Cyber Monday and big data go hand in hand because understanding consumer spending habits is crucial to success for retail companies. And that reliance on data is only going to increase going forward. According to the National Retail Federation, 75 million consumers are expected to browse retail websites in search of deals. To capitalize on this, smart retailers must find a way to use insights and intelligence to improve their customer engagement and experience to boost their revenue.
If you’re looking to drive sales on Cyber Monday, or in general, investing in a big data strategy can provide your business with three key benefits: a personalized customer experience, dynamic pricing, and smart inventory management.
In the early days of online shopping, most retailers provided the same digital experience as their static web pages. Converting browsers into buyers fell to old-fashioned sales tactics, like organizing the merchandise into familiar categories.
Today, McKinsey has estimated that as many as 35 percent of consumer purchases on Amazon come from product recommendations. By using customer information, Amazon can tailor its site to make personalized offers. The analytical ability of pioneering firms like Amazon means retailers must have a tighter grip over how they use data to create effective websites.
Your customers interact with your business across multiple channels, both in stores and online. Building a profile of these customers is a challenge, especially because of the huge amount of data collected. This is a challenge that must be met head-on, as the development of a personalized customer experience by leveraging customer-rich data is critical to success.
The more your business can analyze the data it collects, the better it will understand customers’ preferences—and the easier it will be to create tailored experiences. That tailoring starts with your landing page. Know your customers well, and you can greet them with products that match their interests.
Retailers spend huge amounts of money honing their approach across all channels. Beta testing can ensure simple mechanisms—like the color of a website or the placement of a basket—do not hinder customer experiences online. An effective recommendation engine, meanwhile, will boost experiences and potentially sales.
Personalization is not just confined to Cyber Monday and big data, or to online channels. Traditional retailers might consider giving customers a discount if they pick up products in store. This enticement to a physical location might mean that customers buy more goods while they browse.
If you want to outsell your competitors, you cannot afford to be selling products at a higher price. Prices are transparent in the digital world, and anyone searching online will quickly realize when your fees are higher.
Dynamic pricing gives retailers the opportunity to change pricing on the fly. It’s a tactic that makes Amazon such an effective presence. Evidence suggests Amazon changes product prices 2.5 million times a day, meaning an average product’s cost changes every 10 minutes.
Effective online retailers like Amazon will source data from a range of areas that include competitor pricing, buyer behavior, browser history, and product attributes. They bring this information together, analyze their pricing strategy, and automate prices dynamically.
Dynamic pricing gives retailers the flexibility to change prices and dominate markets during critical periods. Estimates suggest that dynamic pricing has helped Amazon boost profits by as much as 25 percent.
Effective personalization and dynamic pricing are not the only factors that help guarantee sales. Enticing online customers to buy a product won’t work if they check out and discover it’s no longer in stock.
On Cyber Monday, there will undoubtedly be “hot” items that sell out quickly. Smart inventory management ensures that customers don’t leave empty-handed. It provides visibility, so customers can see how many products are still available. That capability can be crucial during holiday sales, when limited numbers of products might be available at a specific price point. Further, it uses a range of sources—such as historical information and previous promotions—to forecast how much inventory will be required and where that stock should be located for fulfillment.
Big data analytics plays an important role providing better demand forecasts and inventory visibility, and is critically important during holiday sales. People want to know they’ve secured a bargain, and have a positive experience while doing so, so if you fail to create smart inventory management, your business could leave a negative impression.
While a personalized experience, dynamic pricing, and smart inventory management are key elements, other data-led approaches can also help boost sales. For example, smart retailers use data to improve the site navigation process for customers.
Across all processes, the effective use of real-time data is crucial. Right now, many organizations focus on creating a cumbersome data model, a waterfall implementation process, and then honing that approach over time. Today, big data techniques and streaming analytics can help leading retailers make changes quickly and effectively.
Rather than using pre-established data models to create experiences, realize replenishment needs, and set prices, retailers will use streaming analytics to change prices and make personalized offers in real time. These decisions will occur while consumers are onsite, especially during holiday season sales.
Further advances—such as virtual reality and augmented reality—will provide other data-enabled sales boosts. For example, customers buying clothing will be able to dip into a virtual wardrobe, while customers looking for furniture will be able to visualize how new items might look in their homes.
Cyber Monday and big data play a key role in retail sales. Businesses that take advantage of analytics can personalize experiences, take a tighter grip on pricing, and predict demand effectively. All these factors prove to be competitive differentiators, especially during key events. Now is the time for you to use big data analytics to change retail processes and digital business capabilities for the better.
To read more about how big data can also drive Black Friday sales, read this article.