Sales
analysis, it is the very basic of managing e-commerce websites.
I
often hear people say "We check the management screen of our website
everyday".
However,
there are not so many people who actually examine real factors which bring
profits to their e-commerce websites.
For
example, here is an e-commerce website managed for several years. As time goes
by, it is easy for a manager of the website to get used to the reasonable
profits the website brings and not really think about what is the real cause of
sales. And he may only make these kinds of analysis on sales factors...
"Product
A has an excellent quality."
"Product
B has always been the most popular one."
"Product
C has shown results."
This
can be said to anyone; and if you only make vague sales analysis, you might end
up with another bland attempt, such as starting a new advertising as usual.
In this
case, there is a danger of missing new business opportunities. It is not until
the sales start to decline that you might notice that you are actually in a
serious problem out of the blue.
On
the other hand, if you carefully examine numbers, you can use good sales
records for a reference at the time of recession, or perhaps you can still keep
know-how even if a personnel in charge leaves the company.
By
pursuing the ultimate factors of daily sales, you will definitely be able to
find tactics to increase sales. Even if the result was not excellent, there
will be another chance to start a new approach.
So
this time, I'm going to write about how to make a precise analysis on causes of sales.
【Pursuing the further cause
from the primary cause】
Perhaps
you may know, but sales are broken down into several elements.
[Sales
= Visitor × Rate of purchase × Order unit price]
This
formula is still not good enough, I think, but this is the basic of sales
analysis.
When
sales go up and down, there's always influence of increase or decrease of some
of these factors: number of visitors, rate of purchase and order unit price. In
any case, pursuing the further cause from the primary cause comes to very
important.
For
example, your e-commerce website had good sales on the day before, and you found
it's because the number of visitors was increased more than 20% compared to the
average. Now then, you need to figure out why there was 20% increase on the
number of visitors.
- Which type had more visitors, pull-type or
push-type?
-Did
any of advertisement have more visitors?
-Was
it because of the e-newsletters?
-Did
the number of visitors from the search engine of organic keywords increase?
-Did
the number of visitors from the alliance website increase?
-Was
it because of distribution on TV or magazines?
Once
you find out which number has increased, then you need to find out more about
it.
And
now you see these factors.
-The
number of visitors from the ad banner A has increased.
-The
number of visitors from the e-newsletter about Product-B has increased.
-The
number of visitors searching " keyword-C " from search engine has
increased.
-The
number of visitors who watched TV show-D has increased.
Once
you examined the numbers thoroughly, then it's time to think about the reasons.
- Why the ad banner A attracted more visitors?
-Why
the e-newsletter about Product-B brought more visitors?
-Why
more people visited by searching "Keyword-C"?
-Is
it because the tag line was matched to the target customers?
-Is
it because the tag line contained the previous results?
-Is
it because the product needs was matched to the seasonal occasion?
If
you also had more products sold, then you can think about these factors too.
-Why
the products advertised by the banner ad sold well?
- Why the products that had specific keyword sold
well?
-What
kind of people purchased the products?
-Why
the reader of the e-newsletter purchased the products?
- Was it new customers or repeaters who purchased
the products?
-Were
there any similar customers who purchased the products?
-Were
there any products purchased together?
Thinking
about "What happened" and "why" repeatedly, you can know
what you were not aware of. If you have clear knowledge about "the
cause", you can make it your know-how.
Now,
let's think about ways to increase sales using your know-how.
By
the way, let me get off track a little.
In
order to clarify the tactic to achieve the sales target, you can apply the way
to break down the sales on the way to set the sale target.
Most
companies set their sales target every year. At this time, the sales target of
each e-commerce website is also set as well.
However, even if your boss says ”Our sale target
is 10 million dollars! Let's achieve the goal together!", what you can do
is only to check the sales from the day before each day and calculate the rest
of amount of sales you need to achieve.
So
you can calculate the number of the visitors in the following formula if you
know the standard of order unit price and the purchase rate.
[Number
of aim visitors = Number of purchase ÷ Purchase rate.]
If
you can clarify the number of the aim visitors, you can make it into the
following formula.
[The
number of the aim visitors = the number of expected visitors in a month + the
amount of shortage on visitors]
By
using this formula, you can actually calculate the exact amount of shortage on
visitors, and demonstrate the budget in case of making up the shortage by advertising.
However, in the end, what you need to make up for is the sales. Therefore, you
can think in these ways.
-Making
up for the shortage of visitors by advertising.
-Improving
the number of orders by delivering e-newsletters.
-Producing
new products which can expect good sales.
-Carrying
out a measure to gain bulk purchase and improve order unit price.
- Find the way to have each repeater purchase one
more item.
- In order to offer proper items at proper timing, find
the occasion that new customers return to the website for shopping.
etc.
Let's
get back on track.
Analyzing
sales from various angles.
If
you think pursuing the cause of causes as a vertical axis, what I'm going to
write about is the horizontal axis: to open up your view on pursuing causes.
Previously,
we broke down sales into this formula,
[Sales
= Number of visitors × Rate of purchase × Order unit price.]
Apart
from this, you can also find trends by analyzing the orders from customers.
In
order to find the trends, it is necessary to analyze data from various angles.
Sales ＝ Sales from new customers + Sales from existing customers
Sales ＝ Sales by product categories（Category-A sales, Category-B
sales and Category-C sales）
Sales ＝ Pull-type sales + Push-type sales
Sales ＝ Sales from members + Sales from non-members
Sales ＝ Unit price of one point order × Number of products purchased
etc.
It is
better to research thoroughly, since you never know where you find
opportunities, but this takes enormous amount of time. You probably don't have
enough time to do so, therefore, you should look for the key of sales at such
time.
For
instance, if there is small number of visitors, repeated purchase rate per
customers, frequency of repeated purchase, and timing of purchase might come to
be the key. If there are frequent bulk purchases then the key would be the
number of items per each purchase.
Furthermore,
it is also good to know what kind of person purchased what type of product and
the reason she/he chose it. I think analyzing a customer's action and
psychology will bring you the new method and empirical knowledge.
If you thoroughly pursue the further cause from
the primary cause, you can discover a method to increase sales.
