A few months ago we published the Volo Levers framework for scaling up your ecommerce business, covering 10 levers of sales growth and efficiency. We devoted a single detailed post to each of the levers – 5 of them growth-related and the other 5 efficiency-related. There’s also an 11th lever, a ‘super’ lever, which is reporting & analysis. In this post we cover how ecommerce reporting & analysis gives you the insight to positively move your Volo growth levers across marketplaces like Amazon, eBay and OnBuy, and webstore platforms like Magento and Shopify.
The framework boils down the secrets of ecommerce success into a strategic checklist of 10 areas that directly impact sales growth and efficiency improvements. Spoiler alert: at the heart of your success are two factors, which are closely linked, anf they are data and automation. More on that later. Take a closer look at the Volo levers diagram which visually articulates the framework and you’ll see that reporting & analysis sits in the middle, and is the window into exactly how you’re doing across the levers. Let’s get into this in a little more detail.
Talent scouts are paid to spot the next sporting superstar, musical prodigy or supermodel. They spend hours and hours plying their trade, travelling, watching, observing, noting. They rely on gut instinct as well. They’re looking for the signs and behaviours of those destined to become great, and in so doing they can unlock fame and fortune for our future role models and heroes.
In the ecommerce world, success can be a result of the seller’s well-developed hunch that something is going to take the markets by storm, or at least do very well indeed. It’s more likely, however, to be by virtue of hard work and research into what’s selling well elsewhere, from other sellers, in other regions or in new and developing markets. For your own business though, the success is rooted in the lessons of past performance, and an analysis of what’s happening so that you can see trends, anticipate issues and plan your business decisions accordingly.
Two factors are central to being able to report on and analyse your sales performance. The first is the accuracy of the data itself. Most systems and software applications are only as good as the underlying data. In a dynamic business like an ecommerce business, that data is in a constant state of change, so the more up-to-date your data, the more accurate your window on what’s happening. The second factor is how the data is structured so that it’s surfaced in formats and reports that are meaningful and relevant to you. You want to be able to slice and dice your data in a number of ways, and well-structured data and flexible reporting allow you to do that, whereas poorly structured data and rigid reports don’t.
Reporting & analysis is also one of those areas that suffers from a ‘reality gap’. We’re pretty sure that in theory everyone embraces the idea of analysing performance regularly to inform our buying and selling decisions. In practice, however, we’ve a business to run and we get sucked into the day-to-day grind, so our analysis tends to be reactive, sporadic and infrequent. We also experience a difference between the data we’d like to see and the data we can actually extract and report on. This is the gap, and it can be a frustrating gap to bridge.
It’s really important to be able to measure the key indicators of sales growth in your business, because if you can’t measure it, you can’t manage it. You don’t know if you’re doing well and growing, or whether your growth has plateaued, or even declined. It’s hard to put a figure on how much we’d all pay for reliable, fast answers to important questions. How much is each product selling? What are the best sellers? What are the poor sellers? How fast are the items selling? What are the prevailing trends? How fast will I run out of each item? Bearing in mind how long it takes for a fresh supply to come in, when do I need to re-order? How many do I need to re-order, and for which variations?
Sometimes it seems that these important questions are too many to manage. What’s happening across the different channels and regions? How do the best sellers and poor sellers distribute across my various suppliers? How profitable is each product? What are my average order values and attachment rates? Are they trending up or down? What’s happening seasonally? What happened seasonally last year so I can be better prepared this time? And so on.
Volo’s work with our multichannel customers helped us identify and frame the 5 levers of ecommerce growth. You can pull each of these levers to accelerate and maintain your sales, and becoming great at all 5 levers can have dramatic and lasting effects on your top line revenues. Good reporting and analysis gives you visibility into how you can improve in each of these areas.
Listing Quality: the better your products and their variations are listed, and the quicker you can list them, the more likely they’ll be found by buyers. Good reporting systems allow you to look at your ecommerce order and sales data to determine how well your items are selling, by product, over different time-frames, across regions and channels. Poorly performing items may be down to the quality of information or language that’s presented to the buyers, and this analysis enables you to focus on the areas where you can improve your listings, or indeed other determinants of success like price or shipping, and adjust your listings accordingly.
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, but only when you’re armed with the information.
Inventory Breadth: the more inventory you have, and the more variations you can offer, the more you can sell. You need to have enough stock so that you don’t run out, suffer a stock outage and oversell. Also, many sellers use drop-ship partners to widen the breadth of inventory they can offer their customers. In this instance, you need to make sure that the information and reporting you’re getting from your virtual suppliers is reliable and current. Systems like the Volo platform allow you to take in supplier feeds so that you’re regularly analysing the total picture of your sales performance.
You also need to be aware of the time it takes to sell each item of inventory – from your physical or drop-ship warehouse – and the different lead times for ordering and reordering, down to a SKU level. Good reporting will allow you to balance your stock and your sales, sliced across a range of criteria, like marketplace or channel, region, SKU and supplier.
You could use a master-sub/variation SKU report to break down sales by variation for a selected time period. Review your best sellers within the range and ensure that the popular variations are kept in stock and that the appropriate quantities are reordered. Studying the sales velocity of your items will also indicate which items are increasing or decreasing their velocity.
Items that are increasing are clearly your key to ecommerce sales growth in the short term. A rise in velocity may indicate that your pricing is too low and less competition may allow you to raise prices and drive better margins. These indicators will also help you decide to re-order or liquidate stock, depending on the circumstances. Using a SKU sales velocity report identifies risers and fallers and helps you make decisions on pricing and re-ordering.
Staying with inventory, a stock forecast report helps you see, down to the individual SKU level, how many days of stock you have left, the supplier lead time for reordering the stock, and the days until you have to re-order the stock. What’s more, a zero stock report showing you how long each item was out of stock for, combined with supplier lead times, helps figure out your total elapsed time without stock. Better still, a system like Volo allows you to set up automated email notifications to let you know if a SKU’s stock level goes ‘amber’ or ‘red’, according to rules you put in place.
Channel Coverage and International coverage: your ecommerce channel coverage strategy and international strategy encompass your webstore or webstores, the various different marketplaces around the world and other channels like price comparison sites, daily deal aggregators, and commerce from social and messaging platforms. Channels and cross-border also include the traditional avenues like a physical store, mail order and telephone order. The more places you can offer the same stock, the more potential customers see your listings and the more sales you can make. Being able to analyse the performance of your products across the different channels, countries and regions – over different time periods and perhaps also by supplier or shipper – lets you see where the growth and profitable areas are, as well as the areas for improvement.
Promotions: the more promotions you do, the more you increase your sales. Analysing your sales performance allows you to identify what the best promotions are and what products suit promotions better than others. For example, let’s say that you have a best-selling laptop and you also stock a case for the laptop, which would make an ideal bundle. You can use a system like Volo Vision to analyse the customers who bought the laptop but not the case and make them an offer accordingly. Similarly, studying which SKUs sell well with other SKUs allows you to put together new bundles that you hadn’t thought of but that the market is effectively identifying and demanding from you.
Promotions are a cost, so it’s important to analyse and understand your ROAS – return on your advertising spend – for each of your promotional vehicles. Being able to see exactly how profitable each promotional campaign is, factoring in all your other costs, will open your eyes to where you;re making money and where you’re losing it.
Staying with profit across all your growth levers, it’s a crucially important commodity of your long-term success. If you focus all your efforts on driving sales volumes for products that yield very low profit, while ignoring products that sell at lower quantities but with much higher profit, then you need to rethink your strategy, but you can only do this if you have an accurate picture of exactly what you’re making – or losing – and where.
A multitude of costs combines to turn your gross margin into the all-important net margin on the items you sell. Having to aggregate these costs manually is extremely time consuming and laborious. Great reporting and analysis gives you the mechanism to define all of these charges and monitor profit performance against target across ecommerce SKUs, channels, suppliers, countries, shippers and over time. For example, try comparing your margins for products below or over a certain price point, or for orders over a certain item number.
As we said earlier, though, you have a business to run. eCommerce reporting & analysis resources like Volo Vision allow you to customise your dashboard and alert notifications so that at a glance you can see the most important or most viewed metrics for your business. The more you can automate your reporting & analysis, setting up alerts and notifications across a range of levels and thresholds, the more time you can spend buying well, marketing and selling.
To conclude on ecommerce reporting & analysis for growth: success comes from having a clear picture of your best sellers, best suppliers, your margins and your stock, across categories, regions and channels. When you’re great at reporting & analysis, you can spot trends, opportunities and challenges, thereby increasing your sales. We help companies grow revenues through dynamic, accurate reporting, automated reordering processes and informed business planning. The Volo ecommerce platform has a fully featured analytics environment, using visual reports to provide easy at-a-glance figures and trends as well the detail behind the numbers to give you the full picture.
To talk with us about about the ecommerce reporting & analytics super lever for growth, please contact us here.