Digital transformation is on fast-forward in the retail world. And some businesses are already reaping the benefits of being digitally mature, such as increased revenues and cost savings.
One of them is Footway, a Swedish e-commerce platform active in 24 markets across Europe. They managed to stay on top of ever-changing customer behaviours by leveraging first-party data, which helped them improve production quality and drive business growth.
Daniel Mühlbach, founder and chief executive officer of Footway, shares three key lessons from Footway's first-party data strategy:
Lesson 1: Use first party-data to reduce the number of returned products
Online shopping soared during the pandemic, and, while it helped businesses stay operational, it also meant an increase in the number of returns. Although this was a challenge for many retailers, Footway saw an opportunity to build their first-party data strategy by keeping in mind the return rate when calculating product demand. They had started doing this several years before the pandemic, but truly saw the effects of it in action in the past 18 months, with a 10% decrease in the company’s return rate.
“We make sure that suppliers remove products with high return rates and then we use this data to inform our advertising strategy,” explains Mühlbach. “So, if we have a customer group with a high return rate or are not interested in a specific marketing campaign, this data impacts how we allocate our budget. We use data to optimise advertising for products and customer groups who are less likely to return purchases.”
Lesson 2: Invest in data-driven production processes
Having a data-driven production department can help remove low quality or less interesting products to customers, and instead highlight products that they really want to purchase. It can also save the company money, as automating more departments means less manual decision-making.
For Footway, this means automating both their purchasing and marketing departments. “Including automated data-driven decisions in our processes has been key,” says Mühlbach. “We have a small team reviewing and optimising algorithms, if needed. It's a system that automatically allocates budgets to the countries and campaigns that are generating the most return.”
“For example, if we see a campaign in Germany that is growing and generating conversions, the system will automatically increase the ad spend there.“ says Mühlbach. “I think the whole manufacturing industry of consumer products will be much more data-driven.”
Lesson 3: Make first-party data accessible to everyone in the company
A data-driven company culture is a win-win for everyone. For the business, it means constantly gaining insight into their customer needs and finding new ways to enhance their shopping experience. For Footway’s employees, having access to the company’s first-party data has increased productivity and helped them learn new skills, such as creating applications and algorithms that will take the company to the next level.
“It's really critical to use data,” Mühlbach explains. “One of the things that can be a challenge is that many organisations tend to have people on the C-level that are afraid of going into detail. But we work hard to educate Footway employees in our in-house data management system and make data available for everyone.”
Check out the Listen & Think with Google podcast for more lessons on the benefits of first-party data from Footway and other executives from Northern Europe.
