The Online Retail indus­try is a $135 bil­lion behe­moth that will grow to $234 bil­lion by 2014 in the US. E-commerce rep­re­sents 3.7% of all retail sales in the US and is expected to increase to 5.5% in 2014. It is one of the few seg­ments that enjoyed a pos­i­tive growth rate in the year 2009. (U.S. Cen­sus Bureau, William Blair and Com­pany estimates)

retail_sales1

I will be exam­in­ing the role that Web Ana­lyt­ics plays in the retail indus­try in gen­eral and for retail web­sites specif­i­cally. We’ll take a look at what dif­fer­en­ti­ates online retail sites from other web­sites (Yes! They are different!).

We’ll start, how­ever, with 3 sim­ple ques­tions that when answered hon­estly will help you level set on your organization’s adop­tion of web ana­lyt­ics.
1. Do you have the exec­u­tive spon­sor­ship and resources nec­es­sary to sup­port the ana­lyt­i­cal needs of your orga­ni­za­tion?
2. Do you have the right cus­tomized web ana­lyt­ics tools and peo­ple to help you per­form analy­sis and iden­tify prob­lems spe­cific to your prod­uct offer­ing, shop­ping expe­ri­ence and check­out flow?
3. Has ana­lyt­ics been an inte­gral and strate­gic part of the plan­ning and tag­ging process or just an afterthought?

Site Objec­tives

darts_objectiveThere are obvi­ous dis­tinc­tions between sites that have dif­fer­ent objec­tives. A site sell­ing prod­ucts is dif­fer­ent than a site show­ing videos which is dif­fer­ent than a tech­nol­ogy dis­cus­sion forum. One of the ques­tions we often ask clients is, “Why do you have a web­site?” This may seem like a basic ques­tion. In today’s post-dot-com-boom econ­omy, it is often taken for granted that every com­pany has a web­site, even if they don’t have a clear mis­sion state­ment for it. The ubiq­uity of web­sites may also be due to low ini­ti­a­tion costs and low bar­ri­ers to entry. How­ever, hav­ing a web­site and know­ing the pur­pose behind your web­site are two very dis­tinct things. The ana­lyt­ics of your web­site should directly sup­port your web­site objec­tive or mis­sion state­ment. The point is, under­stand­ing the “Why” behind your website’s exis­tence will exten­sively affect the “What” of the ana­lyt­ics you pay atten­tion to. This par­a­digm shift will change the way you approach your web analysis.

In much the same way, web ana­lyt­ics tools are taken for granted in today’s world. As such, web analy­sis may be seen as a task to check off our to-do list. On the con­trary, web analy­sis should be cul­tural – a way of life! It should be the foun­da­tion for your web opti­miza­tion efforts.
At this point, let’s take another look at Ques­tion #1. Do you have the exec­u­tive spon­sor­ship and resources nec­es­sary to sup­port the ana­lyt­i­cal needs of your orga­ni­za­tion?
lego_peopleOf course, resources include both mate­r­ial and human resources. Mate­r­ial resources might include a robust infor­ma­tion tech­nol­ogy infra­struc­ture, an intu­itive and flex­i­ble eCom­merce plat­form, value-add part­ner and ven­dor rela­tion­ships, and effi­cient processes for site opti­miza­tion and analy­sis deliv­ery. Human resources should include insight­ful ana­lysts, ver­sa­tile devel­op­ers, com­pe­tent con­sul­tants, and savvy busi­ness infor­ma­tion con­sumers? Take a few moments to con­tem­plate this one. Just because you have an ana­lyt­ics tool does not nec­es­sar­ily mean you get full points here. With­out the ancil­lary sup­port infra­struc­ture around your web ana­lyt­ics, you may not be real­iz­ing the full poten­tial return on your tool investment.

Is your web ana­lyt­ics data fully uti­lized? You may have a great tool, but if no one uses it, how much value does it bring? Here is a par­tial list of groups in your orga­ni­za­tion that might ben­e­fit from access to and train­ing regard­ing your web ana­lyt­ics data: Mer­chants (online and offline), User Expe­ri­ence, Web Mar­ket­ing, Pro­mo­tional teams, SEO, Paid Search, and Infor­ma­tion Tech­nol­ogy. Of course, the full list will depend on your orga­ni­za­tion. Ensur­ing these stake­holder groups have the abil­ity to get to per­ti­nent data quickly and eas­ily, and under­stand how to inter­pret and act on it, allows you to real­ize the return on your web ana­lyt­ics investment.

Shop­ping vs. Content

shopping_cartOne of the most strik­ing exam­ples of dif­fer­ing objec­tives directly relates to online retail sites. While many other sites may be more con­cerned about con­tent con­sump­tion or cus­tomer engage­ment, online retail­ers say, “Show Me the Money!” Due to dif­fer­ing objec­tives, there should be a cor­re­spond­ing dif­fer­ence in Key Per­for­mance Indi­ca­tors and data dimen­sions used to ana­lyze those sites, respec­tively. As an exten­sion of what we dis­cussed above, the dif­fer­ent objec­tive of your web­site leads to spe­cific key met­rics which enable valu­able analy­sis. Under­stand­ing this con­cept allows you to move from page views and vis­its to con­ver­sion rates and yield.

In a sim­ple exam­ple, con­sider a page from a content-centric site (per­haps a blog post) com­pared to a page from a retail shop­ping site (let’s say a prod­uct detail page). Both are at a sim­i­lar level of gran­u­lar­ity in their respec­tive sites. How­ever the data we want to col­lect around each dif­fers sub­stan­tially. For the blog post we may want to know if a user is engaged with the con­tent, indi­cated by how long they spent on the page or if they read or wrote com­ments. For the prod­uct detail page, we are more con­cerned about what the prod­uct is and how the user got there (Browse, Search, etc.). We want to know if the vis­i­tor adds this item to their cart or if they share the prod­uct with their friends. Most of all, we want the vis­i­tor to pur­chase! Con­sid­er­ing these key dif­fer­ences in the infor­ma­tion we want to gather, shouldn’t we have spe­cial­ized track­ing and analy­sis in place?

Here comes Ques­tion #2 again… Do you have the right cus­tomized web ana­lyt­ics tools and peo­ple to help you per­form analy­sis and iden­tify prob­lems spe­cific to your prod­uct offer­ing, shop­ping expe­ri­ence and check­out flow?
moneyCon­tin­ual focus on your goal (the money!) is essen­tial to suc­cess­ful web analy­sis. All too often, I meet with com­pa­nies who think only about projects and dead­lines. What they should be think­ing about is how those projects influ­ence their objec­tive (the money!). With­out a focus on the goal, site opti­miza­tion becomes nearly impos­si­ble because no valid cri­te­ria are used for project prioritization.

Which brings us to Ques­tion #3: Has ana­lyt­ics been an inte­gral and strate­gic part of the plan­ning and tag­ging process or just an afterthought?

If you answered ‘no’ to any of the ques­tions above, it’s time to make some course cor­rec­tions and get seri­ous about dri­ving major value for your com­pany on your web­site. To drive major value, the answers to each of the ques­tions above must be a resound­ing ‘yes’. Once these fac­tors are ironed out and you find your­self at the fore­front of dri­ving tan­gi­ble results and opti­miza­tion rather than strug­gling to get the right orga­ni­za­tional and tech­ni­cal pieces in place, you’ll be poised and ready to take part in the excit­ing growth rates com­ing to online retail­ers over the next 5 years.

How much of the pie do you want…?”

Stay tuned for my next blog post where we will look at tech­nol­ogy adop­tion in the Online Retail Industry.

2 comments
Peter Chang
Peter Chang

I think a very important point from this post is that while the KPIs that you are measuring on eCommerce sites differ from other kinds of sites, the fundamental requirements stay the same. You still need the right tools, personnel, and management commitment to measure it properly.

Adam Egbert
Adam Egbert

Hello, Peter. You're exactly right. Having the right tools, personnel, and sponsorship are essential to successful web analysis regardless of your objective. However, the objective of your site should drive your KPI's, strategy, and action plan. For example, it might be easy to assume that every site wants more visitors. But, I've worked with several sites that have plenty of visitors. Instead of concentrating on Acquisition of traffic, they should put their time, money, and efforts into making sure the visitors have the most effective experience possible. In other words Optimization and Retention. The end goal is to align your efforts in web analysis to the overall objectives of your organization.