Anomaly Detection Techniques in Retail and eCommerce
Companies across the retail sector have shifted their focus from in-person experiences to online ones. The sudden shift has made anomaly detection techniques in retail and e-commerce more important than ever.
In Q2 2020, retail e-commerce sales shattered records, with a 44.4% increase from Q2 2019. Analysts at the US Department of Commerce estimated that US retail e-commerce sales for Q2 2020 totaled more than $200.7 billion, a staggering increase of approximately 37% from Q1 2020.
While more than half of Americans have reportedly cut down on spending since the pandemic started, total e-commerce sales for apparel, department stores, and beauty products increased almost 10% between March and May, per McKinsey. A recent report from IMB estimates that the pandemic accelerated the shift from in-person shopping to e-commerce retail experiences by 5 years.
There are many signals that e-commerce will continue to grow even after the pandemic ends, especially as shopping centers continue to shutter at record breaking rates.
How Retail Companies Can Use Anomaly Detection Techniques to Maximize Revenue
As e-commerce sales continue to increase, companies are being forced to grapple with the surge in demand, as well as the surge in users, across their digital products, including website and mobiles apps.
Companies that started using anomaly detection software and tools before the pandemic struck were better prepared to understand the sudden and ever changing needs of their customers. They could better anticipate the increase in e-commerce transactions and the rise in online shopping, making it easier for them to align on priorities and deliver their users a superb online shopping experience.
And remember when everyone started panic buying toilet paper and Clorox wipes? By turning to anomaly detection technology, retailers can stay ahead of the curve and identify key trends before they impact their bottom line.
Detecting sudden surge in online shopping
For retail companies, anomaly detection techniques assist teams with monitoring any sudden changes in the number of completed transactions, including an unexpected surge in demand.
Spikes in demand occur for a number of reasons, including holiday shopping and sudden changes in weather conditions. The wildfires in California this year, for instance, have led to a surge in demand for, and consequently a scarcity of, N95 masks.
By identifying increases in sales quickly, businesses can analyze their inventory levels and make important business decisions, such as ordering additional supplies or identifying alternative products that effectively meet their customers’ needs
Spotting costly bugs
Anomaly detection software also makes it easier for teams to spot those hard-to-find glitches, such as a mispriced item or an inaccurate tax calculation. If revenue dropped lower than expected but conversion rates (especially the percentage of people making a purchase) remained high, then there’s a decent chance that an item was mispriced, or that a teammate accidentally let a promotion go on for too long.
On a similar note, anomaly detection technology helps retail teams to pinpoint design flaws that create customer friction and lead to unfavorable results, such as increases in the website’s bounce rate or sudden spikes in the shopping cart abandonment rate.
Monitoring marketing campaigns
Retailers and e-commerce businesses can also use anomaly detection technology to evaluate the effectiveness of a marketing campaign or new promotions.
By using retail-focused anomaly detection techniques, your team is better equipped to analyze data and ask pressing questions such as, “Are we seeing enough people converting (making a purchase) to offset discounts?” or “How do we identify revenue opportunities from coupon errors?”
Identifying business opportunities
The various anomaly detection techniques in retail assist teams with identifying new business opportunities, preventing revenue leakage, and better understanding your target customer’s demographics, including age, gender, and geographic location.
After all, developing a deeper understanding of your user, and especially their shopping behaviors, is critical to ensuring that you’re delivering the products, goods, and services that they both want and need.
How Quantum Metric’s anomaly detection intelligence is helping retailers
As the shift from in-person to e-commerce continues, retail businesses will have access to more customer data than ever before, which means that they have the opportunity to build digital products that their customers love and need.
Retailers like Lululemon, Neiman Marcus, and Bass Pro Shops have already turned to Continuous Product Design (CPD), a customer-defined and quantified approach to building digital products that meet users’ needs.
As the digital revolution remains strong, more and more retailers are using Quantum Metric, the global leader in CPD, to help build better digital products. Organizations benefit from using analytics methods and tools to enhance the user experience design.
Quantum Metric’s anomaly detection technology has helped retailers drive conversion rates and measure top e-commerce metrics by:
- Pinpointing broken paths while replatforming
- Monitoring business opportunities after a product launch or version release
- Identifying value leaks on mobile apps
- Detecting and preventing e-commerce fraud
- Reducing customer returns and phone agent call time
- Rescuing customers after third-party payment tools fail
Is your company interested in taking the Quantum leap? Request a live demo today.