Why data aggregation services will transform ecommerce

The growing accessibility of third-party data is changing the way retailers do business.

But what does it mean for the future of ecommerce?

What is data aggregation?

Data aggregation is the process of collecting and organization data from disparate sources into a database.

If you’re as wizened as I am, you’ll remember an early example of this: the Yellow Pages – an extensive list of local businesses, organised by category and distributed in a big yellow book. Useful if you (the customer) were looking for a local plumber, or wanted to order a pizza in the early hours of the morning.

Today, the Data-as-a-Service (DaaS) market offers businesses easy access to swathes of rich, organised data, available in increasingly innovative forms.

A business will typically buy access to a large data set and integrate it with their own product or service. A subscription fee will provide access to a cloud-based, white-labelled database of anything from standardized product details to geographical information.

For ecommerce businesses looking to bolster their product or service offering, or just to gain a greater insight into their audience, this can be invaluable.

How can marketers access data aggregation services?

The short answer is to this question is: usually via an API.

The key thing to remember is businesses don’t own the data they’re paying for – they simply buy access to the data. For ecommerce, the ‘service’ is often packaged as a modular feature that can be integrated with your existing functionality.

Review aggregator Test Freaks is an interesting example. As well as offering consumer and expert reviews on a vast range of products under their own brand, they also offer that data to ecommerce businesses via an API.

This allows businesses to display independent reviews on product pages without needing to collect and organize the data themselves. Test Freaks cite an increased conversion rate, more traffic and greater consumer trust as some of the key benefits.

So how does buying data work in practice? DaaS is priced in two ways:

  • Volume – this can either be by quantity (which works better for high volume) or per-call (better for low volume). A call is defined as a single request/response interaction with an API.
  • Data type – e.g. a mapping API that sells geo-coordinates and zip codes might offer school and post office locations at an additional charge

Why do marketers use data aggregation services?

Key benefits

  • Convenience – the data is clean, structured and you can put it to work immediately. Provides access to the benefits of a large data set whilst freeing up time to focus on other areas of your business
  • Ease of use – services are designed to integrate with your existing systems and software, making implementation quick and easy
  • Access to advanced technology – small businesses can implement cutting-edge features that rival much bigger players.

Challenges and considerations

  • Cost – DaaS platforms can provide huge benefits, but they aren’t cheap – and the cost is ongoing
  • ‘Renting’ data – although DaaS providers offer an easy-to-use solution, they also reduce your level of control. You are rarely able to create, edit or delete data – you’re limited to whatever functionality the provider can offer.

What kind of services are available for retailers?

In short, everything from aggregated reviews and product information to personalized fit recommendations. Here are a few examples in action:

Product reviews

For ecommerce businesses that lack the userbase of companies like Amazon, it can be hard to encourage users to leave reviews for products. Test Freaks API solves this problem by letting users see thousands of genuine reviews for each product.

The presence of user-generated reviews has been shown to increase conversion rates with impressive reliability. Research by Smart Insights found that conversion rates doubled when a product had over 50 reviews, compared to those with 0.

Image by SmartInsights

Personalized fit recommendations

True Fit uses data aggregation to try and solve a persistent problem in online retail: the fit of clothing.

Shoppers enjoy the convenience of browsing online, but tend to go into stores to try on the item before completing their purchase.

Research by PwC found that while 48% of clothing and footwear buyers preferred to do their research online, 53% still prefer to make the actual purchase in-store.

Image: PwC Total Retail Survey 2016

The industry also continues to see a high return rate, with consumers often adopting a ‘buy lots, return what doesn’t fit’ approach to online shopping. 48% of ecommerce businesses in this survey said they had a return rate of between 25-50%. The effect can be seen brand-side, too – with many online retailers like ASOS now offering free returns as standard.

To tackle this problem, TrueFit compiles data from several sources. First, data is collected on purchases and returns – to determine what items people keep (and by inference, are happy with).

It also looks at data from a collection of retailers to understand how their sizing categorization compares to other retailers, and how it relates to the product itself. It then performs ‘Netflix-style’ analysis on what shoppers who bought certain items in a certain size also bought at other retailers, and in what size.

After churning through all this data, it produces personalized, data-driven size and fit recommendations for individual shoppers – functionality which is available to ecommerce businesses via an API.

Standardized product information

Some data aggregation companies like GfK Etilize specialize in product information aggregation.

Using their technology, retailers can access a database of product information including verified images, owner manuals, specs, dimensions and even manufacturer’s links to compatible accessories – all available in 20 languages for 30 countries.

Change is coming

As the ecommerce market grows, so will the importance of optimizing online conversions.

eMarketer estimates total ecommerce sales will surpass $2 trillion by 2017 – making up 10% of total sales worldwide – with growth predicted to continue year-on-year until up to 2020.

Image by eMarketer

Data aggregation services have the potential to drastically improve the customer experience, delivering cutting-edge functionality at a fraction of the cost (and time) they would require to build in-house.

Now such services are widely available, the question is: can you afford not to?

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