7 ways eCommerce businesses use alternative data in 2022
Staying competitive in the eCommerce landscape requires agility and flexibility to pivot business strategies and adjust to changing consumer preferences and economic conditions.
Alternative data from websites, desktop/mobile applications, and other online sources gives managers the critical information they need to make effective decisions. While once confined to investors, eCommerce businesses are also adopting alternative data to refine their marketing strategies, improve product offerings, obtain demographic insights, track brand mentions, and improve SEO rankings.
Alternative data helps eCommerce businesses make better decisions.
Alternative data in finance and economics comprise real-time information, reports, and data sets outside "official" government or corporate sources. While its use has typically been associated with hedge funds and investment firms, other businesses are now taking advantage of alternative data to enhance decision-making.
Some current sources of alternative data include:
- Online marketplaces
- Mobile and desktop applications
- Supply chain sensors
- Public records
- Credit and debit card (point-of-sale) transactions
- App store analytics
- Geolocation data
- Shipping trackers
- Price tracking applications
More data is generated as additional consumers migrate their business to the online environment. As data volumes grow, so does the potential of alternative data to provide increasingly accurate insights.
How to Obtain Alternative Data
eCommerce businesses can purchase datasets, order customized reports, and subscribe to platforms that provide real-time data.
Another option is to use web scraping (also known as content or data scraping) to extract data according to the needs of your project.
Web scraping employs specially-programmed scripts to crawl the web, extract data in either HTML or JSON, and parse (or convert) the information into a format that analysts can read to extract insights.
Web scraping can be conducted in various ways, including:
- Customized web scraping Some businesses hire a team of developers to program scripts that execute the web scraping process. Benefits of this method include full customization, increased flexibility, and the ability to troubleshoot the process in real-time.
- Third-Party Tools Not every business has the resources necessary to employ a dedicated web scraping team. As a result, the increased demand for data gathering solutions has led to the development of tools smaller firms can customize to perform data extraction tasks. Benefits of this option include lowered costs, improved efficiency, reduced complexity, and the ability to divert resources to analysis.
7 Ways eCommerce Businesses Use Alternative Data
eCommerce is becoming increasingly competitive, leading to the growing demand for data that helps businesses gain a more significant market share. Alternative data provides that edge with information that enhances decision making, allowing companies to:
1. Gain Product and Service Insights
Customers insist on being heard, and the internet has given them an outlet to voice their opinions through online reviews. Web scraping makes it possible to quickly analyze large volumes of reviews by extracting large amounts of data and using specialized analytic tools to extract critical insights.
2. Obtain Demographic Information
Most eCommerce businesses base their target market on customized customer avatars or personas. Since the consumer market is never stagnant, marketing teams typically revisit those personas over time to adjust for demographic changes.
Scraping data from government sources gives businesses critical insights into changing demographic conditions. For example, a healthcare business can pivot its strategy to adjust to an aging population. Accordingly, a food export/import business can refine its product offerings to account for changing consumer preferences resulting from immigration. Web scraping makes it possible to process massive volumes of data to obtain the precision insights necessary to create accurate personas and develop effective marketing messages.
3. Track Brand Mentions
Consumer comments and reviews that mention your brand are valuable types of feedback that provide clear insights into how consumers perceive and interact with your brand.
Tracking brand mentions manually, however, is almost impossible. Instead, web scraping can be employed to automate the process by continuously crawling websites and social media platforms to collect and store data relevant to brand perception.
4. Refine SEO and Content Marketing Strategy
Some ways web scraping can be used to optimize your marketing strategy and improve SEO rankings include:
- Scraping competitor websites for topics, keywords, optimal article lengths, and formats
- Extracting data from social media website comments and reviews
- Improving website content with internal scraping that analyzes keywords, article lengths, formats, and images used
- Analysis of data in comparison with Google Analytics to determine the most popular articles
Web scraping is an ideal complement to standard SEO tools. When used together, both strategies provide specific information marketers require to create effective campaigns that speak to their target market.
5. Expand Locations and Optimize Operating Hours
Businesses with physical locations can obtain mobility (or “foot traffic”) data from mobile devices, WiFi connections, and sensors to determine new areas for expansion. Mobility data can also be used to optimize business hours by either reducing hours when demand is low or increasing hours to accommodate increased traffic.
6. Predict Consumer Demand
Consumer demand can be predicted from various alternative data sources, including Point-of-Sale (POS) data, consumer spending reports, and pricing data.
Businesses can also scrape competitor’s websites for stock alerts that help them determine the most in-demand and profitable products. Combined with traditional sources like government reports, insights obtained by web scraping help managers make strategic decisions based on demand predictions.
7. Monitor Trends
Web scraping helps eCommerce businesses monitor social media and other public websites to determine upcoming trends in products such as apparel and cosmetics. For example, scrapers can gather data from sites using specific product keywords to determine the most in-demand products and those declining in popularity. In addition, scrapers can extract data from social media influencer profiles to reveal upcoming trends for use in marketing campaigns on the same platform.
Photo Credit: Nonnakrit/Shutterstock
Gediminas Rickevičius is VP of Global Partnerships at Oxylabs,