The Value of Descriptive Analytics: Evidence from Online Retailers

Abstract

Does the adoption of descriptive analytics impact online retailer performance, and if so, how? We use the synthetic difference-in-differences method to analyze the staggered adoption of a retail analytics dashboard by more than 1,500 e-commerce websites, and we find an increase of 4%–10% 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 CRM, personalization, and prospecting 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 repeat customers. In contrast, there is no change in basket size. These findings are consistent with a complementary effect of descriptive analytics that serve as a monitoring device that helps retailers control additional martech tools and amplify their value. Without using the descriptive dashboard, retailers are unable to reap the benefits associated with these technologies.

Keywords: descriptive analytics, big data, difference-in-differences, synthetic control, e-commerce, online retail, martech.

JEL Classification: C55, L25, M31