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The Ins And Outs Of BI For Retail
Part 2

by Lyndsay Wise, President, WiseAnalyticsMonday, December 21, 2009

Part 1 of this article looked at the difference between online and in-store analytics and the benefits and applications associated with retailers and their adoption of business intelligence.  Part 2 focuses on ecommerce and e-tailers and their use of analytics to drive business performance and gain better visibility into their customers.

As discussed in Part 1, online retailers and ecommerce sites have an advantage over their physical counterparts when looking at ways to adopt and apply analytics within their overall business processes.  However, the adoption of BI among retailers has been slow at best.  Online retailers have had the added benefit of being able to embed analytics into their operations without having to build additional infrastructure or having to integrate their back office with in-store and POS-related analytics.

The advantages of web analytics

Because free website traffic analytics exist, organizations are used to employing analytics as an extension of their online business.  Therefore, the expansion of analysis towards identifying the products being looked at, put in shopping carts, bought, not purchased, the correlation between items bought, etc. becomes a natural extension.  Organizations can almost intuitively build a platform that expands upon the information already being collected to identify retail-based analytics and to build and to maintain an advanced analytics platform based on customer behavior and sales.

Without the added needs of in-store POS such as video integration, foot-traffic identification or product placement, online retailers can focus on collecting and analyzing the data based on the behaviors and traffic associated with their online sales and customer behavior.  Also, because most businesses have an online presence and look at traffic statistics and analyze the interaction with their sites, online retailers do not have to reinvent the wheel when looking at analytics and the adoption of BI.  Products already exist that can be adopted without having to worry about a physical store location.

Taking BI to the next level

Using Amazon.com (or other large online retailer) as an example provides a glimpse into what organizations can achieve by applying web analytics and BI for retail to their online endeavors.  E-tailers can look beyond web traffic to identify what customers are looking at based on demographics, geographic location or past interests.  Once this is defined, patterns are identified that enable software to make automatic recommendations based on previous buying patterns, current shopping carts and search history.  Instead of physically having to strategically place product, content can be dynamically updated and changed based on what a customer at any given moment is looking for.  This type of dynamic interaction creates an enhanced customer experience by bringing relevant content to customers while still letting them control their overall experience.

Because of the popularity of online retailers such as Amazon.com and people’s increased interactivity with technology, customers are beginning to expect these types of interactions when shopping online.  Companies that do not know what stock they have at any given moment or that do not use advanced analytics will fall behind and be unable to keep up with their competition.  Therefore, not only are online retailers required to embed analytics within their online operations, but they are also required to integrate their findings to create an enhanced end-user event.

Achieving a positive end user experience

With the commoditization of goods and services, the key to differentiation is the ability to provide a value-added experience to customers.  For example, two similar online retailers may provide similar products at competitive prices, but the retailer that consistently delivers products more quickly and provides an easier online interaction will always come out ahead.  The use of analytics enables e-tailers to provide a positive experience to their customers while collecting valuable information.  Even though retailers may have the advantage of creating an in-store experience that helps differentiate themselves from other retailers, online sellers can do the same thing by combining the look and feel of their online store with advanced analytics aimed at providing that enhanced end user experience.

Considerations for e-tailers and ecommerce organizations

Overall, the ability to adopt BI online can be more intuitive than integrating POS, in-store and back-office data.  Due to the number of analytics available to online retailers, the choices may actually become more difficult when considering BI.  Retailers have less choice when looking at front-end analytics, making their overall choices less complex.   Online businesses, however, can look at general analytics vendors, solutions targeted to e-tailers specifically, or may consider task specific analytics-based on the need to identify market perceptions or to track marketing campaigns.

With all of the choices available, organizations should identify the purpose of adopting analytics and the types of applications they require to get the visibility desired to enhance their overall business operations.  In some cases, the adoption of BI will be an incremental one and in other cases companies will plan an overall objective and implementation with the goal of seeing value over time.  Even though online retailers will have similar BI requirements, the choices they make can still help them differentiate themselves from their online competitors by looking at BI and analytics as the bridge to increase business visibility and customer satisfaction.

About the Author

Lyndsay Wise is an industry analyst for business intelligence. For over seven years, she has assisted clients in business systems analysis, software selection and implementation of enterprise applications. Lyndsay is the channel expert for BI for the Mid-Market at B-eye-Network and conducts research of leading technologies, products and vendors in business intelligence, marketing performance management, master data management, and unstructured data. She can be reached at lwise@wiseanalytics.com. And please visit Lyndsay's blog at myblog.wiseanalytics.com.


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