Do Big Data for small retailers offer an opportunity to compete with the big retailers or is it too much trouble? One of the fall outs of the digitization of business is the massive amount of data that are everywhere.
Every time a customer makes a purchase online or registers online, data is generated. The data can potentially tell you almost everything about consumers. Retailers that sort, analyse and interpret big data can add value for customers and so increase their shopping experience.
Surely retailers should take advantage of big data since it contains captured detailed information that probably was overlooked in the past. However, to get the most out of it, retailers need to be innovative.
The promise of new revenues, customers, and new businesses with big data will require development and investment in teams and technology 1. But first let’s have a look at what big data is all about…
What is big data?
Big data is a term that primarily describes data sets that are so large, unstructured, and complex that it requires advanced and unique technologies to store, manage, analyse, and visualize 2.
Therefore, big data represents the data sets that cannot be perceived, acquired, managed, and processed by traditional IT and software/hardware tools within a tolerable time 3.
Compared with traditional data sets (small data), big data typically includes masses of unstructured data that need more real-time analysis, according to Chen, Mao, and Liu, (2014).
Where can retailers find Big Data? Rajdeep Nair responds as follows on Quora: “Data is everywhere… it can be purchase data or images uploaded by you on the social media site or data sent by mission sent to Mars by NASA.
Everything that is there on the internet and company or an organisation’s confidential data stored on the server. Mostly data is stored on the server, the technology of which is improving and evolving rapidly.”
However, a good place for small retailers to find “Big Data” is on their own systems. Have you ever analysed your own data sets before?
What retailers can do with Big Data
According to Russell Walker 1, firms that are first movers in leveraging Big Data have great advantages because they develop innovative insights about customers and markets.
These insights can transform services, and even business models. Bernard Marr, contributing to Forbes declared Big Data as “A game changer in the retail sector”.
Bernard notes that Big Data analytics is now being applied at every stage of the retail process. Says Bernard: “It is used to understand what the popular products will be by predicting trends, forecasting where the demand will be for those products, and optimizing pricing for a competitive edge.”
Moreover helps Big Data retailers to identify the customers that are likely to be interested in their products. Indeed, it can also to help them making the sale and working out what to sell next to them.
Alex Woodie writing a piece in Datanami.com suggests there are 9 ways retailers are using big data technology to create an advantage in the retail sector.
The advantages of Big Data to retailers
- Recommendation Engines – by training machine learning models on historical data, the savvy retailer can generate accurate recommendations before the customer leaves the Web page.
- Customer 360 – customers expect companies to anticipate their needs, to have the products they want on-hand. Also to communicate with them in real time (via social media), and to adapt to their needs as they change. In the cutthroat world of retail, developing a customer 360 system using Big Data may be a matter of survival.
- Market Basket Analysis – is a standard technique used by merchandisers to figure out which groups, or baskets, or products customers are more likely to purchase together. It’s a well-understood business processes, but now it’s being automated with the help of BD.
- Path to Purchase – analyzing how a customer came to make a purchase, or the path to purchase, is another way big data technology is making a mark in retail.
- Social Listening for Trend Forecasting – platforms like Hadoop were designed to facilitate the handling and analysis of large amounts of unstructured data, such as Facebook posts.
- Price Optimization – setting the right price requires knowing what your competitors are charging. Data can be collected electronically using daemons that crawl competitors’ website to get detailed info about product pricing.
- Workforce and Energy Optimization – big data technology can deliver benefits on the marketing and merchandising side. As a result it can help big retailers optimize their spending on human capital.
- Inventory Optimization – by analyzing Big Data, retailers can plan their seasonality in the shipping algorithms better.
- Fraud Detection – retail fraud is a huge problem, accounting for hundreds of billions of lost dollars every year. Retailers have tried every trick in the book to stop fraud, and now they’re turning to big data technology to give them an edge.
The narrative about Big Data is more with ‘Big Retailers’ at this moment. However, more smaller retailers are adding the online channel to their businesses.
Therefore, there are ample opportunities for them to use their own data to great effect. To start with small with Big Data may work better for smaller retailers.
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Have a look at this video by Tera data corporation more more on Big Data for retailers:
1 Walker, R., 2015. From big data to big profits: Success with data and analytics, Oxford University Press.
2 Xu, Z., Frankwick, G.L. and Ramirez, E. 2016. Effects of big data analytics and traditional marketing analytics on new product success: A knowledge fusion perspective. Journal of Business Research, 69(5):1562-1566.
3 Chen, M., Mao, S. and Liu, Y. 2014. Big data: A survey, Mobile Networks and Applications, 19(2):171-209.