Big Data E-Commerce System in Retail Business: Main Benefits and Adoption Pitfalls
Big Data is on the rise now. According to analysts’ forecasts, the size of the global Big Data market will exceed $274 billion in 2021. This means that the number of businesses using this technology is increasing rapidly, and the retail business is no exception. This happens due to the fact that this technology brings undeniable benefits to the business. In this article, we will talk about the main benefits of Big Data in the retail business and also talk about the barriers that can stand in the way of introducing Big Data into your business. Without further ado, let’s get started.
Benefits of Big Data in E-Commerce Business
In order to start discussing the main strengths of this technology, you should first go from afar. The success of this industry is surprising every year. For example, global sales of the e-commerce business exceeded $4.2 trillion in 2020. This is all thanks to the huge customer base, as Amazon alone has over 197 million monthly active users.
Such a huge number of users generate a fantastic amount of information that needs to be processed. Indeed, based on this data, you can make business decisions that will lead your business to even greater success. And Big Data is the main tool for working with large amounts of data that brings many benefits to a business.
Benefit #1. Trend Prediction
Knowing trends helps a business stay one step ahead of the competition and be ready for change. Big Data algorithms can collect data from various social networks and browsers and are driving the biggest trends and hype. In addition, you can easily track marketing campaigns in order to keep abreast of trends that are just beginning to form. Possession of such information helps to more thoughtfully approach the formation of a business strategy based on existing facts and the state of the market.
Benefit #2. Price Formation
Retail mark-up is the basis of income for any retail business. However, the formation of the correct mark-up is a difficult matter that needs to be approached wisely. Set it too high — no one will take your product and go to competitors. Set it too low — your income will be positive, but it is not high enough, and the stock of goods will quickly be bought up. Big Data tools can collect and compare data on prices for a particular product at various sites. In addition, algorithms can track the demand for a product and provide a recommended price for a product, depending on the current market situation.
Benefit #3. Demand forecast
Warehouse storage costs can seriously undermine your budget if you miscalculate product demand and purchase. Big Data algorithms can take into account various factors affecting demand, such as product type, season, upcoming holidays, and much more. These parameters allow you to make a more accurate calculation of the demand for the product and the required amount of goods in the warehouse.
Benefit #4. Personalized Approach
A personalized approach can work not only for the benefit of browsers but also for the benefit of your retail business. Big Data algorithms can collect information about each customer’s preferences to form a personalized product listing and purchase recommendation. Thus, you increase income, and the customers buy more because since they see more products that they can potentially buy (for example based on review history, previous purchases, views, and more).
Benefit #5. Service Improvement
Politeness and excellent service are what will help you stand out from the competition and not lose customers. For example, according to research, 96% of buyers will simply leave you if they are faced with bad service. That is why it is important to use the capabilities and implement Big Data analysis results in your CRM for e-commerce to provide the best service among your competitors.
Benefit #6. Sales increase
Any entrepreneur wants his business to grow and achieve new sales and profit indicators. Big Data is a great tool that can help businesses do this. For example, analysts estimate that nearly 70% of shopping carts are abandoned before a purchase is completed. With the help of Big Data analytics, you can identify weaknesses in the buying process and eliminate them to increase conversion.
Big Data Adoption Pitfalls
Despite the fact that all of the above benefits sound like a spell that will lead your business to success, Big Data is not a simple thing that can be implemented into a business at the click of your fingers. When introducing this technology into a business, the following barriers may await you, and you better be prepared for them in order to properly respond and prevent them.
Pitfall #1. Inflated Expectations
This problem is not entirely technical but rather mental. Many entrepreneurs think Big Data is the ultimate recipe for success. However, this tool will not be able to solve all the problems of your business. All Big Data gives you is valuable information. And how you use this information is entirely up to you.
Pitfall #2. Lack of Knowledge
You must be armed with certain knowledge to work with Big Data. For example, you must figure out how to work with special programs that specialize in Big Data. In addition, you must create correct queries to the database and process the received information competently. In addition, no one cancelled critical thinking and literate weighing of the analysis results obtained.
Pitfall #3. Security Issues
This is one of the biggest doubts on the road to Big Data adoption. Many business people fear for data and that it might fall into the wrong hands. And this is not a groundless fear, since the personal data of users, credentials, high-profile private information are a tidbit for intruders. That is why when implementing Big Data, you must take care of security first.
Pitfall #4. Analytics Underestimation
Many businessmen mistakenly believe that the most important stage in using Big Data technologies is collecting information. However, this is not the case. The most important part of using Big Data algorithms is analyzing the information received. Analytics should not be underestimated, as if the analysis is wrong, you will get results that are far from the truth. To avoid such situations, it is worth investing more in data analysis than in data collection.
Pitfall #5. Poor Hardware and Software
Huge amounts of data require massive storage and processing power. And if you don’t take care of this, or your existing capacity is not good enough, the whole Big Data venture can turn out to be a failure. Fortunately, today’s big data analytics providers offer a wide range of services, including collecting, storing, processing, and analyzing data.
Since we have discussed all the benefits and pitfalls of implementing Big Data into business, it’s time to talk about the most famous Big Data solutions on the market.
Famous Big Data Solutions for E-Commerce Field
When choosing a specific Big Data tool for a business, you should carefully analyze its capabilities and for whom it was created. Some tools were designed for beginners and some for professionals. We have collected five of the most famous Big Data solutions for the retail market.
- Dundas BI. This tool offers users a customizable web-based dashboard for analyzing big data in e-commerce. Users can select the tools they need, build their own reports, and process as many metrics as the business needs.
- Pentaho. This platform provides advanced BD analytics, visualization, reporting data mining, and predictive analytics in one fully customizable dashboard. In addition, Pentaho is compatible with multiple databases, the Hadoop platform, and NoSQL.
- Oracle Advanced Analytics. Users have a choice between several systems for data analysis. The core platform includes two products Oracle R Enterprise and Oracle Data Mining and works with Oracle databases. The combination of these tools opens up advanced capabilities for real-time analytics, market forecasting, product recommendations, and more.
- Cloudera. This scalable system is designed for advanced users. It works with the Hadoop platform data processing framework. Cloudera is an open-source system licensed from the Apache Corporation, which means it is very easy to work with for an experienced developer.
- Vertica. This platform has gained popularity due to its high performance and scalability. The company has three different products designed for data processing of companies of different levels, which allows you to choose the ideal solution for your business.
Wrapping Up
Big Data is a very valuable resource in the retail industry that allows you to see the overall picture of the market and develop well-thought-out business solutions based on the received data. Despite some disadvantages and pitfalls associated with business implementation, this technology has undeniable advantages that help businesses move forward and reach new heights.
