The secret weapon for e-commerce success: digital shelf scanning
The world of e-commerce is constantly evolving, and with it, the way businesses measure their success. In the past, brands in brick-and-mortar retailers could simply rely on traditional metrics, such as Total Distribution Points and Sales Velocity, to track their performance. In today’s digital landscape, these metrics can’t paint an accurate picture of how successful a brand or product is performing. So, how can we determine what the key metrics are in e-commerce to measure a product’s success? And what’s the right way to interpret them?
Scanning the digital shelf is the process of collecting data on how products are displayed and performing on online marketplaces. By gaining this deeper understanding, you can make informed, strategic decisions in key areas such as pricing, positioning, and marketing. This also helps you re-define familiar KPIs and adapt them to an e-commerce environment.
So, how do you scan the ‘digital shelf’? Here is a closer look at three key metrics that should be tracked and investigated to understand the performance of your product:
Visibility
Visibility is a metric that gages the prominence of a product in an online marketplace. It considers important factors such as the product’s search rank, placement on the product listing page, and the number of reviews it has garnered. To comprehensively assess a product’s visibility, this metric combines “Share of Search,” which measures the percentage of search results featuring the product, and “Search Rank,” which considers both the breadth and depth of the product’s visibility in search engines. This merged metric enables you to effectively track, benchmark and compare your product’s placement on the digital shelf across multiple platforms, and understand the best position for it to sit on the digital shelf. This is important as data from Instacart, one of the leading online shopping companies in the US, reveals that shoppers typically go with the first items that show up from their search (70% buy items in first row, including sponsored or recommended items).
Digital velocity
Velocity is used to quantify the rate at which a product is sold per distribution point. But how do you measure velocity digitally? You can start by calculating digital velocity by dividing sales of a product in online retailer by the visibility of the product (“Share of Search” x “Search Rank”). Allowing brands to compare performance across retailers and decompose sales based on changes in visibility vs velocity. This is critical to understand so you invest in the right place. If you have low visibility – you need to invest in SEO, retailer advertisements and sponsor your items on the retailers’ websites to drive higher “Share of Search” and “Search Rank”. If you have low digital velocity, pricing and promotions will be much more impactful.
Reviews
We all know how important it is to listen to your customers, and the digital landscape has made this much easier. Customer reviews are a great way to gain insights into what people like and don’t like about your product, and they should be taken into account when analyzing e-commerce data. Basic NLP (natural language processing) analysis can uncover key themes and drivers / drainers for your products. These can have a significant impact on a product’s sales, help you improve your products and optimize your pricing strategies, and could even potentially help you rank higher in search lists when a product is positively reviewed.
The digital shelf is constantly evolving, and you need to be able to understand it to stay ahead of the competition. Digital shelf scanning is a powerful tool that can help you track your products’ performance, identify trends, and make informed decisions about how to improve your results. Visibility, Digital Velocity, and customer reviews are key metrics that can help you make informed decisions and step-up your e-commerce game.