sales data, and you can figure out the demographic of your loyal customers.
This can come in handy if you want to efficiently expand your business. For instance, your sales data is showing an increasing number of customers in the United Kingdom. You might want to establish a fulfillment center in the country to cater to your UK market better.
This is one way to get ahead of your competition.
3. Demand Forecasting
Market demand plays an integral role in the optimal turnover of goods and grows one’s revenues in the long run.
The longer an item is kept in the warehouse, the more you will need to spend on storage and inventory management.
If you know the market demand for a particular product, you can determine whether you need to stock up or run a clearance sale. This is to ensure that you get more bang for your buck. Otherwise, you might suffer from financial setbacks down the road.
Big data handles this problem by forecasting the specific demand for a particular group of goods or items. This allows you to know which specific products you might need to store in your warehouse and generate sales for a particular period.
According to a 2019 survey, millennials make 60% of purchases online. As more younger millennials enter the workforce and older millennials progress in their careers, you can expect an increase in their spending.
But if you want their money, you should provide them with a personalized shopping experience.
Here’s the thing: The only common denominator among millennials is their age range. While people consider millennials as impatient and self-absorbed, some do not identify with it. Hence, targeting them with marketing campaigns using monolithic data is futile.
Instead, you should use customer data to provide a personalized online shopping experience. This can include upselling or cross-selling relevant products based on the customer’s purchase history.
Another excellent example is automating recurring purchases.
If you run an online grocery, for example, you can rely on customer data to identify which products your buyers always add to their online cart. Thus, you can add an “Order Again” functionality in your customer’s dashboard.
5. Optimized Customer Service
Do you know that 71% of your customers expect to get help online within five minutes?
Customer satisfaction is critical when it comes to customer retention. You may have exceptional products at competitive prices. But you are less likely to turn them into repeat customers if you do not optimize your customer service.
That’s because customer experience is what encourages people to refer to your brand to their family and friends. And this means new potential customers. Hence, you should prioritize customer satisfaction.
Luckily, big data can help you improve customer service. This includes better product recommendations, reduced delays in delivery, and boosting customer retention.
Another way big data can help is by identifying the micro-moments that changed the way customers perceive your services. A great example is showing social media ads when someone mentioned or searched your target keyword on Google.
6. Sales Generation
Boosting your conversion rate and increasing your sales are some of the few uses of big data. This can come in the form of web analytics, helping you identify web traffic sources, popular entry and exit pages, traffic demographic, and more.
It also includes identifying which products are popular to different customer segments or in a particular location. From there, you can improve your online store or the services that you provide where necessary.
It can be changing your e-commerce platform to something better or switching to a more reliable third-party logistics partner. That way, you can enhance your website’s performance and ensure customer satisfaction.
Big data can also impact your e-commerce SEO efforts. That’s because it informs you of the keywords customers use to find your website, or even within your website search tool. That will help you optimize your online store. In addition, you can conduct multivariate testing to identify which design elements (i.e., button colors and texts) can compel your customers to take action.
7. Improved Inventory Management
An inventory refers to the stocking of goods that will be used later on.
Therefore, inventory management is crucial if you want to optimize your resources and boost sales.
You should know by now how to effectively manage your inventory. So that if ever you experience a sudden spike in sales, supply remains unaffected. To achieve this, the stock and supply chains are analyzed thoroughly.
Machine learning algorithms analyze data between elements to detect patterns and correlations in purchases. The analyst will then analyze this data and develop a strategy to boost sales, create a timely delivery, and manage your inventory stocks.
The combination of big data and machine learning allows you to manage your inventory better. That’s because you can identify what products are selling well throughout the year or during a particular season. This can prevent fluctuating stocks, which can make or break your month-on-month and year-on-year sales.
You can also use extensive data analysis to track demand, ensuring that you get the right amount of inventory. You will also get to determine the right amount of products that are needed for specific periods.
As a result, you will not lose sales because a product is out of stock.
8. More Secure Online Payments
Big data analytics offer greater security when it comes to online purchases.
With the help of machine learning technology, you can analyze broad sets of information that can help you detect banking frauds. Thus, you can ensure the security of your payment channels and customer data storage.
For example, Paypal uses extensive data resources, enabling machine learning algorithms. Usually, these algorithms can analyze billions of transactions to identify any possible fraud transactions.
Similarly, one can also use big data to view which payment methods are best or most popular.
9. Better Pricing Decisions
One of the essential factors which can affect your site’s conversion rates is competitive pricing for your products.
Competitive pricing can make people buy your products. But the process of constantly checking the prices of competitors can be exhausting. This is where checking pricing comparison websites come in handy. Such sites collect and aggregate pricing data from various sources. That way, you can check pricing information in one place and make informed pricing decisions without hassle.
In a nutshell
There is no doubt that big data can be a goldmine of information that can help you with your business if you use it properly.
When used correctly, it can help you improve your e-commerce business. This can include the following:
- Improving website performance
- Better inventory management
- Personalizing marketing campaigns
- Increasing conversions and sales
- Ensuring customer satisfaction
Making the most out of big data can be fascinating for an e-commerce business owner. Once you realize what it can do for your business, big data can be an indispensable asset.
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About the author
Jake Rheude is the Director of Marketing at Red Stag Fulfillment, a reliable provider of California fulfillment services. He has years of experience in e-commerce and business development. In his free time, Jake enjoys reading about business and sharing his own experience with others.