5 ways to raise your profit with merchandising analytics

Mar 18th 2024ecommerce

Do you know what your ecommerce customers want?

If the answer is “Hmm…” or “Well, I sure hope so”, you’re going to love discovering the amazing data insights you could get from modern retail analytics. You can definitively and continuously answer that question, and you’re about to learn how.

Merchandising and retail analytics solutions have transformed modern retail-industry players’ understanding of shoppers’ needs with deep insights on shopper behavior, illuminating the way for companies to make user experience (UX) improvements and boost their bottom lines.

If you’ve yet to experience the heady power of analytics in relation to your websites and apps, here’s some background on what you stand to gain.

What do merchandising and retail analytics involve?

Online merchandising and retail analytics can drive decisions to leave customers more satisfied, make in-house processes more efficient, and boost profits. These types of information facilitate data-driven decision-making:

Customer data

Age, gender, income level, geographic location — these are some of the basic shopper demographics. But useful customer data goes way beyond the basics. It encompasses online customer behavior data, preferences, feedback collected through surveys, what people write in reviews, customer-service interactions, and of course, purchase history. Acquiring comprehensive customer data is vital: 63% of companies use customer data to influence product offerings, such as by suggesting products that align with consumers’ personal values.

Sales data

Granular data about every transaction, like the date and time of all purchases, the location (online or off), the quantity, and the price, underlies great merchandising. When you have adequate sales data, you can uncover patterns like seasonal trends and instantly know which products are bestsellers.

Inventory data

How are your site’s current stock levels? Which products are flying off the shelves? Which are barely moving? How often is your inventory replenished? The answers to these questions — otherwise known as inventory data — prevent overstocking and help teams efficiently manage the supply chain.

5 benefits of using merchandising analytics

Here are some of the upsides you’re likely to see when using analytics:

Accurate forecasts

Merchandising and retail analytics tools are equipped with advanced algorithms that analyze past and current data to forecast future trends. This lets you adjust strategies proactively, ensuring that they’re always aligned with market dynamics and shoppers’ expectations.

To see how this is possible, let’s look at the use case of a sports-equipment ecommerce website. The team is kicking off the sales season by applying predictive analytics to forecast seasonal demand. Analyzing past sales data, social-media trends, and local sports-event schedules, they pinpoint increased demand for running shoes, hiking gear, hockey pads, and baseball bats. This detailed foresight lets them make appropriate stock adjustments and launch promising marketing campaigns, plus create new sales opportunities and satisfy customer needs by making smart recommendations.

Streamlined operational efficiency

Retail analytics can identify critical bottlenecks in your supply chain, inefficiencies in inventory management, and opportunities for cost reduction. The upshot? Analytics can be very handy for reducing expenses and ensuring that shoppers can easily browse or search to find what they want.

For example, let’s say a health-food ecommerce site uses inventory-management analytics to track stock levels in real time and predict demand based on historical sales patterns. This lets the team adjust the supply-chain logistics to always keep popular products in stock, which results in higher revenue and more satisfied customers.

Top-notch personalized marketing

Personalization is the key to your online shoppers’ hearts (and wallets). According to one survey, 82% of customers feel more positive about a company after reading customized content. Merchandising and retail analytics can help you personalize effectively by learning your shoppers’ unique habits and preferences. Then you can deliver highly targeted marketing that drives revenue.

Consider a theoretical beauty-products retailer. They’re using customer segmentation analytics to uncover purchasing behavior and customer preferences. Those insights form the basis for a personalized email marketing campaign that offers deals on products shoppers have shown interest in. This campaign leads to happy buyers and higher conversion rates.

A superior customer experience

Did you know that 56% of shoppers say they’ll become repeat buyers after being given a personalized experience? Merchandising and retail analytics solutions provide actionable insights on what shoppers are looking for, their purchasing patterns, and how they see and respond to online product information. That means you have exactly what you need to meet their expectations and increase customer loyalty.

For example, consider an online gaming retailer that’s using browsing and purchase-history data to guide the ways it revamps page layouts. By understanding how people want to engage with content on the platform, the merchandising team can create a more intuitive shopping journey.

Enlightened decision-making

The insights you reveal through the strategic use of data can help you confidently target your marketing strategies to win over more customers and set your company apart from competitors. They eliminate guesswork, giving you the power to make informed decisions about product placement, pricing, and inventory management. Then, you can confidently start aligning your merchandising with what you’ve learned about consumer behavior and market trends.

Consider an online clothing retailer that’s utilizing sales data analytics to identify styles and colors that are popular in different regions. By analyzing its data, the retailer discovers one key difference for its US market compared with Europe: Americans are crazy for textured fabric. Based on this observation, the team increases the US stock levels for corduroy and velvet apparel, ensuring that Americans can get all the tactily satisfying styles they’re craving.

Another example: an online bookstore that’s using retail analytics to track emerging trends and popular genres. They notice growing interest in Gothic fiction. In response, they curate a unique page featuring Gothic-era titles, along with banners and a discount to attract this customer base. By catering directly to this niche market, they’re able to enhance customer loyalty while their competition hasn’t even caught on to this opportunity.

Boost search revenue with the right analytics

If you want your business to thrive in the cutthroat world of ecommerce, integrating merchandising and retail analytics is a promising way to start. When you can be guided by the (potentially surprising) insights found in your analytics, you’ll nail down precisely what you need to do to pull ahead.

That’s particularly true when it comes to AI search. With the right merchandising and retail analytics solutions, you can leapfrog way ahead of your less-tech-savvy competitors.

Ready to optimize your search results with awe-inspiring analytics? Algolia can reveal the insights you need to give your customers outstanding search experiences and bring home an impressive return on investment. Contact us for the details!