Business Intelligence and Analytics in Ecommerce

“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”

This famous quote from Sun Tzu has previously been applied to many fields, including business, and the essential fact at its centre remains accurate and true: the collecting of relevant information combined with good understanding is essential if one is to be successful. Within business, including e-Commerce, this translates to the need for Business Intelligence and Analytics.

Within e-Commerce, Business Intelligence and Analytics are often highly integrated and sometimes the terms are used interchangeably, especially when it comes to gathering information about one’s own activities and marketplace.

Conceptually though, there is a difference between the gathering of information and the analysis of the information; one can have spreadsheets of data and gigabytes of information, but if it isn’t analysed effectively and comprehensively, then it is next to useless. Similarly, even if one has the skills and tools to analyse information, if the business information is not available to be analysed, then one is working in the dark.


This is the purpose of business intelligence and analytics: to give the merchant understandable information, to allow them to make data-driven choices and evidence-based decisions that will improve their business operations. It is needed to help overcome some of the cognitive decision-making biases and fallacies that are common across the world, such as anchoring bias, confirmation bias and zero-risk bias. The Economist Intelligence Unit and Aberdeen Group noted in a study in 2015 that a lack of data was a real problem for organizations, with 33% failing to make sales objectives, while Aberdeen Group’s ‘Business Analytics 2014’ reported that 23% of sales staff felt that they were unable to weigh current deals according to customer buying needs and patterns.

For e-Commerce merchants, including those using Magento, several powerful tools are available that help with this process, notably the Magento 2 Analytics extension. But what does this offer and why should a merchant spend their valuable and limited time looking through more data and information?

The general purpose of analytics for e-Commerce is to provide information that helps the merchant improve their business for example by measuring and tracking results over time, understanding visitors to the website and gaining leads from this, and tracking and improving mechanisms to convert visitors into customers.

To do this, a range of information can be collected and then assessed. The Magento 2 Analytics extension collects among others for example, data on sales, customer purchasing, abandoned sales, different stores, and product performance. This information is then processed so that it can be presented in a clear way for the merchant. To give a couple of examples:

  • The Big Picture. How is the company doing? How are sales compared to last quarter or to this time last year? The analytics extension can show this in one click, having captured the sales data that has gone through the online store, it can show the merchant how their business turnover has changed, the percentage growth or decline rates, how much tax is liable, the amount invoiced and amount of refunds, and compare these figures to previous points in time. One company, for example, reduced its churn rate by 71% after undertaking analysis of its data, while another company was able to reduce their churn rate by 68%.


  • Product performance. Analytics makes it much easier to understand which products are the most successful and which are failing to perform to expectations. The extension enables the merchant to determine those products that, for example, are in the top 25 percent of revenue generating sales, showing numbers sold, revenue generated and so on.


  • Using analytics can make it much easier to determine the particular attributes of a product that are most popular and performing best. For example, which colours are most popular? Which model or brand is generating most sales? If a feature can be categorized, it’s likely that it will be able to be measured.

These are only a couple of examples of what analytics can do. The key essence of the business intelligence extension though is that it allows the merchant to have a better understanding of what is going on with their business. Aberdeen Group’s report discovered that 56% of top performing companies provide self-service analytics to employees.

This, in turn, then allows the merchant to make better decisions about what to do next and what steps to take to improve their business operations. For example, if after having examined the analytics, a merchant sees that item ABC is selling very well but item XYZ is not, they can make a decision about whether to adjust their marketing or pricing strategy to improve sales.

Because analytics gathers information in real-time – and critically is able to analyse and present this information in real-time – the impact of a change in strategy can be determined as soon as it is out in the marketplace.. Knowing where you are starting from, in terms of your sales and customers, is clearly highly important that any marketing activity is going to be directed effectively and targeted at the right audience. Without knowing this, any marketing may be disseminated over too wide a group or targeted at the wrong cohort.

There are some cautionary notes, however. Analytics and better Business Intelligence are not silver bullets. They can provide a great insight into business operations and give the merchant an excellent basis on which to take decisions – but the decisions are still those of the merchant and may be the right or the wrong ones. There is no guarantee of immediate success and with increasing understanding of the use and potential of analytics in the marketplace, one’s competitors may well be using their own analytics against you.  What is important, however, is that when analytics and business intelligence are used to inform decisions correctly, over time there will be an improvement in the business and beneficial results.