How alternative data is changing the face of eCommerce
Same-day shipping, product fulfillment center, and social media sentiment data are all changing eCom industry fundamentals including real-time insights and consumer-driven commerce
In this article we will cover:
- The alt data that is currently serving eCommerce businesses
- How alt data is changing eCommerce fundamentals
- eCom alt data in action
The alt data that is currently serving eCommerce businesses
Let’s first get a better idea of what alternative data points look like in the context of ecommerce:
- Product data – Alternative product data sets range from the amount of ‘likes’ or ‘save for later’ clicks a product has received (indicating high/low consumer engagement) to which color or model has the highest sales.
- Social engagement – These types of data sets may include customer reviews of a certain product or service, unboxing videos on YouTube, and posts on social media channels such as Instagram where a product or company is tagged/mentioned.
- Competitive edge – Certain alternative data sets can be clearly designated to help one gain a competitive edge. Data can include the quantity of items a competitor has in production, transport or storage. It may also include the location of competitor and distribution centers as well as shipping time and customer satisfaction.
- Search engine trends – Many search engines have tapped into the e-retailer space such as ‘Google Shopping’. Additionally, many consumers begin their purchase journey with a search engine query (e.g. ‘best smartphone 2021’). This means that collecting longtail keyword data and search engine shop data can shed light on current consumer trends and demand.
- Marketing data – One of the best ways for retailers to reach consumers is through internet-based advertisements including web banners, social media ads, video adverts on streaming platforms, in-app pop ups/ push notifications, and the like. eCommerce businesses are collecting information from these types of campaigns to gauge consumer interest and competitor offerings. This may include advertising messaging, special offers, and Click-Through Rates (CTRs).
- Shopping data – Amazon has started buying consumer receipts in order to determine where shoppers are spending their dollars. Collecting
- digital shopping receipts
- conversion data
- credit card transaction data
and anything else that shows where consumers are actually spending their hard earned cash is enabling retailers to increase market share on new frontiers.
How alt data is changing eCommerce fundamentals
Alternative data sets are changing eCommerce in 3 core ways:
- Real-time competition and insights – Being able to get alternative data insights in real-time as trends unfold instead of having to wait till the end of the week or month is having a big impact on competition. For example, a company that collects competitor ‘in/out of stock’ levels will be able to take advantage of this information to grab market share.
- Identifying new audiences, and opportunities – Alternative data sets are changing the way eCommerce businesses think about their ‘core audiences’ or their archetypal ‘buyer’s journey’. A company for example may be targeting boys ages 8-15 with sports paraphernalia but then discover a new audience (e.g. soccer moms) who learn about jerseys through bloggers and forums.
- Consumer-driven commerce – Consumption is increasingly becoming about what buyers want and less about what retailers want to sell. One example of this is customization. Many people want items personalized to their tastes from shoes to t-shirts which is where the idea for Print-on-Demand (PoD) models have come from. Many eCom giants such as Amazon are moving away, at least partially, from mass production in favor of on-demand customization such as with Amazon’s new ‘Made for you’ tailored to shoppers’ exact measurements. Alternative consumer sentiment data was part and parcel of driving these eCom giants to take the plunge into this new space.
eCom alt data in action
Now let’s take a look at some practical ways in which eCommerce businesses can leverage alt data to increase profitability in their respective markets:
One of the biggest issues in eCommerce is shipping time. Shoppers want to get their purchases ASAP, a consumer necessity which has been heightened in our on-demand economy (think of Wolt, and DoorDash food delivery services and on-demand streaming services such as Netflix and Disney +). Amazon Prime ‘two-day’ and even ‘same-day’ shipping has proven how valuable quick shipping times can be in recruiting and maintaining shopper satisfaction.
One way to take advantage of alternative shipping data is to identify sellers or marketplaces where certain items are taking longer than anticipated to reach consumers. One alt data set which can indicate this is collecting negative customer reviews about shipping time. Once an opportunity is identified, you can start targeting the same customer base with timely and possibly even free shipping. This can be a data-driven approach to increasing your market share and expanding into new markets.
eCommerce businesses can collect data regarding certain images which are ‘trending’ on social media. Take for example @asos whose Instagram feed features images of real customers posing with their products organically.
eCommerce businesses can crawl social media to see which products are ‘hot’ right now and use this data to keep their merchandise and product catalogues ‘relevant’ in real-time.
Rounding it up
Alternative data is changing the face of eCommerce, making it more driven by:
- Consumer wants and needs
- Your industry’s competitive landscape and ecosystem
- Real-time events, and trends
Tapping into such datasets will help your company grow and adapt instead of falling behind old competitors and new industry players.