Profitability of online stores – what affects it?
E-commerce is a booming economic sector worldwide. According to statistics, the value of the global e-commerce market in 2021 was about $4.5 trillion, and forecasts suggest that this value will continue to grow in the years to come. Many factors can affect the profitability of online stores. Let’s take a look at some of them:
- Availability of assortment: One of the key factors affecting the profitability of an e-shop is the wide selection of products. Customers appreciate being able to find everything they need in one place. Online stores should therefore take care to diversify their assortment and regularly update their offerings to meet customer expectations.
- Quality customer service: Excellent customer service is a key element in building loyalty and encouraging customers to buy again. For this reason, online stores should provide easy access to product information, fast and friendly service, and flexible return and complaint policies. Good customer relations contribute to increasing loyalty and gaining positive recommendations, which has a direct impact on profitability.
- Transaction security: Security is a key issue for customers shopping online. Online stores should take care to provide secure payment methods, use data encryption protocols and protect the privacy of their customers. Lack of trust in the store can affect conversions and ultimate profitability.
- Website optimization: Website loading speed and responsiveness are of great importance to users. Studies show that longer loading times lead to more abandoned shopping carts. Therefore, online stores should take care of the technical optimization of their sites to ensure a smooth and convenient experience for users.
- Marketing Strategy: An effective marketing strategy is key to attracting customers to your online store. You should invest in online advertising, build a social media presence, run email campaigns and use remarketing strategies. It is also important to monitor the results and analyze the data to adjust the strategy according to customer preferences and behavior.
- Logistics and delivery: Fast and reliable delivery is one of the most important factors in determining customer satisfaction. Sklepy internetowe powinny dbać o efektywną logistykę, w tym skuteczne zarządzanie magazynem, umiejętne pakowanie towarów i współpracę z niezawodnymi firmami kurierskimi. Free delivery or low shipping costs can also attract customers and increase profitability.
Wzrost rynku e-commerce można obserwować na całym świecie, zarówno w krajach rozwiniętych, jak i rozwijających się. The COVID-19 pandemic has further accelerated this trend, increasing the number of people using online shopping. The global e-commerce market is currently estimated to be worth more than $5 trillion, and forecasts suggest further growth in the coming years.
The future of e-commerce seems promising, especially with the development of technologies such as artificial intelligence, augmented reality and the Internet of Things. Online stores will look to further personalize their offerings, improve the shopping experience and use analytics data to effectively target customers.
What areas of e-commerce are supported by data analytics and Power BI?
Anyone who runs an online store is well aware that analyzing data on site traffic or user behavior is essential for growth. Based on the data collected, we can:
- Determine the sources of traffic to the online store,
- Get to know customer demographics – age, gender, location, hours of activity,
- Select the most effective channels of communication and promotion,
- Identify the products that generate the most profit for our e-business,
- Find the cause of basket abandonment.
In order to analyze the data properly, it is very important to aggregate and segment it properly. With help here comes a system Power BI, which allows you to collect all the data about your online store in one place and analyze and visualize them accordingly in the form of clear and interactive reports. What’s more, by using Power BI, the aggregated data is available to everyone in the company, regardless of place or time.
Microsoft Power BI is a business intelligence tool that will take your online store’s data analytics to a new level.
With the Power BI service, they are available in one place regardless of location and time, and by using Power BI Mobile also from mobile devices.
Power BI allows you to combine information from multiple sources – databases, files, folders, Azure service or web services. The creation of reports is fast and intuitive, and their scope can be freely modified and shared with other users.
What data in your online store will Power BI help you analyze?
- Sales and margins – analysis of price levels and sales of goods (including per SKU), market share, competitive analysis. Power BI guarantees real-time sales data insights for specific categories or brands.
- Inventory – Power BI helps analyze inventory and performance metrics, including those related to deliveries which helps optimize inventory management.
- Marketing – website traffic, sources of entries, activity on social channels, effectiveness of promotional campaigns – all this data is analyzed by the Power BI system and, thanks to its ability to visualize the impact of marketing activities on the e-store, helps in making business decisions.
- Finance – analysis of cash flow, accounts receivable and accounts payable gives managers constant insight into the company’s financial situation and enhances their ability to respond to potential crisis situations.
Why is data analytics in e-commerce so important?
Data analysis in e-commerce is extremely important for several reasons:
- Learning about customer preferences and behaviors: Data analysis in Power BI allows online stores to gain an in-depth understanding of their customers’ preferences and behaviors. This allows you to better tailor your offerings to your audience’s expectations and personalize the shopping experience. Trends, popular products and preferred communication channels can also be identified from the data, helping to make effective business decisions.
- Optimization of marketing activities: Data analysis allows online stores to effectively optimize marketing activities. Based on the data, it is possible to monitor the effectiveness of advertising campaigns, identify the most effective channels and messages, and tailor promotional strategies to customer preferences. The data analysis also makes it possible to segment customers and create more targeted and personalized marketing campaigns.
- Improving the sales and customer service process: Data analysis in Microsoft Power Bi besides allows you to identify weaknesses in the sales and customer service process. Conversions, average order value, delivery time and other metrics can be analyzed from the data to optimize business processes. Online stores can also analyze customer service data, such as response times and customer satisfaction, to help improve service quality.
- Forecasting and strategic planning: Data analysis allows for forecasting and strategic planning. Based on the data, market trends can be predicted, seasonal changes in demand can be identified, past sales performance can be analyzed, and based on this data, decisions can be made about orders, product mix, marketing and other areas of the business. Data analysis allows for more rational and fact-based business decisions.
The insights from Power BI data analysis in e-commerce are extremely valuable for e-commerce stores, as they allow them to better understand their customers, tailor their offerings to their preferences, optimize marketing efforts, improve sales and customer service processes, and plan strategically. With data analysis, online stores can operate more efficiently and compete effectively in the e-commerce market.
Correct analysis of data in Microsoft Power BI gives a global view of the health of the online store and helps in making sound business decisions. If you are interested in implementing a Power BI system in your e-store, then feel free to contact us. We will be happy to prepare a dedicated solution for your company.
