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.