Why an eCommerce Data Warehouse is essential for growing brands?
It is imperative for growing brands to operate an eCommerce Data Warehouse and in this article we try to explain why we believe an eCommerce Data Warehouse is a critical component for the growth of these brands. eCommerce businesses operate at varying degrees of maturity when it comes to infrastructure, data management, management reporting, operational reporting, analytics, etc. However, the executive needs when it comes to the reporting, analysis, and what is happening in the business are not too diverse when you compare a small eCommerce brand to a large brand such as a Macys.com.
Executives want to understand
- Who are my best customers?
- Why do they buy from us?
- Is our loyal customer base growing?
- How are we doing on inventory for top-selling products?
- How is the traffic on the site and the behaviour of this traffic?
- How is marketing performing overall?
- What is the profitability of the company?
- If customers happy with our products?
- What is the lifetime value of my customers?
How do operators of these large or digitally native eCommerce firms that are data-driven find answers to these questions? – They hire leaders to run their data management program, give them a budget and allow them to put together data management systems for MIS reporting and hire decision support, data analysts, or data scientists to deliver reporting and insights to the decision-makers in the company.
So, how do operators of these small eCommerce brands find answers to these questions? – There is no simple answer.
Why is an eCommerce Data Warehouse important?
After having worked with many eCommerce stores over the last three years, we found that most companies do not have systems and resources in place to be able to address these questions in a simple yet effective manner. So, some of these queries get answered by individuals responsible for each department like marketing, operations, finance, sales, etc. using spreadsheets. Most questions do not get answered because finding answers to those questions is a complex activity in data aggregation, data modelling, and analysis. If the eCommerce team has no data analysts/decision support analysts in place or have not engaged a firm like us specializing in this space, it is highly likely that deep questions are not getting answered. Reporting challenges exist across various departments within the company and highlighted below are some typical problems that these resources have.
eCommerce businesses tend to be multi-channel in nature as it is important to be present where their customers are shopping, and that means selling on their website, on Amazon.com, have their products in big box stores, etc. Selling on multiple channels naturally creates data silos for sales data. Unless the data is aggregated, it will be difficult to determine how they are doing across all channels and what their profitability across channels looks like.
For reporting on overall marketing performance, marketers typically resort to spreadsheets. They run reports on various ad platforms like Facebook Ads, Pinterest, Google Ads, analytics platforms like Google Analytics, and eCommerce platforms like Shopify, BigCommerce, Magento. They download those reports to their laptop or computer, perform some data manipulation, and put together a set of manual reports that reflect marketing performance. To report actuals against targets involve manipulating another set of spreadsheets. These spreadsheets get emailed on a daily/weekly basis to management teams. Some companies may have achieved a degree of automation in this space by using tools that are specialized for marketing.
Other departments of the business tend to be not that lucky because they typically do not have the kind of budget marketing has to acquire tools to help them with reporting.
Customer service is one of the most important, yet most underrated aspect of an eCommerce company. Considering how expensive it is to acquire customers and the fact that a customer may not be profitable for the business until they repurchase, it is vital to retain customers. It is essential for management teams to keep an eye on the overall performance of the customer service department, the sentiment expressed by customers, and the quality of work done by individual customer service reps. Modern business typically use three to four different channels to engage with their customers. These channels include services like Intercom, LiveAgent, or Freshchat for onsite chat support, Zendesk or Freshdesk to handle incoming customer service requests, and a contact center software like NectarDesk and Avoxi.
For the manager of a customer service team, it is a daily chore to look at a few different systems to arrive at their final report on the performance of the customer service desk. Once they aggregate all the data from the onsite chat, customer service desk software, CRM data, and transaction data, they can assess if shipping prompted complaints, or if a product return happened due to a size issue or a quality issue or for some other reason. Management and marketing teams should care about customer service and work closely with customer service to ensure that a high degree of customers who interact with customer service turn around and engage more with the business.
It is unrealistic to expect management teams to log into these systems to see how their customer support team is performing. To keep them up to date, the customer service desk manager may be compiling a weekly or a bi-weekly report and sharing it with management. In a time where a small discomfort caused to a customer makes its way to social media and causes irreparable damage to the brand, a week-long delay may be too long. Customer service plays a massive role in customer retention and here is an excellent article on the key metrics to track.
How do large organizations answer these questions?
They set up an organization that is responsible for building an eCommerce data warehouse, keeping the data in the data warehouse up to date with recent data from the source system, hire report developers and analysts to generate business performance dashboard and insights.
How do smaller eCommerce brands deal with this issue?
It has been hard until now. But, changes in technology have enabled smaller companies to own and operate a, eCommerce Data Warehouse at a fraction of the cost as it would’ve taken a decade ago. Here is how:
Leveraging a Cloud Data Warehouse
Leveraging a data warehouse like Snowflake, Oracle’s autonomous data warehouse or Google BigQuery will eliminate all the need for managing a data warehouse. Eliminate all the costs associated with hiring or contracting a database administrator to manage the data warehouse. It is simple – swipe your credit card, click a few buttons, and your database is ready to accept incoming data.
Using Cloud Data Replication Tools
Leveraging a data replication platform like Daton, a fully managed, cloud-based replication software, you eliminate the need to engineer the flow of data from source systems into the eCommerce Data Warehouse. If you start leveraging new applications that Daton doesn’t support yet, just contact us, and we will add support into the platform. Reduce the costs associated with hiring an ETL developer
Data Modeling, Report Development and Analysis
Data modelling, reporting, and analysis are some areas that remain where analysts or businesses will have to spend some resources to get work done. But, this work gets done anyways today, albeit inefficiently and that too by valuable resources like marketers or analysts who’d rather focus their efforts on marketing or insights generation than on reporting. Can you believe that a typical marketer spends 4-8 hours a week on reporting? Assuming, conservatively, that a marketer gets paid $60k a year, a company is paying $6k-$12k per marketer to do a job that they don’t specialize.
With an increase in the adoption of SaaS applications and standardization of data models, for that same $6k-$12k a year, a business can start operating a data warehouse, automate all reporting across the board, and be in a position to leverage analysts to generate insights that can propel the company forward. Don’t have access to good analysts, or don’t need access to analysts full time? Then hire consultant analysts on a full-time or fractional basis. Having a data warehouse would mean the analysts can hit the ground running and do more work per unit time of engagement.
Now is the time to get started on your data warehousing initiative and take steps to become data-driven. In one of our articles, we had written about changes in technology and price that leads us to believe that every organization should consider operating a data warehouse immediately. We covered a few broad reasons that include improvement in manageability, data replication, pricing, business intelligence tools, and an overall reduction in cost as the prime factors that lead us to believe that most businesses can now operate a data warehouse.
Empower your analysts to do more with our data replication platform, Daton. If an analyst does not have access to a robust data warehousing infrastructure, they lose their valuable time on manual work that they could otherwise use to generate insights and work with the leadership to grow the business.
If you don’t have analysts on staff, our analysts and engineers can build a data warehouse for you and make data available at your fingertips when you need it at a fraction of the cost that you thought possible.
Talk to us today about your reporting and analysis challenges. Our solution architects would love a good chat!