Like many online retailers, electronics site Kogan has been grappling with rapid fluctuations in consumer demand, and it recently posted a 3.8 per cent drop in Q3 sales and flagged plans to reduce inventory levels and operating costs to preserve margin. But over the last year, it has also invested in giving managers across the company access to clear and understandable business intelligence reports in real time, a fortuitous move that could now help it get back on track. “Even though we
gh we’ve been digital from day one, it’s obviously still a very dynamic and changing landscape, and the way we use information is improving,” Daniel Taft, Kogan’s director of operations, told Inside Retail.
One example of this can be seen in the buying team, which is now able to combine real-time sales data from Kogan’s payments provider Adyen with website data and customer service metrics, such as star ratings, to quickly identify potential issues and adjust orders.
“Ratings can provide a very early indication of how well-liked a product is, or whether there’s a problem with a product before any potential negatives can be detected,” Taft said. “Returns and things like that take time to flow in, whereas reviews can happen very quickly.”
Similarly, Kogan’s marketing team now has access to real-time logistics and inventory information, so it can decide which products and categories to promote and when.
“The marketing team has a fixed budget, so having visibility over which products are in-demand and available – and appropriate for marketing – is really important,” he said.
“There are some products that people will come in to buy regardless, and there are other products that people may not necessarily buy unassisted. It all comes down to having all of the data available and combined in a nice, clear way.”
Taft said that most retailers have a wealth of information from various systems that can be combined to give managers a holistic view of the business. The trick is doing so in real time.
“Typically, they might have spreadsheets that come in at the end of the month, and there’s manual work to combine them all, so it takes longer to build up a full picture of how things are performing,” he said.
“The speed and accuracy of decision-making is the main thing that’s affected when you don’t have all of the data coming in.”
‘Still no crystal ball’
According to a global study by Adyen, businesses that connect payments systems across their organisation see an 11 per cent increase in growth compared to those that don’t.
But while sales data is clearly important, Taft doesn’t think businesses should rely on this information alone to make decisions.
“Just because we’ve got all this great data and it’s presented amazingly for everyone, there’s still no crystal ball, there’s no magic AI that’s going to tell you the right decision,” he said.
He believes businesses need to leave room for employees to bring their own ideas and experience to the table.
“We have a lot of open dialogue between departments and between people at the new coffee machine that we got to encourage people to get together and talk,” he said. “As much as it’s a very statistical and data-focused business, there’s also nous and intuition a little bit, too.”
Kogan has taken a test-and-learn approach to fine-tune its operations since it was founded in 2006. And while there’s a lot more competition in the e-commerce industry today, Taft is confident the online retailer can maintain its lead.
“To stay in front, we have to keep delighting our customers, finding in-demand products and services and making them affordable,” he said. “Keep focusing on the stuff that we’re really good at and remaining open to opportunity.”