We are currently living in the digital era, and the ever-growing technological advancements will continue to pave their way into our everyday lives. There are number of industries embracing the benefits that technology has to offer. Among such industries, the one that is thriving the most is e-commerce.
According to Statista, the e-commerce industry is booming and is expected to hit $4.5 trillion by the year 2024. As e-commerce has grown, so has the technology that allows us to make use of stored data.
In recent times, big data has become widely used jargon among businesses of all sizes. However, not all have fully embraced it.
Big data, refers to significant sets of data that are collected, stored, and analyzed with the help of machine learning technology. It is mainly used for predictive analytics and other methods used to extract value from data. According to Statista, IT spending on data center systems globally is expected to amount to $208 billion in 2020.
Let's find out how big data can significantly enhance e-commerce businesses.
To help in enhancing e-commerce, big data can predict the latest, accurate, and most relevant trends. Technology, including social media, help define those trends and successful brands aim to create a product that becomes the latest bestseller.
However, the goal is to know what that is before the competitors do, and employing big data can significantly increase your chances of doing so. There are numerous tried and tested trend forecasting algorithms now at play that allow retailers to reduce the effort of guesswork and provide accurate analysis for predicting the next big industry move.
Big data is highly beneficial for picking up on a recurring pattern. By recognizing and analyzing recurring shopping patterns, big data helps e-commerce stores understand their customer preferences. Marketers can then develop business strategies that appeal to customer needs.
Big data can pick up seasonal trends to see which products are in high demand during occasional events or seasons and help businesses strategize around it. For example, many beverage brands like Coca-Cola recognize the value of this and increase their marketing efforts around the time of the Super Bowl. According to Fox Business, Coca-Cola pays around $10 million just for a 60-second ad slot.
Many times consumers visit stores to compare the price of a similar item elsewhere, look around, or maybe just to see if they like something they might buy at a later time. At a physical store, customers might be approached by a sales executive or personnel to help them decide, convince, and try to change their mind to buy something right away.
As daunting as this process can be for both the parties, it is much easier and transparent online thanks to big data analytics. With the help of external information about the customer, it is easier to recognize whether he/she is a first-time customer or here again for purchase. E-commerce retailer can not only see if the customer is here through an ad or any other marketing medium, but can also keep track of their preferences in the future.
The customer is king, and every thriving business has abided by this one rule of staying successful. Your e-commerce business will flourish only if customers are happy with the demand that you are fulfilling and are actively available for their support. Not long ago, businesses undermined the value of active customer service. But as of recent times, any e-commerce business that has a long-term perspective for the business would agree that they are a customer-centric company and that big data has greatly helped them achieve it. As per the recent Deloitte survey, 72% of companies now believe that analytical reports from the customer service department have greatly helped improve their business. They have experienced enhanced growth from providing better customer service.
Thanks to big data, we can expect even more significant marketing changes. Marketing will become considerably sophisticated. Retailers and e-commerce business owners will be able to better recognize what marketing channels work for their type of business. Big data can help brands stop wasting their resources and efforts, and instead put them to good use where they will get guaranteed results. For instance, you don't need to send an email across all your potential customers. You can segment your data based on their affinities.
E-commerce used to be a very bland combination of window shopping and product-centric market. But as e-commerce businesses have grown in light of recent technological advancements and tactics to provide better closure to customers, the industry has grown more customer-centric.
Today, buyers have a more personalized experience as they hit an online store for shopping. From readily buying products to adding items to their wishlist, e-commerce websites now provide an enhanced personalized user experience for customers. Consumers can use features to recommend and review products that, in turn, help businesses better understand the customer's point of view and get meaningful feedback.
Businesses are putting so much time, effort, and resources into learning how to leverage big data. It is even more important for them to realize that the end goal should be to have a higher conversion rate of turning mere website visitors to actual buyers and longtime customers. Big data can help marketers learn why customers visiting the site do not engage or indulge in any buying behavior.
For instance, your online writing website has an offer for customers to buy coursework. Many customers visit your site through the ad promoting it but do not actually engage in any of the services. In such a situation, big data can tell you if the issue is with the type of customers your ad is targeting or with pricing, or the advertisement itself.
Big data has consequently helped the e-commerce industry realize what optimized pricing is and how it works. It has revolutionized the pricing system for the better, as many companies now realize that pricing needs to be a strategic move rather than just a distinct way of balancing out your profits. Many companies have completely dropped the idea of manual pricing since big data has provided ways to compare and contrast their prices with that of competitors.
Big data can help brands price with the market demand, customer choice, and competitor pricing in mind – while still turning a profit.
As we read above, thanks to big data companies now understand that pricing needs to be a strategy. Big data and machine learning have greatly impacted the competitive pricing strategy to grow and adapt as per the business utilizing it. There is no fixed set of rules to follow and hence a less tedious task for business owners than ever before.
Now that the world has embraced blockchain and cryptocurrency as a modern medium of exchange, it is high time businesses use big data to analyze which payment channels actually work and sit well with their customers. Although it is in the best interests of a company to have multiple payment options for the convenience of the customer, businesses should not underplay the power of acknowledging which medium of payment customers find it easier to shop with and leverage that accordingly for their benefits. For example, many e-commerce businesses collaborate with credit card companies to offer discounts to customers who choose to pay through it.
In addition to all the immense benefits we are listing, big data also has significant implications on how companies manage stock and inventory. Machine learning and big data is advanced enough to tell brands the exact number of products they need to store, the date in which they will require restocking, and can help manage all the inventory-related finances of the business.
Automating manual tasks can increasingly cut labor costs and make use of human resources for more skill-based tasks. It dramatically improves customer experience and integrates better data understanding than a human can. For instance, a key example of automation in e-commerce businesses are chatbots. They are a significant alternative to actual customer service personnel sitting behind the messaging domains, answering frequently asked questions from customers. Chatbots are so advanced that they can hold human-like conversations with customers as well as provide in-depth support.
As machine learning grows stronger and more sophisticated, it will be easier for businesses to tackle global and local sales simultaneously. Many websites of global brands have already embraced this as they leverage big data to provide services accordingly with mediums of currency and language. Many e-commerce stores have become adaptable to countrywide shipping, sales, advertisement, and enhanced engagement from customers.
For instance, some cosmetic brands from the Middle East have started to get popular in the west. Such brands have integrated their sales accordingly by collaborating with website domains that allow easy access all the way to this part of the world.
Social media has played a hand in the growth journey of the e-commerce industry. It has increasingly helped brands develop a customer-centric approach for marketing, advertisement, and sales.
Social media can also help brands better understand customer behavior. Businesses have access to a plethora of information including likes and dislikes and enhanced trends forecasts that they can use to their advantage. Brands can even ask customers to fill in surveys and feedback forms, give reviews, and provide relevant data that they can utilize later to develop future campaigns.
All in all, big data is a growing industry trend that will be a huge part of our near future. As it continues to evolve and help businesses worldwide, big data will further improve e-commerce businesses, no matter at what growth stage they are at.