The Value of Descriptive Analytics: Evidence from Online Retailers

53 Pages Posted: 10 Dec 2020 Last revised: 12 Dec 2020

See all articles by Ron Berman

Ron Berman

University of Pennsylvania - The Wharton School

Ayelet Israeli

Harvard Business School - Marketing Unit

Date Written: November 20, 2020

Abstract

Does the adoption of descriptive analytics impact online retailer performance, and if so, how? We use the synthetic control method to analyze the staggered adoption of a retail analytics dashboard by more than 1,000 e-commerce websites, and find an increase of 13–20% in average weekly revenues post-adoption. We demonstrate that only retailers that adopt and use the dashboard reap these benefits. The increase in revenue is not explained by price changes or advertising optimization. Instead, it is consistent with the addition of prospecting and personalization technologies to retailer websites. The adoption and usage of descriptive analytics also increases the diversity of products sold, the number of transactions, the numbers of website visitors and unique customers, and the revenue from repeated customers. In contrast, there is no change in basket size. Put together, these findings are consistent with an indirect effect of descriptive analytics, and they suggest that the adoption of analytics serves as a monitoring device that allows retailers to assess the value of new technologies. Without using the descriptive dashboard, retailers are unable to reap the benefits associated with these technologies.

Keywords: descriptive analytics, big data, synthetic control, e-commerce, online retail

JEL Classification: C55, L25, M31

Suggested Citation

Berman, Ron and Israeli, Ayelet, The Value of Descriptive Analytics: Evidence from Online Retailers (November 20, 2020). Harvard Business School Marketing Unit Working Paper No. 21-067, The Wharton School Research Paper, Available at SSRN: https://ssrn.com/abstract=3745748 or http://dx.doi.org/10.2139/ssrn.3745748

Ron Berman

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

Ayelet Israeli (Contact Author)

Harvard Business School - Marketing Unit ( email )

Soldiers Field
Boston, MA 02163
United States

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