In the fast-evolving retail industry, data won’t just be the key ingredient to success, but outright survival. This post looks at the disruption taking place in retail, and a couple examples of the data-driven disruptors that are succeeding today.
If you look at what’s been happening across industries in the past few years and tried to come up with a single-word description, “disruption” wouldn’t be a bad pick. Transportation, travel, and tech industries are fundamentally different than just a few years ago.
You could make a case that no sector has seen more disruption than ecommerce. While ecommerce has had a fundamental impact on buying behaviors for years, that’s only part of the story.
Read recent articles on retail, and you’ll see phrases like “dire prospects” and a CEO comparing retails’ “bloated square footage to the housing bubble” (Fortune). You’ll also read how brick and mortar stores are “shuttering at a record pace” (Wall Street Journal).
At the same time, you also see retailers bucking the trends and seeing growth. While success and failure will be based on a lot of factors, data savviness will be a key commonality for those winning in retail moving forward. Following are a couple examples of retailers that are leading the way.
You pretty much can’t discuss ecommerce and disruption without including Amazon. Their deftness in leveraging ecommerce and in building an optimized infrastructure and fulfillment capacity has been integral to their growth. However, I’d argue it is their ability to harness data for optimizing customer service that may be their biggest differentiator and biggest asset moving forward.
Here’s a quick overview of one important process:
- Amazon leverages recent and long-term sales data to establish the sales rank of products.
- Through their algorithms, they then use sales rank to inform product placement in search results.
- When shoppers conduct searches, optimal products appear.
This is one way they can create differentiated, personalized product experiences, helping speed up the customers’ search, while maximizing Amazon’s sales.
It is through this data-driven intelligence that Amazon is becoming not only the leading retailer, but the leading place for shoppers to begin product research. Amazon has effectively taken the position of the key intermediary between brands and customers.
Fast-fashion retailer Zara is another clear example of data helping to fuel disruption in retail. For traditional fashion labels, moving from a new fashion design to having a new item appearing in stores is a multi-month effort. Zara has compressed these cycles to a few weeks.
Zara established just-in-time production and a responsive supply chain, and they’re using market data to inform their decisions. In this way, they are able to quickly replicate the latest fashions appearing on the catwalk, and adapt more quickly to fast-changing trends.
A recent Bloomberg article explained Zara is “shipping fresh styles to stores twice a week. Guided by daily data feeds showing what’s selling and what’s stalling, the teams develop fashions for the coming weeks.” The article continued to report that Zara is “a breakaway success while most global clothing retailers are struggling.”
For many retailers, web data represents a resource with enormous—but largely untapped—potential. Following are a few areas in which retailers can start to put web data to work for their businesses:
Web data can provide a wealth of intelligence that can help optimize marketing planning and efforts.
- Promotions. You can use web data gathered from promotions of competitors and partners and compare how they evolve over time. By leveraging web data, you can track different promotions in the market and see which are more effective. These insights can be invaluable in ensuring new promotions stand out, while adopting the attributes that helped prior efforts succeed.
- Search engine rankings. By leveraging web data, retailers can begin to more systematically track the rankings of the key search terms that matter to their businesses. Web data enables you to track the relative placement of both ads and unpaid search results. You can see where competitors’ ads and pages are appearing, and monitor how those rankings change over time. With this data, you can gain insights that are invaluable in optimizing ad placements and search engine optimization efforts.
Market Intelligence and Strategy
Web data offers enormous potential for retailers, enabling them to gain more timely, consistent, and granular market intelligence on competitors, partners, and customers so they can build smarter plans and tactics. Following are a few key areas to consider:
- Demand analysis. You can track category sales trends by capturing data from classified, ecommerce, and competitor sites. With these insights, you can more effectively forecast and meet demand.
- Pricing. With web data, you can gain current, comprehensive views of the pricing of competitors, partners, distributors, and classifieds. This enables you to establish benchmarks for how your pricing compares to competitors. You can also gain the insights you need to optimize pricing strategically. With these insights, you can ensure pricing is competitive so you boost sales and you can maximize profits by identifying opportunities to raise prices.
- Packaging/products. By harnessing web data, you can gain a systematic look at the different offerings in the market. Through a comparison of the assortments of offerings available, you can identify product and pricing gaps.
Web data offers retailers a great way to enhance their understanding and management of their online channels. You can use web data to track reseller sites so you can verify whether they are complying with established terms. With web data, you can also discover unauthorized resellers promoting your offerings, and find out if fraudulent or counterfeit products are being sold.
If you’re in the retail segment, now’s the time to start maximizing data as a strategic asset. Start collecting data and build a “data lake” for your organization to start leveraging buying behaviors.
Bear in mind, this is not an IT project—it is a business project. This is a critical distinction, one that will have key implications for hiring and promotion, business strategy, and technology and tool investments. Fundamentally, this is about more than digital distribution, or using data to enhance products. Ultimately, the data being gathered today will be fueling digital products and services of tomorrow.
Leveraging web data to propel your ecommerce business doesn’t have to be a difficult, costly, or time-consuming exercise. If you haven’t given Import.io a try, be sure to do so, and see how easy it can be to start putting web data to work in your organization. Sign up for a free trial.