The emergence and penetration of external data gathering in the online E-commerce sphere have been meteoric. Companies have made great strides, with an estimated 57% already utilizing external data in their analysis processes.
E-commerce companies have found many methods of utilizing external data towards the goals of increasing sales, improving profit margins, reducing costs per lead, and a plethora of other benefits.
In this article, we’ll do a deep dive into two use cases that demonstrate the potential of external data in E-commerce and retail applications.
- Use case #1: Dynamic Pricing
- Use Case #2: Product Reviews Pipeline
Use case #1: Dynamic Pricing
Dynamic Pricing is a strategy in which prices are adjusted by an algorithm in an effort to offer an alternative price that maximizes the sale value and probability. Prices can be reduced to compete with competitors, increased to take advantage of a surge in demand, or altered in accordance with a host of factors.
External Data has taken dynamic pricing to another level. In 2013, it was revealed that Amazon had made over 2.5 million price changes every day, and many studies on the subject have observed that dynamic pricing can increase revenue by 10-20%. Some examples of common, industry-agnostic external data types include competitor data, regional trends, and weather and seasonal data.
One of the key benefits of external data gathering is competitor monitoring. Being aware of a competitor’s products and list prices gives your business an edge when determining your own pricing. However, this is just the tip of the competitor data iceberg.
Shipping information, inventory and stock, and product reviews and ratings are all examples of data that a business can use to dynamically adjust the price of its products to be more competitive. A competitor running low on stock may soon increase their price, offering an opportunity to undercut their prices and drive sales. A competitor who is unable to ship to certain regions may offer an opportunity to increase prices for those regions.
By using social media, reviews, local news, and other sources, regional trends can be identified that offer unique opportunities.
FOR EXAMPLE, An increase in sales during certain sporting seasons or an annual festival or tradition can be strong indicators of increased demand for associated products, and effective dynamic pricing can produce increased revenues by raising prices by the right amount at the right time.
Use Case #2: Product Reviews Pipeline
A product review pipeline is an external data system that continuously gathers, extracts, and formats review data from public review websites into a more useable format for analysis, from which actionable insights can then be gleaned.
Analyzing reviews is an incredible resource for businesses, who stand to benefit by discovering new feature ideas, marketing opportunities, unexpected issues, and more.
Your customers can be your #1 source for new feature ideas. Review data is rich with information about the different ways people have used a product, the locations they’ve taken it, and the new features they wish it had.
A person using an electronic device may wish that it could connect with their mobile device for remote operation or monitoring. Perhaps a cream or beauty product could be improved by having a way of squeezing out an exact and specific quantity. The wisdom of the crowds present in reviews is an endless resource for real-world creativity that is causally linked to your target audience.
When marketing a product, it can sometimes be challenging to see beyond its original intended purpose. This can influence the keywords and marketing campaigns used to promote the product and can result in missed opportunities to hit new markets or demographics.
Reviews may often document the unexpected ways in which a product was used that provided real benefit. A small pillow may be incredibly handy for travel, or noise-canceling headphones may offer a way to unwind and meditate at the end of a long workday.
These alternative uses can be capitalized upon by marketers, who can create SEM campaigns targeting these keywords, modify product pages to mention these new uses, or even be inspired to create new products to fully meet this demand.
Despite even the best efforts to quality assure and test products, it is impossible to maintain a perfect track record over time. Furthermore, some issues or bugs can occur in hyper-specific scenarios which are difficult to predict or test for.
Negative reviews which document unexpected malfunctions, breakdowns, or issues with a product offer businesses crucial information, and allow for these problems to be rectified before they cause widespread damage to a brand’s reputation.
Furthermore, by continuously monitoring these negative reviews, companies can stay abreast of what they can do to make their products better, appeal to broader portions of their target audience, and monitor the status of previously reported issues that have since been resolved to see if new cases occur.
External data offers Ecommerce companies unique insights into their markets, their competitors, their customers, and their products that are difficult to obtain otherwise.
From product design to pricing to marketing, external data has the potential to transform the way every department operates within an eCommerce business.
Gathering external data doesn’t need to be hard. Nimble’s platform streamlines web data-gathering pipelines, for any business need, at any scale. If you’d like to hear more about how Nimble can help your organization solve data collection challenges and implement a hassle-free flow, contact us.