Interviews, insight & analysis on Ecommerce

Data: the past, present and future of the ecommerce boom

By Davide Villa, Director of Business Development EMEAI, Western Digital

With retail ecommerce sales reaching $4.9 trillion worldwide in 2021, it’s hard to imagine the internet, and even daily life, without ecommerce. Everywhere you look, there’s an ad with a convenient link to a nice pair of jeans, a promo code from a podcast, or an extension to guarantee you get the lowest price possible. However, with ecommerce so integrated into the everyday, the foundations that hold it up and determine its future are often forgotten: data.

Data powers everything from targeted ads to customer experience, in turn driving the ecommerce space; across all industries and across the world there are countless examples of this. However, the nuanced mechanics of how that data is leveraged and how it benefits businesses beyond increasing revenue, are vital to understanding where the industry is headed.

Behind the innovation of new products, enhancing of internal operations and guidance for long-term strategic planning, data-driven insights are crucial to the future of the industry.

Customer connections

The information that underpins customer behaviour and preferences comes from a wide range of sources. Google searches and online locations are examples of valuable client information. Companies use data to obtain insight into who people are and what they’re thinking, as long as it complies with privacy standards. That data is utilised in almost every way to assist businesses in finding and connecting with clients.

Helping customers goes beyond just selling them products. Often targeted ads point to resources such as blogs or podcasts, in order to reach the customer where they are in their journey, rather than forcing spending on them. With customer needs constantly evolving, ecommerce retailers cannot afford to take their eyes off the data.

A simplistic analysis of the industry assumes that the extent of data’s influence lies in getting more traffic to ecommerce sites and driving revenue. Crucially, however, this view ignores the ways that businesses get value from the same sets of data when applying them to an array of business functions.

Data leading the way

Rather than data innovations being limited to the duality of sales and revenue, the seller and buyer, the ways in which data can drive holistic improvements for business are immense and varied for each company and industry. Powered by technological advancements, such as progress in machine learning and artificial intelligence, businesses are stepping forward to leverage data points into value-added solutions across business units. For example, insights into consumer preferences can power product recommendations, dynamic pricing, and even new product development.

In the future of ecommerce, algorithmic accuracy will increase owing to data and technological advancements such as machine learning and artificial intelligence. Businesses will need more action-based insights at their disposal rather than descriptive analytics like reporting capabilities.

That translates to data-driven solutions that improve a company’s ability to optimise operations, plan strategically, and identify growth markets over the long term. According to DataHawk and MarketPulse reporting, Fulfilled By Amazon aggregators raised over $12 billion, in 2021.

An Amazon aggregator is a business that acquires multiple Amazon brands for the sole purpose of consolidating them under one brand identity. Aggregators use multitude of data points to evaluate existing successful brands that may perform well together.

These aggregators grew to that $12 billion level by analysing extensive data of existing Amazon brands, and “saw the potential for growth, bought them, perfected them to maximise value, and then went on to expand their portfolio of brands.” By having access to and analysing the data on their marketplaces, these firms identified strategic acquisitions, entered growing markets, and executed a strategic plan to expand and diversify the business.

Data also offers an important lens through which companies can measure success. Rather than the previous motto of “launch it, and they will come”, the ecommerce space is saturated with competition, all vying for the limited spaces available. Compounded with the fact that many marketplaces depend on black-box algorithms with opaque machinations, data plays an integral role in guiding companies through a hyper-competitive field.

In it for the long run

Often, ecommerce firms start utilising data as an easy means to improve the customer experience. Quickly, however, a data-driven approach blooms out into all aspects of the business, improving strategy, operations, and more. When examining the future of the ecommerce space, it’s crucial that the data foundations are not forgotten amidst the aspects of the industry that are most visible to consumers: customer experience.

It stands to reason that the first thing that people think of when discussing the use of data within ecommerce is the startlingly precise social media focused ads. But there is much more to it than that. The core of any business’ development, whether it involves ecommerce or not, is data.

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