How These Expert ECommerce Professionals Leverage Data to Scale with Confidence
February 11, 2022
On its own, data collection has no impact on your business. It’s what you do with that information that can help scale your eCommerce store to new heights.
When data comes in, you must analyze the numbers and behaviors, develop insights, then outline actions in response to what you see.
8fig believes data is the key to giving you a competitive advantage. In fact, our supply chain-based funding technology is rooted in analytics and forecasting data, allowing sellers to manage their supply chain.
We’ve collected feedback from experts in the eCommerce industry to determine which data points they consider the most valuable and how they use those metrics in their business. Scale confidently, knowing you have the facts and figures to support your next steps.
Advice for Creating a Data-informed Growth Strategy
While there are seemingly endless amounts of data for any online store owner to analyze, our eCommerce experts share the data points they’ve used to make the most significant impacts on their business.
1. Use Net Profit Data To Determine Which Products to Feature
It’s important to know which products are most popular among your customers to determine where to focus your messaging and advertising.
Rohit Bimbra, CEO of HomeHealthcareShoppe.com, states, “Knowing which products customers are seeking allows sellers to manage their inventory effectively and ensure they’re pushing these in-demand products to the forefront. It also allows us to market similar products based on what customers are interested in.”
And while featuring and marketing your most popular products is always a good idea, diving deeper into data may help you determine which less popular products deserve a place in the spotlight.
For example, say you sell two different products, each priced at $100. You can sell 200 units of the more popular item each month, but it only generates a 5% net profit margin. The less popular item only sells 100 units per month; however, your net profit margin is 20% on that product. While it’s less popular, that second product generates twice as much profit for your business.
Dive into your data to determine which products will be most profitable. Keep those items in stock and develop a promotional strategy that will drive sales towards those items.
2. Forecast Cash Flow to Stay Profitable & Scale
Cash flow is the lifeblood of any business. You must have money coming in to keep orders going out. Use historical data to create a complete financial picture so you can plan for new hires, advertising budgets, technology investments, product launches, and more.
An accurate cash flow forecast can also help you determine when to seek capital from outside sources, helping you fund your growth.
Ryan Hsu, Founder of CareMax, outlines several of the factors that can play into your financial forecast:
- “Make a budget and stick to it.”
If you consistently go over budget, it’s time to adjust. If your budget is inconsistent or inaccurate, you cannot accurately plan your financials
- “Keep track of your sales data.”
Use historical data to accurately forecast future sales. Take seasonality and new product launches into consideration when planning month over month. You can also utilize 8fig’s free Lines Lab software to map out your inventory batches to scale.
- “Plan for returns and lost shipments.”
ECommerce is a dynamic industry, meaning you’ll inevitably encounter challenges. Make sure you have room in your budget for contingencies, such as returns or lost shipments.
- “Keep track of your tax obligations.”
Be aware of out-of-state and international tax laws and factor that into your financial forecasts.
3. Monitor User Activity to Optimize Your Online Store
We may not have the ability to get direct feedback from every person who interacts with our business, but thanks to advancements in technology, we can learn a significant amount from how users interact with our online stores.
Jason Sherman, Founder of TapRM, states, “There was always a delay in collecting and aggregating data, slowing down the optimization process. But now, it’s possible to view results live. Analytics and eCommerce platforms such as Amazon Kinesis and Apache Flink provide real-time data that enable you to see how customers interact with your website. Thus, giving you a clear view of where prospects drop off. Streaming analytics, along with machine learning, can help you refine your site faster than ever so that you can minimize bounce rate and maximize conversions.”
You can use user behavior data to revise your messaging, optimize your navigation, and update visuals to keep users on your site longer while guiding them to the most critical pages.
Michael Chammas, Founder of Makro Agency, has found that a seller must get at least 65% of its users to product pages to scale. “To optimize towards products pages, you must start looking at bounce rates per page and where users are dropping off. Work on making the shopping flow extremely easy for your users while eliminating any website section that causes drop-offs. In most cases, mobile sessions make up at least 60% of all sessions, so ensure your site is tailored to mobile users and not just an adaptation of your desktop experience.”
4. Inform Your Marketing Strategies With Analytics
There are seemingly endless tools and platforms available to help sellers reach their buyers – from the eCommerce platform you use to host your store to where you run ads and the tools used on your site to increase conversions. So how do you know what to use for your business? Simply use the analytics provided by those platforms to determine what is and isn’t working.
Make it part of your routine to regularly monitor results, checking in at least once every two weeks. Use that data to determine how you can revise your marketing strategy.
- Are you getting a significant number of impressions but not enough clicks? Try revising your messaging.
- Is one channel driving more conversions? Reallocate budget towards that platform.
- Are you getting a high rate of cart abandonment? Utilize tools that will bring those buyers back, such as exit pop-ups or retargeting.
Rohan Kadam, Founder of Biking Know How, has firsthand experience reducing cart abandonment. “Through dynamic remarketing ads, I could target my audience (shopping cart abandoners) with highly personalized messages, increasing my conversions by 23%.”
5. Monitor Market Conditions To Forecast Your Sales Potential
Depending on what you sell in your online store, the pandemic either helped or hurt your business. If your products relate to a hard-hit industry, such as a restaurant or anything travel-related, you’ve most likely had a rough few years. However, many eCommerce retailers have grown as consumers make more online purchases.
While we’ve all learned the unexpected can happen at any moment, it’s important to monitor market forecasts so you can plan accordingly.
Adam Ng, the CEO and Founder of Trusted, knows the importance of monitoring the status of the economy and has promising insights for the year ahead. He states, “In its annual global economic outlook, the U.S. investment bank optimistically predicted that 2022 will mark a huge improvement from the past two years. The report said the new year would bring the end of the pandemic and a return to normal economic and market conditions.”
There are several things you can do to monitor the market:
- Follow relevant influencers. News frequently breaks on social media, so keep industry insiders in your feed.
- Subscribe to industry publications and set up relevant Google Alerts so you can see the latest research and updates.
- Study your digital analytics. Do you notice a difference in how users interact with your site? What are users searching to find businesses like yours? Learn what you can from how users are behaving.
- Seek customer feedback. Find out what their purchase drivers are.
- Monitor your competition. How are they messaging to customers? What can you learn from how they’re evolving?
6. Utilize Real-Time Inventory Data To Prevent Stockouts & Surplus
Stockouts are costly problems for all eCommerce sellers, preventing sales and hurting your reputation. You also want to avoid a surplus of inventory, which keeps cash tied up in products sitting in a warehouse.
Shaunak Amin, Co-Founder & CEO of SnackMagic, utilized inventory data to enhance operations. “We took a hard look to discover which items are typically slow-moving versus those that sell out fast. Now we can better identify our inventory turnover rate, improve our demand forecasting, and refine our safety-stock quantities.”
To automate the process, you can utilize inventory management software. Using barcodes and scanners, you’ll be able to track your products from warehouse to delivery and receive notifications when stock is low and it’s time to reorder.
Innovate & Scale With Data
Scale your business confidently, leveraging these critical data points provided by our experts:
- Use net profit data to determine which products to feature.
- Forecast cash flow to stay profitable and scale
- Monitor user activity to optimize your online store.
- Inform your marketing strategies with analytics.
- Monitor market conditions to forecast your sales potential.
- Utilize real-time inventory data to prevent stockouts and surplus.
Develop a growth strategy based on what you uncover in your data deep dive, then let 8fig infuse your business with capital to match your supply chain demands and fund future growth projections.
Karlyn is an eCommerce writer and Content Marketing Manager for 8fig. She's on a mission to democratize online retail by empowering small and medium-sized businesses with resources and tools they need to compete in dynamic marketplaces.