Leveraging Data Analytics to Rapidly Improve Your Ecommerce Business

If you’re building an ecommerce business, you’re in a good company.

In 2023, there are over 26 million ecommerce sites across the world.

A decade or so ago, ecommerce was still a new frontier. But that’s not the case anymore. Today, you’re fighting with competitors across the globe to get more eyeballs on your ecommerce site.

But data analytics can help you attract more people to your website, getting you more attention and more sales.

When you make decisions that affect your business, you want data to inform those choices. Data analytics can help you get ahead and stay ahead in the ecommerce industry.

What Are Data Analytics?

Data analytics refers to a set of metrics that give you insight into customer behavior.

Through the process of collecting, maintaining, and analyzing your data analytics, this information set helps paint a picture of your customer, from their loyalty to your brand to their purchasing habits. Some key metrics to pay attention to include sales conversion rate, customer lifetime value, customer acquisition costs, and website bounce rate. 

When you properly utilize the power of data analytics, you can unlock insights across many different facets of your ecommerce business. You’ll learn about aspects of your business that would be otherwise unattainable without data collection, such as how often customers abandon their carts once they reach the checkout stage or which ads have the highest click-through rate.

4 Reasons Why Paying Attention to Data Analytics Matters

1. Engage Clients More Effectively

In today’s fast-moving digital world, buyers have a lot of options when it comes to making a purchase, which is why it’s essential to cater to your customers. Today’s consumer expects a personalized buying experience, especially if you’re looking to attract the attention of younger generations. 

When you utilize data analytics, you can gain insight into particular customers so that you can optimize the content you’re serving them via marketing, customer support, etc. Personalized recommendations are far more likely to gain attention and potential conversions than general recommendations that aren’t data-backed. 

2. Optimize Your Supply Chain

Your supply chain and inventory make up a large chunk of your yearly expenses. The last thing you want is to place a big order for a particular product only to have that product sit on the shelves. Through data analytics, you can learn about what your top sellers are to ensure that you always stock up with what’s sure to go flying off the shelves. 

However, data analytics can go even further and help you predict trends and fluctuations throughout the year. What sells best in April might not be what your customers want in December, so trend analysis is essential to make sure you stock up for the right season and don’t overorder what won’t sell, saving you money.

3. Find New, Profitable Ideas

Data analytics can also help you grow your inventory. By examining your data as well as competitors, you can learn more about what your customers truly want, allowing you to find gaps in your offerings. Through customer profiles and trend analysis, you can unearth what types of products might become your new bestsellers. 

By offering products backed by data, you can spend more time refining what your customers want rather than wasting time on things that might not sell at all. Offering products this way is also great for uplifting customer loyalty and longevity. By introducing products your current customers want, you’re re-engaging them after their initial purchase, encouraging them to keep coming back for more. 

4. Set Up Your Website For Success

It’s not enough to simply get potential customers on your website. You also need to optimize your website for a high conversion rate.

According to the Baymard Institute, the average cart abandonment rate is just over 70%, which means that less than three in 10 people who fill their shopping carts online actually make it all the way to completing their purchase. 

Data analytics can help you see where that abandonment is happening so you can polish your website’s processes for purchases. Is your checkout page too complicated? Are you ignoring payment methods your customers would be more likely to use? Is the price point too high for your customer base? By analyzing the data you’ve collected on your website, you can find ways to encourage your customers to get all the way to the end of their purchase.

3 Tips to Leverage Data Analytics in Your Ecommerce Business

1. Maintain and Manage Your Data

Many companies collect data. However, after that it often sits somewhere in a file, being underutilized. From there, it grows stagnant, outdated, and unusable. Making decisions based on data that’s been gathering dust can be a big mistake. 

You need to ensure that the data you collect is adequately maintained, organized, and standardized on a regular basis. Bad data quality can result in you not getting the complete picture and making decisions without having all the facts. It’s no wonder why Gartner found that poor data quality costs businesses almost $13 million each year. 

When you collect data, you should have a set of standards and practices to make sure you optimize it for use. While AI tools can help you maintain your data, you should also consider having a data steward whose duty it is to uphold the data’s integrity. Keep in mind that data collection is an ongoing task. Data maintenance must be, too. 

2. Invest in Data Privacy and Security 

In a time when data collection by companies is considered the norm, not many people have a high level of trust that those companies are doing right by them.

According to a Pew Research report, only one in five people believe that businesses with access to their personal information will act responsibly with it. Considering that the same report found 34% of Americans report being victimized by data breaches and hacking, it makes sense why so many are worried. 

You have to prove to your customers that you have respect for the information you’ve collected. Once you collect data, you need to keep it protected. Adopt a data governance strategy, which determines how and why your company uses data, keeping it secure and only used for the proper purposes. You should also consider investing in encryption software to make sure that, even if someone improperly accesses the data, those seeking to do damage cannot decode the information. 

A data security misstep can also have high financial ramifications. According to IBM’s Cost of a Data Breach Report, the global average cost of a data breach was $4.45 million in 2023 — which continues to grow yearly.

From ransom payments to legal fees, you can end up losing a lot of money very quickly. On the other hand, organizations investing in security AI and automation tools save an average of $1.76 million per year. When you invest in data privacy, you’re protecting your customers, but you’re also protecting your reputation and bottom line.

3. Increase Data Accessibility Across Your Company 

Unfortunately, it’s not uncommon for one team to collect data and keep the information where other teams are unable to utilize it. This is called data siloing, and it’s often the result of outdated office competitiveness or technology that can’t work together to share data safely.

Lots of sets of data analytics can be beneficial for everyone, from product engineers to marketers. However, data silos make it so that the information is difficult to share in a way that’s accurate, fresh, and usable. 

Without sacrificing data privacy, ensure that data sets are accessible throughout your company by keeping them in one centralized hub. When companies break up data sets into many different files to share throughout their teams, it becomes harder to maintain that data. If the marketing team has one file, but the product team has another, they are likely to have inconsistencies in their information. 

You also don’t want your staff to have to chase down data, as doing so can suck up valuable time and resources. According to a study by Airtable and Forrester Consulting, workers dealing with data silos reported wasting nearly 12 hours every week looking for critical information needed to do their work.

How Will You Use Data Analytics for a Better Ecommerce Business?

The world of ecommerce isn’t going anywhere. In fact, it’s growing tremendously.

The ecommerce share of all U.S. retail sales continues to increase quarterly. Sales peaked at $284 billion in 2023, and that’s expected to climb steadily.  

The number of competitors is only going to continue growing as well, which is why it’s essential to make sure that data analytics backs the decisions you make for your business.

With data analytics, you can optimize your website and inventory, build better relationships with your customers, and create products that are more likely to sell. However, simply hoarding data isn’t enough to make these changes happen. After acquiring data from your customers, it’s up to you to make sure the quality of the data never devolves. You also need to ensure data is accessible to your company without sacrificing customer privacy.

Data analytics requires continuous work, as data is constantly being collected and maintained. However, overall, it can help you cut costs, boost your reputation, and put you ahead of your competition.