When you think of Big Data, what’s the first thing that comes to mind? For most people, the way Big Data is used by tech giants like Google or Facebook might come to mind. However, Big Data has a huge impact on our day-to-day lives in a completely different way: the things your customers buy and how much they will pay for them. In fact, when you hear the term “Big Data,” one of the first things that should come to your mind is the retail industry.
Big Data has several applications in retail. All of them most likely have an impact on buying behavior as well as the prices customers are paying. Its influence goes beyond the Internet as well: Big Data’s role spans beyond eCommerce and has found itself in-store. Here’s a brief overlook on how Big Data is used in retail, and how it impacts your revenue on a daily basis.
Advertisements
Probably the most well-known way in which Big Data is used is via advertising. Most are more than familiar with personalized ads that pop up on the sides of their screens, offering discounts for items they viewed recently. In fact, this ultra-personalization of advertising in retail comes down to the immense amount of consumer data the industry has been able to get their hands on in the past decade.
Armed with advanced algorithms to detect patterns in consumer behavior, retailers are grabbing as much data as they can get to make their advertisements as effective as possible. Anything from transaction history to information gathered from social networks, Big Data can be used to understand your customers better and provide the most targeted advertisements possible. If you aren’t using Big Data in your advertising yet, it’s likely that your revenue is taking an unnecessary hit from all the missed sales opportunities.
Pricing
Previously, pricing products was quite literally an educated guessing game where managers did a bit of math, trusted their experience, and crossed their fingers. Today, pricing is a data-driven science with Big Data at its core. A plethora of data can be analyzed by pricing software – which typically uses advanced algorithms – such as competitor data, historical pricing data, and historical purchase data.
After thorough analysis, patterns can be found within the data to determine the right price for thousands of products at a time. These prices can also be changed fairly frequently, which is something a lot of eCommerce retailers need to do to stay competitive.
The “right” price can differ according to your company’s particular goals. Some retailers go as far as offering different prices for the same product according to who is viewing it. Finding these optimal prices encourages people to spend their money. People generally are comparing deals and looking for the best one, so if your business’s prices aren’t optimized using Big Data and advanced pricing software, it could be impacting your profit margins more than you know.
Customer Experience
Other than the price of a product, a customer’s experience with a particular store or retailer is another contributing factor that determines where they want to spend their money. Most retailers know this, and have opted to use CRM (customer relationship management) technology to help them create the best customer experience possible. With most of these platforms, Big Data is vital.
Big Data helps retailers understand a customer’s interests and behaviors to do things like make better product recommendations. It can give retailers the ability to gather insights from important data like previous contact history, purchasing history, and other personal data to provide a more personalized customer experience.
This concept of Big Data for CRM and customer experience spans beyond eCommerce as well: In-store retailers need Big Data to hone in on their target audience to figure out what will bring their most loyal customers back.
Conclusion
Whether it be optimal prices, top-notch customer experience, or ultra-targeted advertisements, Big Data is behind it all, and you need it to stay competitive and grow as a business in the modern day. Now that more data is being collected than ever, we can expect Big Data to become even more necessary in other areas of retail in the future. Big data is impacting everything, and your revenue is no exception. Also remember to keep up with the best data science courses to have an edge over your competitors.
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Interesting related article: “What is Retail?“