Understanding the Difficulties of Measuring ROI in Ecommerce and How Omnichannel Can Help

Difficulties in Measuring ROI for Ecommerce Companies, Retailers, and Businesses

Measuring return on investment (ROI) is a crucial task for ecommerce companies, retailers, and businesses as it helps to evaluate the performance of an investment and determine whether it is worth continuing or if the resources should be redirected towards other opportunities. However, measuring ROI can be a challenging task for many businesses, as there are a number of difficulties that need to be overcome. In this article, we will discuss the top difficulties faced when measuring ROI for companies, businesses, and retailers, the root cause for these difficulties, how Omnichannel can help provide solutions for these difficulties, and the best strategies that Omnichannel provides for measuring ROI.

Tracking Customer Acquisition

Tracking Customer Acquisition also referred to as the attribution problem, is a major difficulty faced when measuring ROI. Ecommerce companies, retailers, and businesses may have difficulty determining which marketing campaigns and channels are effectively driving customer acquisition. This is because there are various touchpoints that a customer may interact with before making a purchase, making it challenging to attribute the conversion to a specific campaign or channel. The root cause of this difficulty is the lack of proper tracking tools or the lack of proper implementation of these tools. Without proper tracking tools, businesses may not have a clear understanding of how customers were acquired, and therefore may not be able to accurately measure the ROI of marketing campaigns. This lack of visibility into customer acquisition can lead to wasted marketing spending and a lack of understanding of what truly drives customer acquisition.

Determining the Lifetime Value of a Customer

Determining the lifetime value of a customer is a major challenge faced by ecommerce companies, retailers, and businesses when measuring ROI. This is due to the fact that businesses don’t have a clear understanding of how much customers are buying across different channels and what segments of the customers are most lucrative. The root cause of this difficulty is often the lack of proper data tracking or lack of proper data analysis. Without this visibility, businesses may not be able to track the complete customer journey and therefore, they may not be able to accurately measure the ROI of customer acquisition efforts. Furthermore, if a business only tracks till the distributor level, it will not have visibility beyond the distributor, thereby making it difficult to track the lifetime value of a customer. In order to track the lifetime value of a customer, businesses need to have proper data tracking and analysis in place to gain a clear understanding of customer behavior and purchasing patterns.

Determining Cost of Goods Sold

Another challenge when measuring ROI is determining the cost of goods sold. Ecommerce companies, retailers, and businesses may have difficulty determining the actual cost of goods sold, making it challenging to determine the ROI of specific product lines. This is because businesses often don’t know what charges were incurred where and don’t attribute these costs correctly, not realizing that their products could be much more expensive than they thought. This lack of proper inventory management and accounting systems can lead to a lack of understanding of the cost of goods sold, making it difficult to measure the ROI of specific product lines.

Isolating Impact of Specific Initiatives

The fourth difficulty faced when measuring ROI is isolating the impact of specific initiatives. Ecommerce companies, retailers, and businesses may have difficulty determining the specific impact of initiatives such as website redesign or new product launch, making it challenging to determine the ROI of these initiatives. The root cause of this difficulty is the lack of proper data tracking or lack of proper data analysis. Without proper data tracking and analysis, businesses may not have a clear understanding of the impact of specific initiatives and therefore may not be able to accurately measure the ROI of these initiatives.

Measuring Branding and Reputation

The fifth difficulty faced when measuring ROI is measuring branding and reputation. Ecommerce companies, retailers, and businesses may have difficulty measuring branding and reputation as these are intangible assets, making it challenging to determine the ROI of these investments. 

The Root Cause of Difficulties in Measuring ROI

The root cause of this difficulty is the lack of proper metrics and data to measure the effectiveness of branding and reputation investments. Without proper metrics, businesses may not be able to measure the ROI of branding and reputation investments accurately.

How Omnichannel Can Help Provide Solutions for Measuring ROI

Omnichannel can help businesses overcome these difficulties by providing a seamless customer experience across all channels, including online, in-store, and mobile. This can help businesses improve tracking of customer acquisition, enhance customer data, improve inventory management, increase visibility into initiatives, maintain consistency and Omnichannel can help businesses overcome these difficulties by providing a seamless customer experience across all channels, including online, in-store, and mobile. This can help businesses improve tracking of customer acquisition, enhance customer data, improve inventory management, increase visibility into initiatives, maintain consistent and cohesive branding and reputation across all channels, and ultimately improve ROI.

Seamless Customer Experience

One of the best strategies that Omnichannel provides for measuring ROI is seamless customer experience. Businesses can improve customer engagement, increase sales, and ultimately drive a better ROI. This can be done by providing a consistent and cohesive brand and messaging across all channels, as well as ensuring that customer data is shared across all channels to provide a personalized experience.

Inventory Management

Inventory management is another effective strategy that Omnichannel provides for measuring ROI. An effective inventory management system is crucial for successful omnichannel implementation in India. This includes real-time inventory tracking and visibility across all channels, as well as the ability to quickly and easily fulfill orders from multiple channels.

Data-Driven Decision-Making

Data-driven decision-making is another key strategy that Omnichannel provides for measuring ROI. To make the most of an omnichannel strategy, businesses should have a solid data analytics infrastructure in place. This includes collecting and analyzing customer data from all channels, as well as using this data to make informed decisions about marketing, inventory, and other operational activities.

Personalization

It is another strategy that Omnichannel provides for measuring ROI. Personalizing the shopping experience is a key strategy for successful omnichannel implementation in India. This includes using customer data to provide personalized product recommendations, personalized offers, and a personalized shopping experience.

Mobile Optimization

Mobile optimization is another strategy that Omnichannel provides for measuring ROI. With the increasing popularity of mobile shopping in India, it is essential to optimize the mobile shopping experience. This includes providing a mobile-friendly website and mobile app, as well as ensuring that the checkout process is seamless and easy to use on mobile devices.

Fulfillment

It is another strategy that Omnichannel provides for measuring ROI. An effective fulfillment strategy is crucial for successful omnichannel implementation in India. This includes providing multiple fulfillment options, such as in-store pickup, home delivery, and same-day delivery, as well as ensuring that fulfillment is fast, accurate, and cost-efficient.

Real-life Use Cases of Omnichannel for Measuring ROI in India

Real-life examples of companies in India that have successfully implemented Omnichannel solutions for measuring ROI include Nykaa and Zivame. These companies have integrated their online and offline channels to provide a seamless shopping experience for their customers. Nykaa, for example, has implemented a comprehensive inventory management system that allows them to track product movement across all their channels, including their own website, marketplaces, and physical stores. This has helped them to optimize their inventory levels and reduce the costs associated with excess stock or stockouts. Similarly, Zivame has integrated its online and offline channels to provide a seamless shopping experience for its customers. They have implemented omnichannel solutions that allow them to track customer behavior and purchase history across all channels, which has helped them to better understand their customers’ needs and preferences. This information is used to improve the product offerings and the overall shopping experience, which has ultimately led to an increase in ROI.

Conclusion and Next Steps

In conclusion, Omnichannel can help businesses overcome many of the difficulties associated with measuring ROI. This can be done by providing a more complete view of customer data, inventory, and the impact of initiatives. A well-implemented Omnichannel strategy can lead to improved customer engagement, increase sales, and ultimately drive a better ROI. If you are looking to understand and know more about Omnichannel solutions, you can connect with us to learn more.