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    In plain words, predictive analytics is the process of forecasting and estimating the course and direction of future trends and events with the use of statistical tools and methodologies. In retail, predictive analytics is used to forecast consumer behaviour in the near future.

     

    Banks and other financial institutions use predictive analytics to ascertain the track record of its customers in loan repayment before disbursing further credit to them. Travel agencies use predictive analytics to identify peak travel seasons and devise their marketing strategies to tap the expected surge in demand. There are hosts of other industries which bank upon predictive analytics to gain marketing leverage.

    Given what present day predictive analytics can deliver in terms of actionable marketing information, retail honchos have started making extensive use of predictive analytics in their retail management and are reaping the primary and downstream benefits stemming from it.

    1. Understanding consumer behaviour

    Consumer behaviour is amazingly predictable. It can be mapped and behavioural patterns can be established. This information can further be utilized towards enhancing customer satisfaction, improving customer service and enriching overall customer experience.

    The key requirement towards understanding consumer behaviour is having quantified data on actual consumer activities. These include data on quantity and frequency of purchases, frequency and duration of visits, areas of purchases, price sensitivity, response to promotional activities etc.

    Predictive analytics, by means of advanced statistical software tools, processes these quantified data on consumer behavioural activities to forecast future buying behaviour of consumers.

    Online shopping portals use predictive analytics to highlight and promote products and services based on customers’ past purchases and recent searches. Various social media platforms use complex algorithms (as part of predictive analytics) to present to its users relevant content.

    2. Tuning the marketing mix

    Product selection and development – Based on analysis of past patterns and forecasts of future consumer behaviour, Predictive Analytics helps retailers better understand the needs and wants of their customers. Such information is vital for development of existing and new products. Retailers could get to know which products they should focus on and which ones to be discarded off the shelf.

    Price sensitivity – There are various approaches towards pricing of a product or service. Predictive Analytics provides the necessary statistical information and price sensitivity analysis as a guiding force in the pricing process. Price sensitivity plays a pivotal role in product pricing. Movie theatres use predictive analytics to adjust the prices of its tickets to attract movie goers on the weekdays.

    Promotional campaigns – Having the forecasts of buying or non-buying behaviour of customers, retailers can put in place suitable promotional campaigns, customised offers, discounts etc.

    Sales and marketing staff – As predictive analytics help retailers plan ther marketing strategies in advance, it also puts them in a position to allocate required manpower according to those predetermined strategies. It is broadly discussed later.

    Distribution and delivery – Retailers also use predictive analytics to decide upon the channels of distribution and mediums of delivery for different products and services based on geographical concentration of customers. Such decision making would get complicated without a location based analysis of the past trends and forecasts of sales.

    3. Supply Chain Management

    Typical supply chain activities involve placing orders, procurement, storage, despatch, audit and control, reorder and the cycle goes on.

    In order to maintain steady and necessary levels of stock all the time, retailers need to plan and prepare its supply chain strategies in advance on a perpetual basis.

    In today’s retail environment, such decision making has been made convenient with the use of modern age software and technologies like predictive analytics. Because there’s a holding cost involved and timely delivery of orders is of utmost importance to customer satisfaction and customer retention, retailers need accurate statistical analyses and forecasts to rely upon in making supply chain decisions. In this pursuit, predictive analytics has become one of the indispensable tools in supply chain management.

    4. Risk Minimization

    Retailers, irrespective of the industry they are into, face several risks ranging from demographic shifts in the areas of operation to changes in customer preferences, from shortages in supply to seasonal fall in demand, from rise in competition to poaching of employees and so on.

    Predictive analytics help retailers statistically forecast such disturbances in the external and internal environment of a retail enterprise thereby enabling them to make the necessary changes in their marketing strategies.

    5. HR empowerment

    HR empowerment is one of the downstream benefits of predictive analytics for a retail enterprise. Once the marketing goals and strategies are finalized, retailers find themselves in a position to take calls on manpower requirements to roll out the marketing activities.

    After job analysis is done, recruitment drives can be initiated and suitable candidates could be hired before the competitors does.

    Recruitment is a costly and time consuming process. If the firm knows what skills and attributes they want in retail staff, existing staff could be imparted short term training and development programs.

    It is never easy to be a front line retail staff doing the same things every day. Right from appearing presentable to striving to get a purchase finalized, it can get too tedious a process to be routine. Various financial and non-financial incentives could be attached to the pay structure of retail staff.

    Predictive analytics has opened up a sea of opportunities for retail enterprises; not just by providing future marketing forecasts but also by equipping entrepreneurs with the relevant statistics for advanced retail management.

     

    To know more about “How Retail Analytics can get your business a competitive edge?” get in touch with YRC Business Experts on [email protected]


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    Author Bio

    Rupal Agarwal

    Chief Strategy Officer

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      PROCESS AUTOMATION

      The idea of having Ecommerce Consultants on-board from the beginning itself points towards reducing the involvement of the promoters in daily operations. Ecommerce Businesses willing to be a brand reaping profits & sustaining the competition must ensure that most of their processes should be automated. The more the manual intervention, the more would be the errors.

      In Ecommerce business, you get only 1 chance to impress the customer & if you mess up there, you lose the customer for long.

      Process automation in respect to all the activities pertaining to customers from order receiving to order fulfilment is a must for a seamless experience for the customers.

      Task Management is another grey area where most deadlines fail as 90% of the tasks are assigned manually & are forgotten, unheard, misunderstood or mistaken.

      YRC Team of Ecommerce Management Consultants helps to make maximum of the processes system-driven to ensure minimalistic manual intervention.

      VIDEOGRAPHY & PHOTOGRAPHY

      No matter how good your product is, the customer would know only if it looks good.

      Photography includes the following steps:

      • Cataloguing your products
      • Cataloguing your images
      • Backup your images (A few cloud storage solutions include Dropbox, Google Drive, Bitcasa, Apple’s Cloud Storage etc.)
      • Choose the right camera & lens (You may also outsource the photography to a third party agency)

      DIGITAL MARKETING

      Digital Marketing includes SEO & SMM. SEO i.e. Search Engine Optimization includes activities like back-linking, meta tags, blog-writing etc. to ensure your website ranks on the 1st page on Google Search.

      Next comes SMM i.e. “Social Media Marketing” which as the name suggests including promoting your products on all the social media sites, email marketing, influencer marketing & several other BTL activities.

      These activities are going to be recurring & would decide the traffic on the website, the conversions, whether the right target market is tapped, the likes, the views, the orders, the reviews & much more. YRCs Ecommerce Consultants create a budget for digital marketing right from pre-launch to launch & for each month thereafter.

      Building digital marketing strategies in coordination with the agency, selecting them to signing them off would be the role of YRC.

      This ensures seamless coordination, detailed interactions & desired execution as it is always advisable to work with a single agency than multiple of them.

      IT INTEGRATION

      Selection of the right software for smooth functioning of back-end operations right from production to webstore display would be suggested and integrated by YRC Team.

      YRC’s Team defines SOPs of Product Movement, maps it with the locations & people. They then create a blueprint of all the features required in the software & help in shortlisting & selection.

      IT Integration involves connecting your offline inventories with real-time online webstore so when a sale occurs, inventories get deducted real time across offline as well as online platforms.

      This helps in accurate inventory management, maintaining the MOQs, re-order levels & achieving the optimum inventory levels.

      Some popular software include unicommerce, viniculum for your front-end website management & Genisys for your entire back-end Purchase, Production, Accounting, Invoicing etc. management.

      WAREHOUSE & LOGISTICS PLANNING

      • How many cities or countries you wish to sell in?
      • Where should your Warehouse be located?
      • Should you have one warehouse in each country or city?
      • Should you be having your own delivery team in your base city?
      • Would the 3rd party vendors be reliable? What happens when they lose or misplace your product during delivery?
      • How should I manage the logistics if my goods are coming from different countries?
      • How should the goods be stored and barcoded?
      • How much space do I require for warehouse?
      • I am sure several such questions must be haunting you while you think of starting your own fashion ecommerce brand.

       

      At YRC, our warehousing and logistics experts can help you devise a strategy for all of the above mentioned queries and much more.

      We design the layout of the Warehouse considering the inward, goods processing, software entry, barcoding, outward, goods return, scrap storage, goods stacking & much more.

      Logistics route plan is devised considering the manufacturer to your warehouse and from there to last mile delivery locations.

      UI & UX DESIGNING

      This Step involves 03 distinct parts:

      Part 1: Choosing the right Platform:

      From several platforms available in the market right from Shopify to magento, woocommerce, prestoshop, wordpress etc. you must choose the one that fits best for your business

      Part 2: UX Designing:

      “UX” denotes User Experience, which if put in simple language is building the functional requirements of the website.

      UX Designing includes designing the features required in the website, customer journey map, website features, the browsing features, navigation features, ecommerce order management process flow, checkout cart features, catalogue management, ecommerce payment system, cross selling features & much more.

      “As per statistics, 68% of the customers abandon the carts before payment”

      An interesting UX ensures the customer sticks on to the website for a longer time.

      Part 3: UI Designing:

      UI stands for User Interface, which means designing the look and feel of the website. UI includes using the right colours, elements and the entire aesthetics of the website.

      A good User Interface ensures the user completes the task that he has come for. It navigates the user through the journey of the brand in the simplest but most effective way.

      The UX designer maps out the bare bones of the user journey; the UI designer then fills it in with visual and interactive elements.

      If User experience is the bare bone, user interface wraps it up with an attractive cape.

      At YRC, our team if experts can help you develop the entire User Journey to ensure it is engaging!

      SAMPLING & PRODUCTION

      This step follows the “Designing” Phase, whether you have an in-house design team, freelance designers or an outsourced design company. It is one of the most exciting phases, as here you see your designs turning into products & your ideas turning into reality.

      In most start-up cases, production is outsourced i.e. brands tie-up with the established manufacturers/ job-workers to get their products manufactured.

      Sampling involves multiple 04 Stages, Fit-Sample, Prototype Sample, Pre-Production Sample & the Production Sample.

      Prototype Sample is the first sample provided to the buyer. It can be in any fabric/ colour. This sample is just to understand whether the product design looks equally great in reality.

      Fit Sample, as the name suggests is prepared to check the fit of the garment i.e. the various sizes, length, width etc.

      Pre-production is made by the actual production line. Here the stitching quality and other aspects related to manufacturing are checked. This is the last stage where rejection can be accepted.

      Production Sample is made before the production which is the replica of what is going to be finally produced.

      Once you are through with all this, you are good to go ahead & get your goods manufactured.

      PRODUCT DESIGNING / SOURCING

      Product Designing or Sourcing is the heart of the Ecommerce Fashion Brand.

      Product Designing / Sourcing can be done in several ways, as follows:

      • In-house Design Team
      • Freelance Designers
      • Outsourced Design Team
      • Ready Product Sourcing (From Manufacturer or Wholesaler)

      At YRC, we evaluate your business strategy & business model to arrive at the decision, which of the above ways would be best-fit for your business. In certain cases, product sourcing may be a combination of the above.

      These are the people who are going to build your brand! Whether they are the designers or merchandiser, your brand look is going to be in their hands.

      If you are designing each garment from the scratch, the sourcing would play crucial role in developing design identity of your brand.

      Sourcing includes fabric, trims, lining & all the raw material required to build the garment.

      BRANDING

      Branding is the “Look of the Brand”, right from logo to tagline, the colours used, the brand story, the brand communications on social media, the packaging & all the other aspects which speak directly or indirectly to the customers. Branding constitutes the look & feel of the brand & hence must be thoughtfully planned to match with the product that we are selling.

      Branding must appeal to our target audience. Example : A golden colour logo depicting finesse, art, richness, premium, however beautiful it may be individually cannot go with a brand selling affordable kids wear products. So, your logo must be in-line with your brand positioning, whether you are an expensive brand or a luxury brand or a value for money brand, it must be depicted from your “Branding”.

      It is an integral part to attract the target audience.

      ORGANOGRAMS & SOP’s

      Organogram is the “HR Blueprint” of the business which is created at the onset, to map out the team required across each function at various stages of the business. At the launch, only key people need to be got on board to ensure the project gets started & at this stage, all of them need to multi-task. Similarly, certain financial as well as operational goals are set for addition of the further team. Example, for the operations team, we hire 1 operations manager during the pre-launch phase & we add 1 more only when the business kicks-off & we reach a volume of selling more than 1000 pcs/ month or a turnover of more than 0.1 million USD.

      SOPs are Standard Operating Procedures, a bible to run the entire organization right from Sales, Purchase, HR, Order receiving to Order fulfilment, Inventory Management, Accounts, Warehouse, Logistics, Supply Chain, Production & all the other relevant functions for the business. Business must be organized from its first day of operations; only then the tasks can be delegated.

      At YRC, we design the organization structure, the processes, and approximate time taken to execute each process, job profile of every member within the organization, their KRAs, KPIs & the Reporting Structure.

      CRITICAL PATHWAY

      Critical Pathway Analysis (CPA), is a project management technique which cannot be overlooked while launching an ecommerce fashion brand. Brand launch process is cumbersome with multiple inter-dependent & time-bound tasks involved, which need to be tracked to ensure the project remains on track.

      CPA outlines key tasks across the project, their turnaround time (TAT) & the dependencies of tasks upon each other. It identifies the sequence of tasks, their interdependent steps from inception to completion, their criticalities, and their dates of onset, target dates of completion along with the key responsible person for the respective activities. Critical Pathway helps in understanding the unimportant & not urgent tasks which may jeopardize the execution of the project because of an unexpected snag! It also maps out the potential bottlenecks which might be posed because of the dependencies of tasks upon each other & cases where the next task cannot be commenced before the completion of the previous one.

      CPA detects the minimum & the maximum time involvement of a particular individual or team to execute the task, thereby arriving at the overall deadlines associated with the project.

      At Your Retail Coach, we design the Critical Pathway & review it periodically to ensure the project is on track & the progress is measurable.

      BUSINESS STRATEGY & BUSINESS PLAN

      Business Strategy includes the vision, mission, goals, business model, business plan & strategy for all the functions within the organization.

      Business Strategy is a well-defined plan that outlines who, what, where, why, how & when for the company; for example, who would be the target market, how to attract the target audience, when to launch new products, where to operate from, how to handle competitors, what would be the USP, what would be long term goal of the organization & several other answers to the 5Ws of Strategy.

      Business Strategy aligns the organization towards a common goal. Business SWOT helps company to identify & overcome their weaknesses & focus to sharpen the strengths. Business strategy forecasts future risks and helps business in building skillsets to overcome the potential threats.

      YRC’s Business Plan focuses on creating a “Blueprint” of the business, thereby deriving the feasibility of the concept & gauge whether the opportunity is lucrative to invest time, energy & effort. Business Plan creates cash flow understanding i.e. building inflow & outflow cash projections from Week zero to week 60 i.e. 05 year projection. Business Plan calculates the capital investment, operating costs, one-time costs, recurring costs & all the other numbers relevant to obtain the breakeven sales, return on investment, return on capital, internal rate of return & several other ratios. Business Plan is also one of the important requirements if you are targeting the “Investor Route”. Fund raising becomes extremely transparent & channelized. With business plan panned out clearly, the business will know until what point must it be stretched & where to stop, which reduces the probability of unplanned investments.

      MARKET RESEARCH

      Starting the concept of Ecommerce Fashion brand with Market Research ensures we get detailed understanding of the industry & this research report also acts as a social confirmation for your concept. Market Research helps in understanding the target locations, their population, potential online buyers for your product, competitors for each category, and top selling products of the competitors, competitors’ price range, offers & their responses & much more. Market Research helps in thorough understanding of your brand position as compared to our competitors. It helps in identifying gaps in the market, in your category along with the scope of the said product in the desired market. This will help in validation of your concept & prevents you from making the same mistakes as your fellow brands, eventually saving your time, energy & efforts. This phase is also a make or a break phase, as the market research study may at-times come up with some eye-popping numbers & statistics which might compel you to re-think on your product or category that you are planning to sell or alter your entire concept itself!! Market Research Reports analyse the competitors’ webstore for their traffic, conversion & sales. This is extremely valuable information to derive our inventory budgets & projections, which takes us to our next phase.