“If something is not measurable, it is miserable”…
No matter what kind of work you do, social or commercial, you need to use various performance indicators to keep the track of your business. Especially if you want to measure your success and failure over time, you need to identify key metrics which are called KPIs. Naturally, this hypothesis holds for e-commerce as well.
I will not dive into detail in this article since I will write an article specifically about business intelligence approach in e-commerce. However these below are the essential identifiers that you might need to base your KPIs on:
SKU: It’s the alphabet of your online store. Although some websites don’t use this one, it will prevent you from duplicates of same products with double (or even triple) photo shooting, double content editing and so on. How can you differentiate if you had the new-arrived product in your database before it was sold out? You have to avoid the implementation of same production (content creation) process for that same item. Besides, how can you enable your customer to describe the product that he/she purchased or thinks of purchasing?
Order Number: This one is the main element for your sales, financials and operations. You can consider order number as the most important identifier of your business. As an order is placed by the customer, this will be the key identifier which will be used to track the delivery process as well as the financial process. Whenever your customers contact with the customer service, order number will be the first thing your customer service has to ask. I would say it is even more important than the name of your customer.
All sales, operations and customer service (even marketing) KPIs will be derived from this identifier. Therefore just make sure you don’t lose control over the order number tracking processes no matter how deep you are in trouble with frequent orders, excessive amount of customers in a short period etc.
In addition to those two above, E-commerce websites need to have 3 more identifiers to enhance their measurement:
Order ID: This will be used for the same purpose with order number, whereas this needs to be sequential. If you are thinking why there are 2 separate order identifiers, it is because your competitor shouldn’t be able to see how many orders you have daily or monthly, which will be the case if you have sequential order numbers.
For the business purposes, you can use either Order ID or order number, whereas for your customers you should not give the information of order ID.
Item ID: How many items do I sell per order? What is my average basket size? My revenue? Gross margin? Average price intervals? Item ID is the “cell” of your e-commerce body. For unit economics-related initiatives, for main KPIs in each department and for your overall measurement, you need to identify each unit that is sold.
Item ID is different than SKU. SKU is the identifier of a product in your website, whereas Item ID is the unique ID of a unique product sold. Item ID never duplicates whereas SKU does.
Barcode: Barcode is the key identifier for communication with your suppliers. Some e-commerce companies use supplier barcode, whereas some others create their own barcodes and send it to the supplier before the purchase is placed. It is not as critical as the other identifiers above. However, it is a must for you to scale up. You shouldn’t underestimate the damage of lost items, wrong purchases, misunderstandings, return of purchased items and so on.
There are much more identifiers that you will need to use once you decide to scale up. I will explain those in my BI article in further details.
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