Making the shift to online: How retailers can stay ahead of the curve
As online sales increase in response to the crisis the world is experiencing right now, more retailers are quickly moving their operations online. It’s clear that there’s been a permanent shift in the way people shop — during lockdown, 62% of online shopping accounted for all shopping, compared to 43% pre-lockdown.
On top of this, only 16% of UK consumers are looking to go back to their old shopping habits, showing just how much the pandemic has changed people’s routines. This shift is also prompting retailers to restructure or close down their stores to keep through a restructuring, or close down stores to keep their efforts focused on their online channels.
So how can you beat out the increasing competition? This article will provide tips on how to stay ahead of the curve and explore how focusing on margin, finding a balance between revenue and profitability, centralising your data, and taking advantage of the right AI-driven software can ensure you make the shift to online smoothly and successfully.
1. Focus on optimising margins
Right now, many retailers are thinking a lot about where they can cut costs. And like most downturns or moments of uncertainty, many have sacrificed their marketing budget. However, study after study after study — done across multiple decades and recessions — show this hurts businesses more than it helps in the long run. In fact, most indicate that companies who continue to market through a downturn come out much better on the other side:
Still, you can’t spend money you don’t have. Your focus should be on increasing revenue and cutting costs where possible in order to get you through today’s economic downturn. In order to succeed online, departments will need visibility of how their actions influence business success — and that means ensuring metrics are aligned with overarching goals. This in turn will help you to optimise your margins and increase profitability.
How to increase profitability
In order to increase profitability, Digital Teams can do things such as pause spend on worst performing products or reshuffle their campaigns to group products with higher chances of success together.
Whilst focusing on revenue growth, it’s important for brands and their departments — like the Digital Marketing team — to understand how their individual actions impact profitability. This would mean that every action they take would be aligned to the business success. – They can use Upp to get this insight on their data.
To get this insight on their data, the use of the right AI-driven platform, like Upp, can help, and in turn, they will gain an overview of the bigger picture. This will ensure your departments are staying on track to an overarching goal and finding the right balance between increasing revenue and improving margin which will help you grow.
2. Centralise your data
A study found that 88% of leading retail companies view data as a critical strategic asset to their continued success (compared to 68% of lagging companies). Needless to say, data is vital to your success online, and in the current circumstances, it’s increasingly important that your team utilise this data wisely. While retailers may be tracking business objectives, it’s important for their departmental teams to also consider these overarching goals and how they align with departmental objectives. That’s why you need to make sure you’re tracking several departmental and business KPIs that each of your teams collects when you’re trying to optimise your margins:
- Sales Conversion Rate
- Market Share
- Return On Ad Spend
- Customer Acquisition Cost
The greater visibility you have into each of these data points from each of your departments (SKU-level is best for marketing departments), the more you’ll understand how each team’s actions impact margin. And, the better suited you’ll be to make the strategic changes that will drive them up.
However, the struggle we see most retail companies face is getting these metrics in a central, visible place where they gather the insights they need to do so. Far too often, data is siloed and teams are often only focused on individual KPIs rather than the bigger picture — they often can’t see how their individual actions can impact other departments. And this makes it easy for them to lose focus on their margin performance.
That’s why getting your data in order is a crucial part of staying ahead of the competitive curve. You need an accurate picture of where you’re making the best return on investment across each of your channels (i.e. where your customers are most responsive), so you’ll know what to optimise and how to optimise it.
And you need to centralise it so that you can align your teams around the insights that will increase profitability — disjointed messaging creates a poor customer experience, just like a disgruntled sales assistant in a store could.
Here’s a way to simplify this process…
3. Investing in the right tech stack
Retailers need to invest in the right tech stack to help them overcome the obstacles that traditional software prevents them from tackling. One of these obstacles includes ensuring listings are optimised for each channel and on the right channels. Traditional PIM systems don’t provide the actionable insights that retailers need to ensure their products are compliant for each channel. The right tech stack will provide you with the data you need to improve your listings on each channel, by comparing what others are doing that works well and offering insights on what you could do to improve yours. Plus it also helps you see which SKUs are performing best across each of your channels (which we’ll get to in more detail).
Gaining actionable insights
The challenge of the information era is not a lack of data to make informed decisions — it’s a surplus of data that makes it challenging for us to pull useful insights from it. This is undoubtedly true in the online retail world, as the volume of data that retailers have available to them these days can be overwhelming.
Traditional reporting systems give teams insight into business performance, however, the problem with these reporting systems is that the data insights aren’t actionable, and teams would have to shift through to find the information that is relevant to them.
That’s where the right AI software, like Upp, can help. Since it gives you a comprehensive, end-to-end view of the product lifecycle at SKU-level, but can also do much of the heavy lifting required to analyse it, it makes gathering useful insights much easier:
- It can help your marketing team have a better idea of tactics they should be using.
- It can help your ecommerce team to gain a better understanding of what’s selling and what’s not.
- It can help supplement your listings with data that you collect on customers.
And since it centralises all of this information, the right tech stack makes it much easier to pull insights that ensure your teams are working towards the same overarching goals (no more siloed departments — only better visibility).
For the latest news and insights from Upp.
Get in touch
Whether you want to find out more about us, our product or our job opportunities, we’re happy to talk.