Why Online Retailers need Predictive Analytics?
Predictive analytics uses machine learning to analyze data and make predictions. Since a long time, it has been on the market but its adoption is quite low because of the complexity and cost.
Predictive analytics has a proactive approach to data, which business intelligence doesn’t have, Business intelligence helps us to identify trends in business, while predictive analytics helps us to identify future trends in a business like how a customer will behave in future.
Predictive analytics empowers organizations to plan for the future. It transforms uncertainty into action with high probability.
Here are some of the benefits of predictive analytics for online retailers
- Predictive Search
Consumer’s interaction with a retailer’s e-commerce site often starts with the site search. If that search can be made intelligent to predict what the consumer is looking for, it will definitely boost sale.
Predictive search helps determine that by analyzing past clicks, preferences, and history in real-time and show relevant product matches for the search term.
The website front-end search interface looks very easy for the consumer. But behind the scenes, the predictive search runs algorithms that continually analyze data, based on machine learning to show the results to the consumer.
It is still a challenge to show the right product recommendation to the customer so that the sale will get close.
This challenge is easy for Predictive analytics, because machine learning understands consumer’s behavior easily based on purchase history, past clicks and performance of different products on the site.
- Price Management
A predictive model looks at historical data for products, sales, customers and many more parameters for pricing and based on that the price for a given product & customer can be predicted at any given time.
- Fraud Management
Predictive models identify potential frauds before the customer completes the purchase transaction, this results in reduced labor and fees required to process the chargebacks.
- Supply Chain Management
Predictive analytics helps to understand consumer demand, which in turn help retailers to plan and forecast revenue for the specific period, which in turn results in better inventory management and optimum use of the warehouse, avoiding out-of-stock items. This results in good cash flow.
This is how you can find huge business opportunities, data insights & much more with predictive analytics.