The First Steps to Deeply Understanding Your Retail Business Through Data
uilding a retail business is hard. Every business starts small, but as you grow you lose the visibility and deep understanding of how your expanding product range is performing. What are your most profitable products? Which categories? Are you buying the right products in the right volumes? Are you investing in a broad enough product range? Are you buying deeply enough?
When you're small, you have an affinity with your product range that means you can make solid intuitive decisions, primarily based on trends and your vibe about what you think people will want. But as you grow you simply can't maintain your intuitive accuracy.
At this point you need to turn to data.
To do this requires considering where you capture data: if you're small you probably don't have an ERP yet. You may have an e-commerce platform, and a POS system. How do you get proper visibility across the two? To start with, you're likely to rely on reports from each system to explain what's happening within the context of each. Generally your only option is to get reports for each individual channel.
This will allow you to have line of sight of most of the important operational requirements of your growing retail company.
What you're missing at this point is likely to be consistency. Where is your stock? How much did you pay? Where should you move it? Why don't the reports reconcile?
At this point you need something to stitch together your data for you so you have a consistent and simple view of what you care about. There are a few views you should care about at this stage:
- High level financial KPIs: revenue, COGS, EBIT, EBITDA
- Marketing: spend, efficiency, attribution, CAC, LTV, traffic by channel
- Website/app performance: CTR, CR, feature funnel, DAU, MAU
- Product: Sell Through, GP
- Support: %tickets/unit sold, avg. open time, % critical
- Sales: funnel health, % sales by channel
In the modern world of SaaS, there are loads of tools that can assist you in having visibility within each of these views. Here are some examples:
- High level financial KPIs: Xero, Freshbooks
- Marketing: Grow, Marketo
- Website/app performance: Segment + Mixpanel/Amplitude
- Product: Style Arcade, ProductsUp
- Support: Zendesk, Intercom
- Sales: Hubspot
- Explain the next batch of problems that can't be fixed with these tools
- Explain how data platforms fix these problems
- Highlight what the next level of maturity will require
- Call To Action: check out SA