Tony Kyberd, COO of ecommerce platform and services provider Volo Commerce, looks at how having a handle on your ecommerce data can improve your long term sales and profitability.
Data is one of those things that everyone reads about and understands the importance of, but doesn’t get the attention it deserves. It’s the classic case of ‘easy to say, hard to do.’ Most people reading this article are probably focused on making a living, doing what they do well and getting their business in the best shape it can be for the November and December peak. Oh, and figuring out how they can navigate their ship through the choppy waters of ‘living with Covid’ and coping with Brexit.
It would be nice to have complete visibility into what’s really happening in the business. Naturally, though, firefighting and reacting – working in the business – will always take priority over getting good intel on your how you’re really doing, which is working on your business.
Marketplaces, on the other hand, are obsessed with data and devote resources to it. Not just because they have immense amounts of it, but because they know that data drives the right decisions on the buyer experience, and they absolutely need to get that right to sustain the volumes of traffic. They use that data to improve the consumer journey to the marketplace, through it, and back to it, time and again. Are you similarly obsessed with the data you get from your own web store?
If you buy into the marketplace argument that the more you focus on your data, the more successful and profitable you’ll be, then owner-managers and leaders of ecommerce businesses should in theory spend all their time analysing their business so they can make good investments and leave the others to implement them. Being able to do this relies on having three I’s on your business – information, insight and instinct.
The Three I’s
Data is one thing, but information is another. What we really need to run our ecommerce businesses successfully is the benefit of the data, the end product we can do something with. That end product is information. The trouble is, we can only get the information when three things happen. First, we have easy access to the data we want; second, the data is reliable; third, we can manipulate the data to give us useful insights.
For example, the information on your listing data quality is crucial to help you improve your showing in searches or winning the buy box. If you sell on a number of online marketplaces, you need optimise your product data for each of those channels. If you have many hundreds or thousands of listings, this is pretty arduous. Useful information for you is which listings are not optimised, where they’re falling down, and what they need to improve. Ideally you should automate this, or outsource it to specialists, to provide the best possible experience for your buyers.
Once your buyers buy from you, you need sales performance information on your suppliers, stock levels, sales, orders, deliveries, returns and service. What you really want, as I mentioned with listings, is information to improve: which of your products are selling the best, which are moving slowly or not at all, which customers are buying the most and most often, what actual margin you’re making on individual product lines, and when you need to re-order products at current sales rates.
Insight is what you get from the information. It’s the knowledge to make good decisions. You need insights across your customers, products, suppliers, channels and regions. Dashboards are a great way to get quick insight into the high level information, and flexible filtering options and flexible reports allow you get into the specific detail you want for your business.
Manipulating the information into insightful content takes time and skills. You can either do this yourself or you can invest in a business intelligence (‘BI’) tool to do the hard work for you. The more comprehensive or flexible the BI tool, the less work you have to do to get your insights. Again, if you sell on multiple channels, you need the tool to connect to all your channels so you have one analytical window on business performance. Flexibility is the key here, since if you can only get a fixed set of reports, then you still have to do a good bit of the manipulation yourself.
Many people are running their ecommerce business on instinct, the gut feel and sensible bets that have served them well so far. The great thing about having the insights from the information on the data you’ve collected, however, is that now you have the confidence to act on your instinct, because you know your data supports it. Conversely, if the data doesn’t support your instinct, then you get the chance to rethink your hunch before committing either way.
Unfortunately I didn’t have the space here to go into too many examples, but we’ve written a fund of articles in the Tamebay know your data series where we cover the intel you should be gathering on the various areas of your ecommerce business. We’ve also sponsored a Tamebay white paper on how to scale your ecommerce business – and clearly data is a critical component of scaling successfully – which you can get here.
I recommend you start by addressing these questions: What performance indicators are we going to measure? How will we measure them? How will we get the intel? Who can we talk with to get that, if making time for it will be a struggle?
In reality, you probably can’t allow yourself the luxury of spending all your time studying your business. That said, using BI technology to deliver powerful reporting (information) and flexible filtering (insight) will allow you to more confidently go with your instinct, or not, and profit accordingly.
To talk to us about how you can get the kind of data insights that lead to better growth and better profits, please get in touch.