Managing your e-commerce store with the help of data received from your customer’s behavior on the store is made easier than ever! Being at the forefront of the ever-evolving technology world, the retail industry requires to keep up with the latest technologies.
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Even though this technology is gaining much popularity in the Big Data field, the adoption of Predictive analytics in the retail industry has been a bit slower. It offers e-commerce businesses a deeper understanding of customer behavior in the online store.
But, What is Predictive Analytics?
“If Big Data is sparking a revolution in general management, then Predictive Analytics may well be the ‘next big thing’ in talent management.” – Richard Mosley
Predictive analytics is a type of advanced analytics utilized in order to predict future trends, customer behavior and activities based on the former and current data. Various techniques utilized for this process are automated ML algorithms, data mining, AI tools, and predictive modeling. For an online store owner, a merchant needs to use all the data available and finely analyze the demand and supply chains to continue offering impeccable customer experience.
The predictive analysis offers demand forecasting, inventory management and movement, assortment planning by predicting behavior patterns.
Predictive analysis is one way to broaden the market and cover the services and goods by e-commerce retail industries. Being an extended part of business intelligence services, it has proved to be highly-constructive by predicting time-framed demand for goods and services required in particular regions.
By harnessing the potential of Predictive Analytics, the e-commerce industry can ensure a healthy conversion rate with customized user experience.
Challenges Faced (Solved by Predictive Analytics)
With the increasing competition rises customer needs, which makes it difficult for the online store owners to meet and offer satisfactory customer experience. With the participation of customers increased in the business on an exponential level, this develops a need for store owners to keep on upgrading, act more capable and creative to keep up with the e-commerce market.
Whether you are a startup or an established store owner, maintaining cost margins is difficult for everyone with the growing demand for offers and discounts. This impacts business performance and cash flow directly.
When an online store is serving in various locations, it is a challenging task to evaluate the revenue that can be generated for a particular location. This is where predictive analytics helps out!
Now, let us have a look at how this enormous process can be helpful to the e-commerce industry.
Benefits of Predictive Analytics in eCommerce
Enhanced Price Optimization
Price Optimization is one of the great features which can be unveiled by predictive analysis. Keeping track of a customer’s activity can help to determine the demand for goods and services which determines the right price of a product. Price determination can be done by comparing two or more products of the same category which usually takes a lot of time and thus making it hard to set real-time price changes. Predictive Analytics software leverages extensive data sets. This includes the competitor’s pricing, purchasing history, desired profit margins, available goods, browsing history, and more. This software helps in tracking all the above-mentioned factors in real-time while comparing the results with present and past year’s information. Thus, it makes it possible to provide an accurate pricing model for each item at any given time.
Conducting all sorts of data evaluation provides information about the customers and their favorable product. This evaluation can be used to make target promotions by categorizing charactorial traits of customers and their purchasing habits which are already recorded. This can also be termed as personalized marketing.
Easy Inventory and Supply Chain Management
Predictive Analysis takes inventory management to the next level by identifying popular and unpopular products and product categories. It helps businesses forecast sales, improve sourcing, order fulfillment, delivery and returns for customers. Merchants can also ensure avoiding “out of stock” items and have enhanced inventory management in their online store. Additionally, the merchant can also experience optimized use of warehouse space and better use of cash flow.
Minimizing Fraudulent Activities
E-commerce stores are susceptible to fraudulent activities and online payment failure is one of the reasons behind shopping cart abandonment. Predictive analytics is a technology that offers an opportunity to the store owners to analyze the browsing and purchasing patterns, payment methods in order to detect and reduce fraud.
Predictive analytics comes with in-built fraud management models for the online retail industry. The speciality of such predictive models is to identify potential fraud even before the customer completes the purchase resulting in lower administration time.
Personalized Marketing Strategies
It makes customers happier when they find an online store offering content based on their personalized preferences. With this technology, it is better to target each customer’s preferences and strategize marketing campaigns accordingly. It helps in streamlining marketing automation procedures by offering the right messages at the right time in the right manner.
Not only does it enhance the customer experience of your store, but it also builds a great customer rapport and affects business ROI positively.
Increased Number of Loyal Customers
In a world full of fierce competition across the globe, it is difficult to keep customers from getting distracted from your competitors. With the analysis of customer’s behavior, the store owner can extract the details of their loyal customers and offer promotions and offers if they haven’t recently shopped from your store. Allure your loyal customers to continue purchasing from your store and attract more with the personalized secret coupon codes or loyalty memberships. You can easily manage this with the help of a customer loyalty software.
Expands Operational Proficiency
When the cyber world keeps on running at a speedy pace, how can e-commerce store owners afford to stay outdated? In fact, offering modern-day technology adaptation is a must for the businesses working online. Not doing so comes with a lot of complexities and becomes tough to meet customer expectations. Predictive analytics analyzes the trends, competitor’s stores and keeps you updated with the upcoming technology trends in the market.
It offers a chance to keep your store updated and stay ahead of the competition.
Recommendations play an important role in improving customer engagement in an online store. But, offering the right recommendation manually isn’t an easy job. It takes a lot of effort to analyze customer behavior manually and recommend the right product for their future transactions. Here, Predictive Analytics plays an important role, it provides just perfect recommendation by correlating data from various sources in order to determine personalized recommendations to the customer that works perfectly with a segment or a particular customer. With the help of machine learning to deeply understand a customer’s behavior including the items purchased earlier and determine the right relevant recommendations with a better probability of generating sales.
The technology expansion is growing beyond imagination. Technologies like Business Intelligence, Predictive Analytics, Data Analytics, Blockchain have already done wonders in the cyber world. The extent to which these technologies can affect human lives has no limits. Predictive analytics is critical for retailers to succeed and stay ahead of the competition. It seems to offer a huge competitive advantage to online retailers. You might not need to enable all the aspects of predictive analytics, but having it on your online store might help in increasing the conversion rate.
The magic of converting data into information is incredible.