Increasing eCommerce profitability at a DIY retailer

Online revenues had increased rapidly for this DIY retailer located in the Netherlands, but profitability in the eCommerce channel was under pressure due to high costs. However, the company hadn’t properly analyzed where the costs were coming from, focusing only on profit/loss generated by front margin. There were a number of insights to be gained by looking into shopping baskets and product-specific costs such as inventory, logistics, returns, waste and the call center.

Data-driven business intelligence pinpoints profit potential

The IG&H team started by building a pipeline that connected 20 data sources to the data warehouse. On top of the data warehouse, the team developed 25 cost and revenue allocation algorithms in the cloud to output the data to a well-known self-service BI (business intelligence) dashboard. Then, dashboard views were created based on 4 types of users: merchants, online team, supply chain/logistics, and finance. The dashboards provided insights into profitability metrics from multiple angles including time periods, banners, product categories and fulfilment streams. Outliers were automatically visualized to provide focus and direction for improvement initiatives.

Once the dashboards were ready to go, the system was rolled out to 100+ users who received hands-on training to understand the methodology behind the dashboard and how to use it. The users were also empowered to define their own profitability improvement initiatives. The critical final step was to ensure the insights generated by the dashboard would be used. To that end, IG&H and the client jointly defined clear roles and responsibilities and governance, with a meeting structure and KPI’s that would enable the teams to achieve their profitability goals.