The power-packed metrics that will have a big impact on your bottom line
Data is a hot topic lately. If you sell online, you know that order information from your marketplace stores enables the massive big data feeds of Amazon and the like to predict broad consumer behavior and seasonality, manage prices and fees across the channel, and control their interests in the inventory and fulfillment industries globally. While you’re powering someone else’s data, it also seems like every day you’re told to climb aboard the big data bandwagon where you, too, can ride into the sunset of freedom and happiness of higher sales, profit, and success.The power-packed #ecommerce metrics that have the biggest impact on your bottom line #profits #Webgility Click To Tweet
But when it comes to practical application of collecting data and understanding the insights they offer, you draw a blank. You’re not alone. Turns out, 94% of companies across all levels have experienced internal challenges when trying to improve their data quality. One could theorize that this dissatisfaction may stem from sheer size and that big data has just become too big. Case in point: The fact is, every second of every day we create new data. To understand the scale, 40,000 Google search queries are performed every second, which makes it 3.5 billion searches per day and 1.2 trillion searches per year. Each of those, at a minimum, creates new keyword and search ranking data. On a more relevant note, while it’s wonderful that Amazon has 304 million active customer accounts worldwide, what can you learn about tapping into that fire hose, or more specifically, why does your store suddenly and inexplicable have a following from Stanley, Idaho?
Sure, there’s plenty to learn from the e-commerce industry at large, but we believe the most valuable data for e-commerce SMBs is in the small game. The most valuable and actionable insights come from examining the metrics of your individual sales channels and your online retail business as a whole. For maximum impact, we recommend focusing on three specific areas.
Realists among us know that there’s no competing against Amazon. Your best hope of making any money in online retail is to sell on multiple channels simultaneously, Amazon included. But unless you have a way to view your sales data on each store, and also together as a group, the financial health of your business gets lost in the shuffle. When selling on multiple channels, your key metrics are
- total average order value
- collectible average order value
- delivered average order value
- average order profit
- total sales by channel
Comparing these metrics for the whole business and each channel individually will allow you to effectively pivot and scale how and where you sell. Talk about small data having an impact.
Through no fault of your own, you may find it hard to get to know your online customers. They’re not walking through a physical door every day and there’s no face-to-face greeting to facilitate the sales process. Yet every day you hear how crucial it is to identify the “whales” that make your business the most successful, then personalize every aspect of the online sale. Your biggest competition has somehow figured it out, so you’d better get on it. To stand out from the masses, the key metrics to follow are
- returning vs new customers
- contribution amount by customer
- customer lifetime value
- top customers by lifetime contribution or profit
Learn these small data details and you’ll know plenty about the buying habits of your VIP online customers and how to make them happy.
Nobody told you that inventory management and control across channels was going to be such a massive headache. Taking steps to reduce chaos around your products will no doubt put you in a better mood, but learning some essential bits of small data, like exactly what products make you the most money or cost you the least to fulfill, can actually affect the profitability of your business as a whole. Anyone selling anything online should know
- the gross profit of each item and which ones are the winners
- when you need to reorder inventory
- the cumulative contribution a particular item provides
These metrics will go a long way to increasing profits and running a more efficient e-commerce business, thus sending your mood into another stratosphere.
Take comfort in the fact that 97% of U.S. businesses are looking to achieve a complete view of their customer, and likely every other aspect of their business, but know that it’s just a matter of time before the competition figures it out. Seize the strategic opportunities offered by small data and win the sale.