Iflexion
How Big Data Shapes Operations in eCommerce

How Big Data Shapes Operations in eCommerce

A successful eCommerce business doesn’t start at the front desk. It starts at the back office, where all the orders are processed. Even if you have the best loyalty programs, personalized shopping experiences and advanced customer relationship management techniques, it all doesn’t make any sense if you’re not able to deliver the order on time, making sure that the client receives what they wanted.

That’s why operational management plays a crucial role in the success of your eCommerce business. Giants like Amazon and Alibaba know this, and that’s why they invest hundreds of millions in operations and their automation. Big data plays a vital role in a modern eCommerce business because it helps back-end processes just as much as it shapes the customer-facing part of the enterprise. Let’s take a look at some of the most relevant and promising applications of big data and advanced analytics within the operational framework of eCommerce companies. These ideas can help you drive operational change within your organization and maybe even inspire your future implementations.

Smart Buildings

If you’re a growing eCommerce SME, then operational costs may play a role in your expansion. Every extra penny that you spend on facilities, warehousing, and office spaces is deducted from the business development budget. That’s why keeping operational costs down is essential.

The concept of smart buildings is not new. The basic idea is similar to that of smart houses that have been entertained and materialized long time ago. Smart buildings control the environment within your office, warehouse or manufacturing space.

Smart building market fact sheetAnd without big data, the real applications of this concept can’t be called smart. Smart buildings collect tons of information about how utilities and other services are used within them. This information is then applied to optimize usage, like turning off heating at specific times or dimming lights in certain areas of your warehouse. This optimization leads to:

  • Lower electricity usage
  • Lower HVAC usage
  • Lower maintenance costs associated with more efficient downtimes

Many solutions offer smart building implementations for SMEs. Most of them are also compatible with other services, such as IoT platforms to further increase the efficiency of the integrated system. Among them, there are:

With these services and the incredible growth of smart buildings technology, you can expect that similar solutions will become even more accessible soon.

Demand Forecasting

When you have items in stock that don’t generate sales, you’re losing money because they take up space in your warehouse and waste time of your staff who still have to account for them in the inventory. Not to mention that these products can also expire over time or just become unfashionable if you’re selling clothing or anything that depends on fashion and trends. Moreover, the longer these items are sitting there, the bigger the chances are for them to get damaged by personnel, elements or accidents.

Demand forecasting funnel

When made a part of your eCommerce development project, demand forecasting allows to predict which items are going to be in demand so you could stock them up properly. This capability can help to get products off your shelves quickly. Another great side effect of this is that you become less likely to run out of stock for something that’s in high demand unless there’s a problem with the manufacturer or supply. These improvements result in higher customer satisfaction rates for those customers who shop at your store solely because you might have something that your competitors don’t.

Big data is the cornerstone of demand forecasting, even if you’re not using advanced analytics or fancy AI-based algorithms to forecast sales. The numbers themselves carry a lot of the information, and by running through them, you’re able to make basic stock availability predictions (what and why you might have run out of certain items).

Fortunately, there are plenty of excellent services that can assist you with forecasting your sales. And even small businesses can experiment with this high-yield area of big data applications.

There are also other methods that don’t involve big data, such as employee surveys based on their previous experience with demand cycles. But they won’t be as effective as a forecast created based on your actual sales and stock availability.

Human Capital Management

As an eCommerce business, you rely on a lot of things, but your personnel is probably one of the most crucial pieces of the puzzle. They run your store, they design its look, they generate marketing results, they maintain your premises functional and are ready to serve any incoming demand.

Bad hiring decisions directly affect your operational efficiency and your profit. Smaller businesses depend even more on employee performance, as there aren’t many options for ‘plugging the hole’ if an employee underperforms.

2017 human capital trends in the consumer market

Source: Deloitte

Big data is vital for many current HR functions, such as:

  • Performance tracking and evaluation
  • Employee satisfaction tracking
  • Team goal management
  • Recruiting & onboarding management

Many of these processes haven’t even been tracked up until recently. But with many available HR solutions out there, you can track employee performance right from the start, and take corrective actions if needed. You can even learn if an employee is thinking about leaving through the employee’s more negative feedback.

This way you can manage employee retention if you want to keep your team intact – which is a crucial aspect of a growing eCommerce business. There are plenty of human resource management solutions out there that vary in functionality, but the majority of them allow you to exploit big data about your employees to improve and maintain their performance. Some notable solutions for SMEs are below:

There’s a particular niche for employee engagement solutions that track their happiness and engagement with your company, so you’d have an additional layer of big data to learn about your team’s desires, blockers and other issues. In this segment, our honorable mentions go out to OfficeVibe and Teamphoria for their excellent integration of big data within the process.

Product Research

Your product line-up directly affects your operational capabilities and most of your business functions.

How inventory is connected to the rest of business operations

Source: http://gebrc.nccu.edu.tw

That’s why any eCommerce store should be careful with what it decides to stock up. It’s crucial to find the right balance between the popularity of the product and its price in order to maximize returns and minimize losses. There are various ways of doing that, from manual online research to competitive intelligence.

But there is another method that might prove to be more lucrative for your business. The beauty of it is that you don’t even have to use your big data for analysis. It is already there, taken from the largest pool of eCommerce data out there – the marketplaces, such as Amazon and eBay.

Through their API, these sites provide the data for finding the most relevant products, choosing the right pricing and gauging their popularity on these marketplaces. Instead of spending time on data mining directly in these marketplaces or social media and Google Trends, you can use any of the services specifically designed to track product performance and help you make informed decisions about your stocks and product line-up:

Supply Chain Management

This complicated facet of operations for eCommerce businesses kind of follows from the previous points that we made in this article. It would also be impossible without big data.

In fact, modern supply management wouldn’t be possible without big data, as complex interactions between all parties involved in the chain are happening due to big data: products, delivery dates, and resources. This fact is especially relevant for eCommerce businesses that operate in the global market, as supply chain get stretched in time and complexity. Some great solutions in this area include:

  • WiseTech
  • Infor
  • TradeCloud
  • JDA
  • GAIN
  • BlueRidge

Imagine these solutions as supply chain equivalents of Salesforce, which store and connect various big data sources within your supply chain so you could manage and predict the behavior of all the data sources.

Conclusion

Big data is the bloodline of any modern eCommerce business. And while marketing, sales, and customer personalization initiatives might seem like a more appealing focus for big data use cases, it’s evident that other business areas rely on it too.

Operational effectiveness creates additional opportunities for business, removes blockers, such as out-of-stock items, and minimizes downtimes and damage to business reputation by preventing unfulfilled orders. Big data is the ‘glue’ that holds these processes together, from stock insights to employee performance and more efficient work environment.

So instead of exploring the customer-facing side of your business as the perfect target for experiments with big data, maybe it’s time to delve into the operational nuances and learn how big data can help companies grow their business by driving change from within the enterprise.

Do you apply big data and analytical solutions around it to manage your eCommerce operations? Let us know in the comments below!

Ekaterina Pioryshkina

Kate Pioryshkina is a sales manager at Iflexion. She has over eight years of experience in IT, negotiating countless development projects and an eye for bottlenecks in development that modern businesses struggle to overcome. This skill allows her to identify specific business pain points and allocate the most appropriate resources from iflexion’s talented pool of developers. ‘Exceeding expectations’ is her professional motto. She has the global experience necessary to understand cultural nuances of any project: locale, target audience, and goals. When it’s ‘go time’ there’s no stone left unturned. But outside of work, she loves to travel, explore new destinations, ideas, cultures, and technologies. She’s also a film buff who enjoys a good movie.

  • Masha Marinina

    I agree, big data and predictive analytics are essential tools in any business today, and a new technology is being added to the mix – blockchain. Blockchain is not just useful for cryptocurrencies, like Bitcoin – any complex string of transactions, like supply chain or even demand generation in marketing. What makes blockchain so powerful is that it is both transparent – every transaction is stored and available for inspection – and secure – a transaction is encrypted and added to the chain once it is validated and cannot be modified or deleted once it is there – a separate transaction is the only way to apply a change. Maersk, the world’s largest shipping chain, with assistance from IBM, is piloting a blockchain solution for managing the movement of a container from loading its contents to delivery and unloading, across countries and oceans and clearing through various customs authorities. There is a great deal of risk in the movement of every single shipment, especially if the goods are sensitive and have a short lifespan, like cut flowersbeing moved from Kenya to Rotterdam. There is also a lot of data from everyone in the supply chain that has to be tracked and validated. This is done via a “smart contract”, which is actually an app coded with every contractual step in the supply chain. Every participant in the contract, like Dutch customs officials, for instance, can validate the paper flow via the blockchain. Using the blockchain speeds up and simplifies the process and cuts the risk; alerts of a possible bottleneck can be picked up rapidly and mitigated.Oh, and the cut flower industry is a very big market for Kenya -40% of cut flowers in Europe are importedfrom Kenya; the total exports for 2016 were a staggering 133 000 tonnes!