In this second post of this series, we continue the work of the first post and examine more of the areas of your ecommerce business driven by the need for data.
Using email marketing to your customer base is an important way for you to encourage repeat buying and increase loyalty. This is an area where reporting and analysis can really inform, fine-tune and improve your communications and conversion rates. Export a list of those customers who have bought similar products from you before and upload them to your email marketing system so that you can deliver targeted, appropriate and relevant content to them. Export your top customers list and reward them with further offers, coupons, discounts and so on. Finally, analyse the most prolific times of day and days of the week for order-taking to set the optimal windows for your email campaigns.
Smart management is all about getting the data to do the heavy lifting for you, whirring away in the background and collecting and crunching the numbers while you keep things moving. If you have access to a reporting dashboard, customise it so that at a glance you can see the most important or most viewed metrics for your business, such as summary figures for the period to date and a breakdown of yesterday’s sales. This saves you time having to navigate to the few key screens every time you want to check performance. Better still, make sure you can access this key data from a mobile device, so that even if you’re on the move or stuck in a meeting, you can stay close to the numbers and react quickly when you need to.
Once you’ve set up your key performance indicators and targets across the important areas of the business, you can sit back and let the system take care of the rest. For example, use a stock forecasting report to send you a 7-day email alert when you have 5 days’ worth of stock left at current velocities and need 2 days for a re-order. Alternatively, if you like to hold a certain number of days stock of a fast-moving item, use the system to re-order a certain number of units to maintain the right levels. The more you can automate your reporting and analytics, setting up alerts and notifications across a range of levels and thresholds, the less time you spend with your head in the numbers and the more time you spend buying, marketing and selling.
Inventory & Stock Control
Getting your inventory right requires a fine balance of time and quantity. It’s also directly linked to how good you are at purchasing. If you can see your stock value, sales and sales velocity by supplier, for all channels, this allows you to match supply and demand more efficiently. For example, you wouldn’t want to see a high stock value for a supplier and low sales for that supplier. A ‘scatter plot’ chart allows you see your supply base at a glance and spot the problem areas where you’re holding too much stock from suppliers whose products aren’t bringing you high sales. Then you can drill into the individual supplier to see the stock value and sales across specific products or products lines. Furthermore, if you’re a big fan of kits, you should also do kit analysis to see how stock moves individually compared to as part of a kit.
Similarly, dead stock is another drain on your profitability. Being able to see what stock has had no sales over the last 7, 30 or 60 days, for example, allows you to identify poorly selling items and see what the stock value is of those SKUs. Perhaps they are seasonal SKUs, explaining the period of inactivity, in which case you could explore selling to countries where they are in season. If they’re not seasonal, you could bundle them into promotions to move the dead stock and recover some of your costs. Either way, reporting and analysis allows you to use the information as you see fit.
We’ve already touched on the usefulness of the stock forecast, but it’s worth repeating here. Having SKU-level visibility of stock levels, measured in terms of the days it would take to deplete them, means you can really improve your efficiencies, especially for those items with long lead times, such as the ones you’re sourcing from China, for example. You could also experiment with a red-amber-green traffic light system for stock levels, and set up automated email notification to let you know if a SKU’s stock level goes ‘amber’ or ‘red’, according to rules you put in place.
Warehousing & Operations
When it comes to the operational side of the business, covering warehousing of deliveries all the way through to fulfilment and order dispatch by couriers, you’re looking for maximum productivity with minimum errors. You should study your supplier delivery and warehouse allocation accuracy to see where you can improve. Also, interrogate your order data and split out the credits/refunds to spot which suppliers, regions, SKUs or categories are eroding your margins. You can protect your margins by monitoring operational costs like legal, regulatory, tax and insurance against targets over time.
Fulfilment & Shipping
Every mistake in picking, packing and shipping eats directly into your hard-earned margins from the original sale. Accurate reporting lets you judge the relative performance of your warehouse staff in processing supplier deliveries and customer orders. This helps you pinpoint the problem areas and staff, so that you can provide more training or better deploy your resources to increase throughput while reducing the error count. It also pays to look at your courier spend and what you’re spending on different parcel types to different countries. When you can report on courier usage you’re able to evaluate other courier options based on current and forecast volumes.
Credits & Refunds
Do you know your credit/refund percentages, by revenue and volume? As we’ve mentioned, this critically impacts both your customer service and purchasing areas. Splitting out the credit and refund data lets you spot which suppliers – physical suppliers versus drop-shippers for example – and which SKUs or categories are causing more credit and refund problems and eroding your margins. High refund figures could be the end result of poor product quality, incorrect item descriptions or clumsy shipping. Or perhaps it’s a specific channel, region or country that’s hurting your profitability? Being able to slice and dice your credit and refund data in lots of ways gives you the detail you need eradicate the worst offenders.
You can take a similar approach when you look at your customer service centre and their service load. Being able to see the minority of products that is taking up a disproportionate amount of customer service effort helps you make informed decisions on what you need to fix. Similarly, if you can analyse and report on the type of customer questions that crop up the most often, thereby taking up most service time, you can work to introduce more automated information and more answers to frequently asked questions to reduce the service costs and the need for manual intervention.
The data on your products is often down to the data you’re given by your suppliers. Being able to analyse your sales by supplier, therefore, helps you spot not only the items that are selling well with a particular supplier, but also those items that are not selling well due to inferior or inaccurate accompanying information. This is something you can then address directly with each supplier. Better data and analytics will also help you get better at purchasing and better manage your exposure to or risks with certain suppliers. You can buy more accurately and use the power of reporting intelligence to negotiate better prices from your suppliers. The best sellers get the best prices from their suppliers and derive the highest gross margin.
You can define gross margin as your sales minus the fulfilling those sales, ie product costs, shipping fees, channel fees, payment gateway fees, tax and so on. Then you need to apply costs like staffing, premises, insurance to calculate your net margin, the profit you’re actually making on an item. Each cost adds an incremental layer to monitor and manage. Having to do this manually is extremely time consuming and laborious, so find a mechanism to define all of these charges and monitor performance against target across channels, suppliers, countries, SKUs and over time.
In the final post in this series we’ll talk about Vision, Volo’s own reporting and analytics module. To find out more about Vision, please let us know.