The internet is flooded with data and e-commerce businesses have started to get a hold of how valuable that can be when it comes to better serving customers and improving their financial performance.

The days of surveys, questionnaires, and feedback requests are long gone – customers probably appreciate that – and the dawn of a new era is here, the era of data processing.

Nowadays, software companies have stepped up their efforts to support businesses in processing the huge amount of data that they typically get from different sources.

One example of this is, an application that can be integrated with any of the leading e-commerce platforms to analyze and provide insightful information about multiple aspects of the online business by using the data that flows through their systems every day.

In this article, we highlight four ways in which data analytics is transforming and helping e-commerce businesses in improving their operating and financial performance.

#1 – Better understanding of the customer

Understanding what customers need, want, and desire, even before they know, is perhaps the most valuable skill that a store owner can develop – especially in the e-commerce landscape.

The reason for this is that being the first in a niche or segment can turn out to be a windfall and data analytics can help in identifying potential shopping trends even when they are just starting.

Think of an online apparel business. The store processes a lot of information every day including the number of visits that a product receives. A data analytics platform could identify an unusual spike in the traffic that a certain category or product gets. 

Even if that does not translate into higher sales right away, it could be a signal that customers are looking for that and owners can react rapidly to see what they can do to turn visitors into customers.

#2 – More accurate inventory projections

Generalist stores typically have to deal with restocking dozens if not hundreds of SKUs and managers don’t necessarily know at first glance how much of each item the store may need to purchase based on the demand it has been getting.

Data analytics can provide insights regarding what would be the right quantity to buy and why by analyzing past trends. For example, a product or category with an inventory turnover rate that is off the charts is signaling that larger quantities need to be purchased as the store has not been able to fulfill the demand for these goods in previous instances.

Moreover, data analytics platforms can also browse through all supply chain data to identify the best suppliers based on different criteria such as delivery times, prices, quality, end-customer feedback, etc.

#3 – Increased efficiency of marketing budget

Marketing spending is quite elevated for most online stores whether the money is spent on online ads or search engine optimization (SEO). With this in mind, understanding the return on investment produced by each of these initiatives and the impact they have on the store’s top-line performance is crucial.

Data processing platforms can organize and interpret data obtained from multiple sources including social media ads and posts, website visits, landing page traffic, and other similar channels to provide insightful reports on what is working best.

#4 – Valuable insights regarding the store’s finances

The commercial side of an online store typically gets most of the attention but financial management is what ultimately secures that its activities are profitable and sustainable. 

Keeping the overhead in check, learning which products produce the best margins, and finding out where the money is going are just a brief list of the kind of insightful information that a data analytics platform can deliver regarding this particular area.

These insights can help owners in making decisions that increase the store’s profitability and the return earned on the capital that they have invested into the project.

Bottom line

It has been said that data is the next oil. That phrase captures how valuable data is in today’s increasingly digital world. 

With this in mind, data analytics firms have emerged as the drilling platforms of the internet’s huge data well and store owners can take advantage of how advanced data processing technology is nowadays to better understand customers, improve the store’s finances, make the most out of the marketing budget, and forecast inventory needs more accurately.