Kuliza

Commerce

Thinking Big Data

Businesses are leveraging big data and analyzing it to gain a stronger competitive position. This article looks at the significance of data and how it is used to conduct experiments to develop the next generation of products and services. by Siddharth Balaravi

Never in the history of commerce has such a deluge of data been vaunted before an information-hungry, and social-savvy audience. Only a decade ago, CERN, a European research organization, set up one of the worlds largest databases with over 11.5 billion web pages. Today, the average supermarket has access to shopping data: stores that are at least twice as big, if not bigger in size. When consumers use their credit cards at restaurants, clothing stores, or other retail businesses, those purchase choices are recorded and processed. Within the hour, businesses have the ability to unearth underlying consumption patterns that can be produced in real-time. In a matter of few hours, not only does the user behaviour trend become more evident, but also the correlation between people, events, locations, and preferences emerge from silhouettes to reveal a fairly clear picture of how marketing campaigns are performing. The availability

of such large amounts of actionable data is transforming the communications landscape and is also having a sibylline effect on the fabric of social commerce.

What is Big Data?

Wikipedia defines Big Data as Datasets whose size is beyond the ability of typical database software tools to capture, store, manage, and analyze. 2.5 quintillion bytes is the amount of data created every day. Although, this proliferation of data is an evidence of an increasingly prying world, it is possible for Big Data to positively impact social commerce. While most research into Big Data so far has focussed on addressing questions related to its volume, this article posits the case of the impact of Big Data on businesses with a special emphasis on social commerce. The article also examines the potential value that Big Data can create for organizations, and illustrate and quantify that value.

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In the old days most data problems could be solved as computing speed caught up. Now, theres this deluge of new kinds of data which is growing faster than Moores law. Weve basically broken what Moores law can cope with, and so we need a bunch of new technologies to get on the right side of that again

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The Value of Experimentation

The hype around Big Data stems from the fact that it eschews a fundamentally different type of decision-making: one that requires a fundamentally different mindset to the analyses of the data itself. Think of it as datadriven decision-making on steroids. However, far from the hype, foundational customization, constant experimentation, and breakthrough business models will be the new telltale signs of competition as companies capture and analyze vast volumes of data.

Walmart Labs, Shopycat, and Big Commerce

In a bid to strengthen its commercial offerings, Walmart acquired Kosmix and its Social Genome in early 2011. The Social Genome organizes the Internet into topic pages allowing users to explore the Web by topic. This platform then works as a Big Data application that is capable of aggregating in-store, online, and social data and analyzing them to power a plethora of social commerce applications. Walmart implemented this with Shopycat -

References
Big Data. Wikipedia: The Free Encyclopedia. Wikipedia Inc, 02 Sep 2012. Case Study: ifeelgoods, n.d. Walmart. ifeelgoods.

Kirsner, Scott. Richard Dale splits from Sigma to raise money for new VC firm, Big Data Boston. Boston.com. Boston Globe, 09 Aug 2012. What is Big Data. IBM. IBM, n.d. World Wide Web. Wikipedia: The Free Encyclopedia. Wikipedia Inc, 07 Sep 2012.

Using carefully crafted controlled experiments, marketers have the ability to test theories, hypotheses, and analyze results of business decisions in near real time. These have a striking resemblance to decisions made in hindsight as well as when experiencing one of those I Wish I Knew moments. Thus, experimentation can help marketers distinguish causation from correlation. This reduces the variability of outcomes while improving the overall probability that the performance of the control variable increases sales, sign-ups, or any other goal. Adaptive experimentation can take many forms. Leading online and consumer goods companies are test continuously. In some cases, they divide a small, but statistically significant portion of their web page views to conduct experiments that reveal factors that drive higher user engagement or greater conversions. In the world of web analytics, and digital media, this sort of experimentation is commonly known as A/B testing or Split testing. Similarly, companies selling physical goods also depend on experimentation to aid decisions, but Big Data can push this approach to a new level. For instance, McDonalds has installed electronic devices that gather operational data in few of its retail outlets. These devices track and store details such as customer interactions, traffic in stores, ordering patterns, billing information, time of the day, etc. Statisticians can then use this data to model the correlation between variations in menus, restaurant designs, and training, among other things on the overall productivity and sales.

a Facebook application that was designed to help shoppers identify better gifts for friends and family. Shopycat takes a persons interests and Likes from Facebook and combines this information with information against a vast product catalogue to identify interesting gift options. For instance, if one has a friend that is known to quote Barnabus Barney Stinson, a fictional character from the CBS television series How I Met Your Mother, it is quite likely that Shopycat would suggest one pick costumes from the Star Wars films as an ideal gift for such a friend. During the month long marketing campaign that Shopycat was tested, it performed an astonishing 42% goal conversion rate. About half of the users who used the app shared the promotion with their friends, and the virality garnered an incremental 25% lift in conversions. Moreover, the cost of user acquisition was $2.67, far less than the allocated campaign targets. Such results mark the success of such a program. Clearly, in the world of Big Data, success lies in connecting the dots in fundamentally new ways that resonate with people, brands, and social commerce. Big data is here to stay as it offers a competitive advantage with a projected 60% increase in retailers operating margins. It provides statistics and insights into user and purchase behaviours which are key factors in influencing shopping behaviours. These datasets allow companies to test, experiment, analyze, and thereby help them implement appropriate social technologies and social shopping platforms.