Big Data and Retail, and How You Can Get Right in the Middle of Action
In the past, companies often relied on tradition and experience to do business. A retailer will have a Christmas sale to celebrate the holidays because it is traditionally a time when people shopped a lot. You have experienced managers doing the thinking.
Sometimes they get it right. Sometimes they don’t. There is no way of telling if last year’s trend will be the same this year. There are very few insights on how you can improve on things that happened in the past. And knowing which products to sell and which services to offer are pretty much left to a guessing game.
All of that uncertainty makes business decision making a combination of experience, tradition, some research, and a whole lot of luck.
Thankfully, big data is changing all that. Data is helping retailers do things differently. They have started to rely on information gleaned from data rather than sheer luck.
But how does big data help retailers specifically?
1. You can be more customer-centric.
Data forces retailers to focus on customers. Remember that being customer-centric will only help you sell more of your products. The trick is in customizing and personalizing your products to capture the customer’s interest.
That is easier said than done. For one, collecting personal data from customers is an uphill battle. Buyers, however, like customized offers. How do you do that without knowing things about them?
You should balance being intrusive and being helpful. There are still ways to get personal information from your customers without creeping them out. For instance, knowing their previous searches, or looking at their order history. Or you can ask them to make sure their details are up to date, such as shipping details.
Big data’s contribution becomes more apparent when you have multiple channels. It helps you analyze every step in your customer’s journey on different platforms. You can use this insight to improve your remarketing efforts and even score a sale. In short, big data allows you to follow your customers discreetly across the sales funnel.
2. Data lowers churn.
Retailers know that it is much more difficult and expensive to find a new customer. This fact is the reason why they hold on to their existing customers. Big data can help you retain your buyers.
It can show you patterns and behaviors of long-time customers, allowing you to identify new leads. You can customize a promotion for repeat buyers, allowing you to start a relationship with them or create bonds. It also allows you to know what they need and give them that.
3. Data improves the supply chain.
Inventory is good. After all, you cannot sell what you do not have in stock. But too much inventory can be bad for business.
Big data can help with stock and inventory analysis. It makes sure that you have enough stock, while also avoiding oversupply.
It has predictive analysis that offers you a view of seasonality, trends, and other factors. Knowing how much in demand a certain product is, you can now buy the right number of goods or even raw materials.
You can also implement real-time ordering systems that will free you from worrying about stock. Furthermore, big data does not only rely on your internal information. It can also tap external data, such as weather, news developments, and others.
4. Strategic planning.
Big data can help you when you are making long-term plans. Analyzing the data on buying patterns, you can come up with more appropriate prices. For instance, if you find that most of your customers buy more during a certain month, you might want to lower prices outside of these months to attract them to purchase. It can also reveal which products are not selling that well.
This means that you will be saying goodbye to end-of-season sales. With a customized promotion and strategic pricing, you can have more revenues. This principle has been used by travel websites to offer different pricing depending on how close you are to the travel date, the demand for a particular city or destination, and even the customer’s location when he or she made the search.
You also have to look at recommendation engines that are able to look at the customer’s previous orders. The engine is now able to recommend complementary products. For instance, the recommendation engine sees that the customer bought an iPhone. It can suggest buying a phone case or some other accessory.
5. Lowers costs.
Big data analysis can disrupt your organization. It is true that work often slows down when big data is introduced, but when things normalize, you will see some benefits in relation to costs.
Your employees will be changing their mindset and the way they do their work. And processes are going to be changed. These business processes redesign and re-engineering can lead to cost reductions, automation of some work, and consequently, free up your employees to focus on the more important task instead of admin work.
It’s not easy to get into big data
It may surprise you that only a little over a half, or 53 percent, of all companies, have adopted big data. There a lot of reasons why this is so.
- First, it is difficult to define the scope of big data in your company. There are a lot of factors to consider, such as the data sources to be included, how to analyze the data, and how reliable the data is.
- What’s more, the company should ensure that they are getting enough data to solve all questions they are trying to answer.
- Another roadblock, they do not have the know-how or the experts to analyze the data. They might not be able to afford a data science team.
- Moreover, there are issues that relate to governance and security. Storing, using, and analyzing a huge volume of customer data can increase your operational risks.
- Cybercrime is also a very real possibility. One successful hack and your customers’ personal data are all out in the open. Your reputation is shot and governments are sticking you with penalties.
Four Cornerstone can help
Four Cornerstone can partner with you on your big data journey. We can get you all the latest technologies, top solutions, and the best practices on adopting a strategy. From getting you set up with Oracle’s many big data solutions to helping you come up with your own strategy, and right down to securing your systems, you can rely on us. Call us at +1 (817) 377-1144.
Photo courtesy of Duncan Toms.